An Introduction to M&A in China in 2023
An Introduction to M&A in China in 2023
2023年中国并购交易简介
In 2023 China’s economy under the influence of post-pandemic macroeconomic and geopolitical trends faced challenges but continued its gradual recovery. Overall, China’s M&A market shrunk in 2023. According to the Wind’s China’s M&A Ranking 2023, 8,821 deals, including cross-border M&A transactions by Chinese companies, occurred in China’s M&A market in 2023, a year-on-year decrease of 5.18%. All the deals had an aggregate value of approximately CNY1,898.9 billion, a year-on-year decrease of about 22.86%, among which China Mobile’s acquisition of 6.83% of the shares in Postal Savings Bank was the largest deal by value, with a transaction value of CNY45 billion.
A few noticeable trends in China’s M&A market in 2023 include:
• state-owned enterprises remaining major players in the M&A market, and M&A activities for promoting strategic restructuring and specialised integration of state-owned enterprises continuing to grow;
• deal makers remaining active in key industries, and M&A activities concentrating on TMT, materials, advanced manufacturing and mobility, etc; and
• certain developed countries still being popular destinations for Chinese companies’ outbound investment, while projects in Belt and Road countries, such as Indonesia, are adding vitality to cross-border M&A.
For the mining industry, as indicated in Deloitte’s Insights into the China M&A Transaction Market in the First Half of 2023, Chinese companies gained more outbound investment experience and became more focused on selecting high-quality resources. In addition, with commodity prices fluctuating, the changes in geopolitics and the rise of economic protectionism, the risks involved in outbound M&A related to key minerals have increased compared to M&A in other sectors.
The Impact of the Revised Company Law on M&A in China
The Company Law of the People’s Republic of China (2023 revised) (the “Revised Company Law”) will come into force on 1 July 2024. This revision to the Company Law is a comprehensive review and in-depth adjustment of the current Company Law (the “Previous Company Law”), which will definitely have significant impact on the operation and development of companies, and raise issues that require further discussions for M&A transactions.
1. Improving the capital contribution system
The current company registered capital subscription system in China has no restrictions on the amount of subscribed capital or the time limit for making capital contributions, which made it easier to establish companies and unleashed entrepreneurship. However, practically speaking, problems such as the extended period of time for paying up the subscribed capital and the extremely high amount of subscribed capital may further affect transaction security and damage the interests of creditors. As such, Article 47 of the Revised Company Law provides that the amount of capital contribution subscribed for by all shareholders of a limited liability company shall be fully paid by the shareholders within five years from the date of establishment of the company in accordance with the company’s by-laws. Meanwhile, related provisions about requesting payment for unpaid shares, share forfeiture, and acceleration of capital contribution timeline are put in place, and contribution obligations on transferred unpaid shares are specified as well.
It can be anticipated that for future M&A transactions targeting Chinese companies, the transferee will need to look into the target company’s capital contribution during the due diligence, and put relevant provisions in the contracts if needed; as for the transferor of unpaid shares, attention needs to be paid to the financial capacity of the transferee to make contributions.
2. Introducing the classified shares system
Article 144 of the Revised Company Law stipulates that joint stock limited companies can issue certain types of classified shares with different rights from ordinary shares in accordance with its by-laws. This provision legally recognises certain special arrangements of shareholders’ rights such as preferential or subordinated dividend rights and liquidation rights, differential voting rights, and transfer restrictions, reflecting the existing practical experience and development needs of the corporate governance structure. The shareholders concerned should push for the by-law to be amended consistent with the Revised Company Law to clarify the classified share arrangement; attention should also be paid to this issue when reviewing the by-law for share transfers. After the Revised Company Law comes into force, classified shares will become more common in M&A transactions to further meet the various needs of different shareholders for, among other things, company control or investment return.
