Article 8 The parties to a merger or acquisition shall determine the transaction price on the basis of the result of the evaluation of the equity interest to be transferred or of the assets to be sold conducted by the asset evaluation institution. The parties to a merger or acquisition may agree on an asset evaluation institution established within the territory of China in accordance with the law. Asset evaluation shall be conducted by adopting internationally recognized evaluation methods.
Where the merger or acquisition of a domestic enterprise leads to any change in the equity interest formed by the investment of state-owned assets or resulting in any transfer of the property right in state-owned assets, evaluation shall be conducted and transaction price shall be determined in accordance with the relevant regulations governing the administration of state-owned assets.
It is prohibited to transfer equity interest or sell assets at a price obviously lower than the evaluation result for the p ur pose of transferring the capital out of China in a disguised way.
Article 9 In case of a merger or acquisition of a domestic enterprise by foreign investors to set up a foreign investment enterprise, the foreign Investors shall, within 3 months from the date of issuance of the foreign investment enterprise business license , pay the full consideration to the shareholder(s) transferring equity interest or to the domestic enterprise selling assets. If the above time limit needs to be extended under circumstances, the foreign investors shall, upon the approval by the examination and approval authority, pay 60% or more of the total consideration within 6 months and full considerations within 1 year from the date of issuance of the foreign investment enterprise business license, and shall distribute the proceeds in proportion to the actual capital contribution.
Where the foreign investors conduct Equity Merger and Acquisition and the foreign investment enterprise established after such mergers and acquisitions increases its registered capital, the investors shall set forth a time schedule for capital contribution in the contract and the articles of association of the foreign investment enterprise. If it is set forth that the capital contribution shall be paid up in one lump sum, the investors shall make the contribution within 6 months from the date of issuance of the foreign investment enterprise business license; or if it is set forth that the capital contribution shall be paid by installments, the investors' first installment shall not be less than 15% of their respective capital subscription and shall be made within 3 months from the date of issuance of the foreign investment enterprise business license.
In case of an Asset Mergers and Acquisition by foreign investors, the investors shall set forth the time schedule for capital contribution in the contract and the articles of association of the foreign investment enterprise to be established. If the investors intend to establish a foreign investment enterprise and purchase and operate such assets of a domestic enterprise through such enterprise, the investors shall pay the part of its capital contribution equal to the price of such assets within the time schedule specified for consideration payment in Paragraph 1 of this Article and the remaining part of its capital contribution shall be paid within the time schedule agreed upon in accordance with Paragraph 2 of this Article.
Where foreign investors establish a foreign investment enterprise through merger or acquisition of a domestic enterprise, and the proportion of the foreign investors' capital contribution is less than 25% of the registered capital, if the investors pay their capital contribution in cash, the full contribution shall be made within 3 months from the date of issuance of the foreign investment enterprise business license; if the investors pay their capital contribution in kind or in industrial property rights and so on, full contribution shall be made within 6 months from the date of issuance of the foreign investment enterprise business license.
The instruments of payment of any consideration shall be in compliance with the Provisions of the relevant state laws and administrative regulations. Where a foreign investor intends to use any stock it has the right to dispose of or any Renminbi assets it legitimately possesses as the instrument of payment, such payment shall be subject to the approval of the foreign exchange administration authority.
Article 10 Where a foreign investor acquires any equity interest held by a shareholder of a Domestic Company by agreement, after the Domestic Company has changed into and established as a foreign investment enterprise, the registered capital of such foreign investment enterprise shall be the registered capital of the original Domestic Company and the proportion of the foreign investor's capital contribution shall be the proportion of the equity interest acquired by the foreign investor in the original registered capital. Where a Domestic Company subject to Equity Merger and Acquisition an Equity Merger and Acquisition also increases its capital at the same time, the registered capital of the foreign investment enterprise established upon the Merger and Acquisition shall be the sum of the registered capital of the original Domestic Company and the increased capital. The foreign investors and the other original investors of the acquired Domestic Company shall determine the proportion of their capital contribution respectively to the registered capital of the foreign investment enterprise based on the evaluation of the Domestic Company's assets.
Where foreign investors subscribe to any increased capital of a Domestic Company, after the Domestic Company has changed into and established as a foreign investment enterprise, the registered capital of such foreign investment enterprise shall be the sum of the registered capital of the original Domestic Company and the increased capital. The foreign investors and the other original shareholders of the acquired Domestic Company shall determine the proportion of their capital contribution respectively to the registered capital of the foreign investment enterprise based upon the evaluation of the Domestic Company's assets.
If a natural person shareholder of the Domestic Company subject to Equity Merger and Acquisition has been a shareholder of such Domestic Company for more than 1 year, the person may, upon approval, continue to be a Chinese party investor of the foreign investment enterprise established after the change.
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