Anti-monopoly requirements for M&A, reorganizations of listcos (I)

According to the provisions of Article 11 of the Measures for the Administration of Major Asset Restructuring of Listed Companies (2016 Revision), a listco implementing major asset restructuring shall fully explain and disclose that it “conforms to national industrial policies and the provisions of laws and administrative regulations related to environmental protection, land management, anti-monopoly and other matters”. The mergers, acquisitions and reorganizations of listcos shall comply with the provisions of relevant laws and administrative regulations of anti-monopoly. Based on current laws and regulations of China, this article sorts out relevant legal requirements of anti-monopoly applied in the process of mergers, acquisitions and reorganizations of listcos.

KEY CONCERNS

The Anti-Monopoly Law deals with three kinds of monopolistic behaviour, namely monopoly agreements, abuse of market dominance and concentration of undertakings. Article 2 of the measures defines “major asset restructuring” as “an asset-trading activity of a listed company and its held or controlled company other than in the ordinary course of business, such as purchase, sale or other disposal of assets, which reaches the specified proportion and causes material changes in the main business, assets, and revenue of the listed company”.

It is not difficult to see from the aforementioned provisions that concentration of undertakings is one of the implementation methods of major asset restructuring of listcos, which means two or more independent entities aggregate and enhance market influence through equity acquisition (to obtain control power).

Cao Yiran is a partner and Zhang Yu is a trainee at Grandway Law Offices