3. Adding restrictions on financial assistance
Article 163 of the Revised Company Law stipulates that joint stock limited companies are prohibited from providing financial assistance in principle, but subject to a valid resolution of the shareholders’ meeting or of the board of directors, the target company may provide financial assistance up to 10% of its issued capital. From an M&A perspective, banning financial assistance would restrict leveraged buyouts while preventing market manipulation and improper benefit transfer to shareholders. The implementation and specific impact of this provision remain to be further observed.
The Interpretation of Foreign Entity of Concern
The US Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law, which was passed in November 2021, led to the US Department of Energy publishing its Interpretation of Foreign Entity of Concern (the “Interpretation”) on 4 December 2023, notifying the proposed interpretive rule and requesting public comment on its interpretation of the statutory definition of Foreign Equity of Concern (FEOC). The comment period ends on 3 January 2024, and the final interpretation is expected to be released in the first quarter of 2024. The FEOC definition dictates whether vehicles may qualify for a tax credit provided for clean vehicles as revised in the US Inflation Reduction Act, which has a significant influence on the Chinese companies linked to the new energy vehicle supply chain and draws widespread attention both within and outside the industry.
According to the definition of FEOC, five types of foreign entities are considered as FEOC. The Interpretation mainly clarifies the definition of the third type (“owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is a covered nation”), and specifies that the PRC is one of the covered nations. Thus, companies incorporated in the PRC will be considered as FEOC, at least for the reason of being subject to the jurisdiction of the PRC. Whether an overseas subsidiary of a Chinese company is a FEOC gives rise to the discussion of two issues.
• For Chinese companies that are considered as FEOC only due to being subject to the jurisdiction of the PRC, their subsidiaries established overseas will not be automatically recognised as FEOCs; however, a subsidiary entity would be an FEOC itself if it is also either “subject to the jurisdiction” of the covered nation, or “controlled by” a covered nation government.
• For Chinese companies that are considered as FEOC due to being owned by, controlled by, or subject to the direction of Chinese government, whether its overseas subsidiary is considered as FEOC would need to be determined on a case-by-case basis according to its shareholding, voting rights, board seats, contractual control, etc.
