circumstances” allowing a non-Chinese investor to have a significant impact on the business decision-making, personnel, finance and technology of the enterprise. Notably, investments in listed companies impacting national security are also subject to review by the CSRC in conjunction with the FISR. The Review Measures call for the CSRC to develop specific measures with the FISR to review such investments. On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (Overseas Listing Trial Measures), which stipulates that under the record filing system, domestic enterprises offering securities and listing overseas also need to undergo security reviews under certain circumstances and must accept supervision by the CSRC and relevant competent departments of the State Council (e.g., those managing the FISR). Review Measures – Procedures and Outcomes FISR filings undergo a multi-stage review with both defined and undefined review stages: ^ Preliminary Consultation (no set timing) . Parties can consult the FISR on whether an FISR filing is required. The preliminary consultation can help non-Chinese investors decide whether they need to make a filing with FISR. However, no formal or informal opinion is available. ^ Preparation of Required Application Materials (no set timing) . If a filing is deemed required, parties must prepare and submit a declaration form, investment plan, statement on national security impact and any other materials required by the FISR. The FISR will not publicize the existence of a filing, and materials submitted in connection with a filing will be kept confidential.
Entity List (UEL Provisions) on September 19, 2020, under which non-Chinese individuals and entities so designated may be restricted or prohibited from investing in China. While these measures directly focus on foreign investment related to China and its interests, it may be helpful to consider them alongside a fuller complement of recent national security- driven measures encompassing cybersecurity, data privacy and data security, anti-foreign sanctions, antimonopoly, export controls, public listing rules and more. For example, in July 2022, the Cybersecurity Administration of China promulgated clarifying guidance, with measures effective September 1, 2022, with respect to the circumstances triggering a security assessment by authorities of any cross-border transfer of data by certain operators collecting or processing data in the country. We discuss the Review Measures and UEL Provisions in more detail below. Review Measures – Scope of Application The FISR has broad authority to review both direct and indirect investment activities by non-Chinese investors. Filings with the FISR are required for non-Chinese investments: ^ In industries associated with military and national security or in close physical proximity to military and national security facilities; and ^ Where “actual control” is obtained over entities (existing or newly established) in industries designated as “important,” including agricultural products, energy and resources, infrastructure, transportation services, equipment manufacturing, information technology, internet products and services, financial services, “critical” technologies, cultural products and services, and “other important fields.” “Actual control” refers to (i) holding more than 50% of a target company’s equity; (ii) holding less than 50% of a target company’s equity, but with significant voting rights; and (iii) “other
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