(The Measures for the Security Review of Foreign Investment, as deliberated and adopted at the 13th executive meeting of the National Development and Reform Commission on November 27, 2020, with the approval of the State Council, are hereby issued, and shall enter into force on January 18, 2021.)
Article 1 For the purposes of satisfying the requirements for boosting the formation of a new pattern of comprehensively opening up and effectively preventing and dissolving national security risks while actively promoting foreign investment, these Measures are formulated in accordance with the Foreign Investment Law of the People's Republic of China, the National Security Law of the People's Republic of China, and related laws.
Article 2 Foreign investment that affects or may affect national security shall be subject to security review under these Measures.
For the purposes of these Measures, "foreign investment" means the investing activities conducted by a foreign investor directly or indirectly in the territory of the People's Republic of China (hereinafter referred to as "in China"), including the following circumstances:
(1) A foreign investor, alone or together with another investor, invests in a new project or invests by the formation of an enterprise in China.
(2) A foreign investor acquires any equity or asset of an enterprise in China by means of merger or acquisition.
(3) A foreign investor invests in China by any other means.
Article 3 The state shall establish a foreign investment security review working mechanism (hereinafter referred to as the "working mechanism") responsible for organizing, coordinating, and guiding the foreign investment security review work.
Under the leadership of the National Development and Reform Commission ("NDRC") and the Ministry of Commerce and located in the NDRC, the Office of the Working Mechanism shall be responsible for the routine work in relation to the security review of foreign investment.
Article 4 Foreign investors or the relevant parties in China (hereinafter collectively referred to as the "parties") shall proactively report any foreign investment within the following scope to the Office of the Working Mechanism before making the investment:
(1) Investment in the arms industry, an ancillary to the arms industry, or any other field related to national defense security and investment in an area surrounding a military installation or an arms industry facility.
(2) Investment in important agricultural products, important energy and resources, critical equipment manufacturing, important infrastructure, important transportation services, important cultural products and services, important information technology and Internet products and services, important financial services, key technology, or any other important field related to national security, resulting in the foreign investor's acquisition of actual control of the enterprise invested in.
For the purposes of subparagraph (2) of the preceding paragraph, "acquisition of actual control of the enterprise invested in" shall include the following circumstances:
(1) The foreign investor holds not less than 50% of the equities of the enterprise.
(2) The foreign investor holds less than 50% of the equities of the enterprise, but has voting rights that have a material effect on the resolutions of the board of directors or the members' or shareholders' meeting.
(3) The foreign investor is otherwise caused to be able to have a material effect on the business decision-making, personnel, finance, and technology, among others, of the enterprise.
The Office of the Working Mechanism shall have the power to require the parties to report any foreign investment within the scope specified in the first paragraph of this article (hereinafter referred to as the "reporting scope").
Article 22 Where a foreign investor purchases the stock of an enterprise in China through a stock exchange or any other securities trading venue approved by the State Council, which affects or may affect national security, the specific measures for the application of these Measures to such investment shall be formulated by the securities regulatory agency of the State Council in conjunction with the Office of the Working Mechanism.
Article 23 These Measures shall enter into force 30 days after the date of issuance.