The State Council of China has laid out long-awaited rules and procedures for national security reviews of foreign mergers and acquisitions. The new acquisition rules will commence operation in March of 2011. Under the rules, the new National Security Review Committee led by China’s National Development and Reform Commission and the Ministry of Commerce that already review mergers under the Chinese antitrust rules will review mergers and acquisitions targeting key companies in the defense, agriculture, energy, resources, infrastructure, transportation and equipment-manufacturing and technology industries. It will apply a broad definition of national security, assessing the impact of deals on economic stability, social order and China’s ability to research and develop key technologies for national defense.

The administration of this blog encourages readers to check out the publications section of the Cenlaw website as it is filled with relevant and detailed information regarding the legal issues which can arise in the context of Chinese business.

As more international investors seek business opportunities in Asia, it will become increasingly necessary for such investors to comply with applicable local laws and regulations. The legal systems in Asian jurisdictions can be very similar or extremely different from Western legal systems. For example, the SAR of Hong Kong, China has a legal system which has its roots in the common law tradition. This state of affairs could be attributed to the fact that Hong Kong was once a Crown Colony of the United Kingdom. Meanwhile, so-called “Mainland China” has a legal tradition that is quite unlike any other jurisdiction in the world. At the same time, the Kingdom of Thailand in Southeast Asia has a legal system which draws upon many different legal traditions around the world while maintaining a uniquely Thai complexion.

Many Western stock exchanges have announced various plans to consolidate through multi-jurisdictional merger or acquisition. This state of affairs will likely raise increasingly complex legal issues as business transactions increasingly occur in a transnational context. As Southeast Asia sees the creation of new stock exchanges in countries such as Laos and Cambodia. It appears increasingly likely that the legal systems in those countries will be of ever increasing interest to international investors seeking information about doing business in those jurisdictions. It will be interesting to follow these developments as business in China and the countries which comprise the Association of Southeast Asian Nations (ASEAN) become increasingly dominant in a global business context.

For related information please see: Laos Stock Exchange.