In recent years, the Chinese government has made efforts to promote business, especially from foreign investors – this has resulted in an increase in mergers & acquisitions activity. Despite this, foreign investors are still bound to relatively tight regulations in China. This can result in additional steps and more requirements for documentation for overseas buyers in mergers.
One of the first hurdles in forming a merger as an overseas company is the matter of regulatory bodies, particularly when acquiring a public company. China’s Negative List, which is updated regularly, prohibits foreigners from investing in certain sectors, and heavily restricts others, including agriculture, technology, medicine, radio and television. Permissions and approvals may have to be obtained from the regulatory bodies for these industries, along with other authorities, such as the Chinese Securities Regulatory Commission, the State Administration for Market Regulation, and the Ministry of Commerce. There may also be limitations on what percentage of a company a foreign buyer may acquire depending on the sector.
Provided that the sector is open to foreign investors, or any restrictions have been taken into account, negotiations for mergers & acquisitions can begin. Non-disclosure or confidentiality agreements are commonplace in China, as often the documents disclosed during the due diligence process would not be publicly available. Although these agreements are not always made to be legally binding, the parties involved may choose to have the signing witnessed by a notary public.
Other documents commonly exchanged during negotiations include:
- Share purchase agreements,
- Shareholders agreements,
- Articles of association,
In China, the standard practice is for the buyer to prepare the drafts of these documents, and they will likely need to be drafted and signed in both Chinese and English. If the documents are drafted, signed, and notarised in the UK, they will be viewed as foreign documents in China and will often require further legalisation and attestation.
Legalising documents for use in China is a slightly different process compared to countries which have joined the Hague Convention on the Apostille. In signatory countries, there is no requirement for double-certification – a single apostille from the country of origin is sufficient in order to use a document abroad. However, in other countries, including China, documents must be certified by both the country of origin and by the country in which the document will be used. This means that after having the document notarised (if necessary) and apostilled, it will also need to be attested by the Chinese embassy or consulate.
Applications for consular legalisation for China can be complicated and time-consuming. In addition to arranging the notarisation and legalisation of your documents, at Pardus Bloom we are happy to arrange attestation, acting as an agent on your behalf and completing the entire process, including the application forms. For more information on embassy attestation, see our services page.