Whether inbound or outbound, activity this year is heating up – and it’s hunting season. Authorities are targeting irregular business activities and hawkish entrepreneurs may find themselves easy targets if they sacrifice compliance for a quick profit. In this issue of China Business Law Journal, we explore inbound M&A in Hunting the hunter, which by its definition spells out the pitfalls in an area that has seen unprecedented activity this year, with Mergermarket figures showing deal value has already surpassed the value of any other year on record.
With activity on the uptick, authorities are also becoming better enforcers, adept at tracking wayward antitrust situations and other anomalies. The Ministry of Commerce is monitoring competition concerns closely, along with commercial corruption. Foreign acquirers may find themselves the unwitting owners of glaring bribery problems if due diligence is not performed extensively and professionally.
More details have been forthcoming on issues like pre-filing consultations, but some lawyers believe the opinions have not gone far enough and do not remove uncertainties. Fast-tracking procedures for simple cases are also now in place, but beware: if your application is declined you may have to re-file under normal procedures, adding more time than using that procedure to begin with. Hunting the hunter is a must read for all foreign investors and their advocates.
Hot and Cold explores the changeable investment climate in the US and Canada, and while the ice appears to be thawing on Chinese investment into the US, following a rather cold spell, in Canada the frost is still evident due to the introduction of stiff foreign takeover rules.
With outbound investment rules loosened substantially, activity is heating up in the US once again and it’s Chinese investors who are on the hunt – for bargains, particularly in the tech sector. Lawyers in the know are commenting that Chinese investors are now learning to protect their industries and interests by utilising the American legal system. Hot and Cold explores tensions under Foreign Account Tax Compliance Act (FATCA) and the Foreign Corrupt Practice Act, and whether this is likely to impact investment.
In Canada, meanwhile, the impact of new rules governing takeovers is apparent. Continued acquisitions by state-owned enterprises of controlling interests in the oil sands industry will only be approved on an “exceptional basis” going forward, but there are other options. Acquisitions of pure exploration properties are not subject to Investment Canada review and are exempt from takeover restrictions.
Finally, Placing your trust explores the best global alternatives for trusts and newer, so-called special trusts. Transparency challenges to confidential investments are on the increase, and the implementation of FATCA and the US hunt for fraudsters has been compounded by China hunting for more information on the financial affairs of its citizens and companies. It’s enlightening to see what some of the top-tier jurisdictions – Hong Kong, Cayman Island and British Virgin Islands – have available.