Opinions of the State Council on Promoting Corporate Mergers and Restructuring
On August 8, 2010, the State Council released its Opinions on Promoting Corporate Mergers and Restructuring (the “Opinions”), which took effect on the same day, aiming to optimize and promote mergers and acquisitions in the country.
The Opinions promote mutually beneficial cooperation, trans-regional M&A and restructuring, overseas acquisition and investment cooperation with a focus on sectors such as the automotive, steel, cement, machinery manufacturing, electrolytic aluminum and rare earth industries. The goal is to improve industrial centralization, boost scale and promote intensive management, accelerate development of key enterprises with self-owned intellectual property and famous brands, cultivate a number of large enterprise groups with international competitiveness, and push forward the optimization and upgrading of industrial structures. Accordingly, the following actions are required to be taken by the State Council to eliminate institutional obstacles to corporate mergers and restructuring:
- Reevaluate provisions restricting trans-regional mergers and restructuring;
- Rethink interest distribution relationships between regions; and
- Relax restrictions on market admission of private capital.
Moreover, pursuant to the Opinions, guidance and policy support for corporate mergers and restructuring will be strengthened as follows:
- Implement preferential taxation policies. Tax preferences shall be given to asset appreciation, gains from debt restructuring and transfer of ownership of land and premises involved in corporate mergers and restructuring, in accordance with the Circular on Several Policies Concerning Enterprise Income Tax on Corporate Mergers and Restructuring Business (Cai Shui  No. 59) and the Circular on Several Policies Concerning Deed Tax on Enterprise Reorganization and Restructuring (Cai Shui  No. 175) of the Ministry of Finance and the State Administration of Taxation;
- Enhance financing options;
- Increase financial support;
- Support independent innovation and technological advancement of enterprises;
- Fully utilize capital markets in promoting the restructuring of enterprises;
- Improve relevant land management policies;
- Properly deal with the problems of credits and debts and employee placement;
- Deepen system reform and management innovation of enterprises.
The attachment to the Opinions also provides a task list for various authorities such as the China Banking Regulatory Commission and provincial governments in implementing the Opinions.
- Opinions of the State Council on Promoting Corporate Mergers and Restructuring
- Issuing Authority: State Council
- Date of Issuance: August 28, 2010 / Effective Date: August 28, 2010