The Interpretation will bring new challenges to Chinese companies in the new energy vehicle supply chain. It not only requires relevant Chinese companies to review their company structures and the origins of critical minerals as well as battery components and materials, etc, but may also expedite the pace of such Chinese companies’ expanding abroad.
在后疫情时代，受到宏观经济和地缘政治形势等诸多因素的影响，中国经济在2023年面临挑战但持续稳步复苏。整体而言，中国并购市场在2023年呈现了收缩的态势。根据万得统计的《2023年度Wind中国市场并购交易排行榜》，2023年全年，中国并购市场（包含中国企业跨境并购）共披露8,821起并购事件，同比下降5.18%，交易规模约18,989亿元，同比下降约22.86%。其中，中国移动收购邮储银行6.83%股权的交易金额高达450亿元，交易规模排名第一。
2023年的并购交易仍有许多突出特点：
• 国有企业依然是投资主力军，通过并购重组推进国有企业战略性重组和专业化整合的交易活动不断涌现；
• 重点行业并购交易依旧活跃，交易活动集中在包括科技、媒体及通信（TMT）行业、材料行业、先进制造业和运输等；
• 中国企业出海目的国仍然较集中在一些发达国家，同时位于印度尼西亚等“一带一路”沿线国家的项目继续为跨境并购注入新活力等。
在矿业领域并购中，正如德勤《2023年上半年中国并购交易市场洞察》中所指出，中资企业随着海外投资成熟经验的累积，将更着眼于优质资源的选择。另外，随着大宗商品市场价格的波动，地缘政治的变化和经济民族主义抬头，与其他海外收购相比，关键矿产资源的海外并购风险加大。
影响中国并购交易的公司法修订
《中华人民共和国公司法》（2023修订）（ “新《公司法》”）将于2024年7月1日起正式实施。本次公司法修订是对现行公司法（“老《公司法》”）的全盘检视和深度调整，无疑将对公司的经营和发展产生重要影响，也对并购交易提出了需要进一步关注和思考的课题。
1. 完善出资认缴制度
中国现行的公司注册资本认缴制对认缴数额、缴资期限等没有限制，因此在其施行的过去十年里便利了公司设立，激发了创业活力。然而，实践中出现的认缴期限过长、天价认缴数额等问题，将可能进一步影响交易安全、损害债权人利益。有鉴于此，新《公司法》第四十七条规定，有限责任公司全体股东认缴的出资额由股东按照公司章程的规定自公司成立之日起五年内缴足。同时，配套规定了催缴出资、股东失权以及股东出资加速到期等制度，并明确了未实缴股权转让后的出资义务承担规定。
由此可以预见，未来在并购中国公司的交易中，受让人将需要在尽职调查中详细审查出资情况、并在需要时在合同中做出相关约定；而对于拟转让未缴足出资的股权的原股东而言，则需要关注受让人的出资能力。
2. 引入类别股制度
新《公司法》第一百四十四条规定股份有限公司可以按照公司章程的规定发行特定类型的与普通股权利不同的类别股。本条款在法律层面上认可了优先或劣后分红权和清算权、表决权差异，以及转让限制等一定的股东权利特殊安排，反映了公司治理结构的已有实践经验和发展需求。有关股东应推动公司章程按照新《公司法》的规定进行修订，以明确类别股安排；这也将是股权交易中核查公司章程时需要重点关注的事项。新《公司法》施行后，类别股在并购中将得到更为广泛的应用，进一步满足不同股东在控制权、投资回报等方面的差异化需求。
3. 增加对财务资助的限制
新《公司法》第一百六十三条规定，股份有限公司原则上禁止提供财务资助，但经有效股东会决议或董事会决议，目标公司可以在其已发行股本的10%范围内提供财务资助。从并购角度而言，禁止财务资助将限制杠杆收购，同时防止操纵市场和向股东进行不当利益输送。这一规定的实施和具体影响尚待进一步观察。
受关注外国实体的解释
针对美国《基础设施投资和就业法案》（又称《两党基础设施法》），美国能源部于2023年12月4日发布了《受关注外国实体的解释》（简称“《解释》”），告知拟议的解释规则，并就其对“受关注外国实体”（简称“FEOC”）法定定义的解释征求公众意见。目前意见接收期间（截止2024年1月3日）已经结束，预计最终版本的定义解释可能于2024年第一季度出台。FEOC定义关系到汽车是否符合条件享受经美国《通胀削减法案》修订的清洁能源汽车税收减免待遇，对新能源汽车产业链上的中国企业具有重要影响，引发了行业内外的广泛关注和讨论。
根据FEOC定义，FEOC包括五类外国实体，本次《解释》主要阐明了第三类“由受关注国家的政府拥有、控制或受其管辖或指示的外国实体”的定义，并且指出中国是受关注国家之一。因此，在中国境内设立的企业，将至少出于受到中国管辖的原因，而被认定为FEOC。中国企业在境外设立的子公司是否会被认定为FEOC，则需要就以下两个问题进行讨论：
• 针对仅由于受到中国政府管辖而被认定为FEOC的中国企业，其在境外设立的子公司不会自动被视为FEOC；然而，如果子公司本身也受到受关注国家的管辖，或者受到受关注国家政府的控制，则子公司本身就会被认定为FEOC。
• 针对由于中国政府拥有、控制或指示而被认定为FEOC的中国企业，其境外子公司是否为FEOC，将需要根据持股比例、投票权，董事席位、协议控制等情况具体确定。
本次《解释》的出台将给新能源汽车产业链上的中国企业带来新的挑战，既要求相关中国企业对自身公司架构和关键矿产、电池部件和原材料等的来源进行梳理，也有望加快相关中国企业出海的步伐。