Legal issues need full service when acquiring petrol stations

Against a background of a saturated retail market for refined oil products and the rise of environmentally friendly electric vehicles, it has become more difficult to secure zoning and land norms for new petrol stations, making the zoning and land of existing petrol stations scarce resources. Accordingly, the acquisition of petrol stations has become an important means of investing in the oil product retail business.

The authors recently handled several projects for the acquisition of private petrol stations in China, and would like to provide a brief description of several key legal issues involved in petrol station acquisitions.

Foreign investor access

Since the publication of the Administrative Measures for Foreign Investment in the Commercial Sector by the Ministry of Commerce on 11 December 2004, China’s refined oil product market has been opened to foreign investors in the form of Sino-foreign equity and co-operative joint ventures, and wholly foreign-owned enterprises.

Pursuant to such regulations as the above-mentioned measures and the Administrative Measures for the Refined Oil Product Market, where a foreign investor engaging in the retailing of refined oil products in China operates at least 30 petrol stations and sells different types and different brands of refined oil products from multiple suppliers, the foreign party may not have a controlling interest.

David Wang is a partner and Zhang Xiuchao is a lawyer at Concord & Partners in Shanghai