The effect of such an acquisition would be to convert a domestic capital PRC enterprise into a foreign-invested enterprise such as an EJV, or lesser extent, "rubber stamped" by the CJV or WFOE (an "FIE"). if the target domestic enterprise is a State-owned enterprise or encompasses State-owned assets, the acquisition is subject to mandatory State-owned assets valuation (which will determine the minimum purchase price) and the transfer must comply with the relevant ratification and/or record filing procedures with the competent State Assets Supervision and Administration Commission or Ministry of Finance organ, as well as the new procedures for the listing of State-owned assets transactions on Property Rights Exchanges.
Another important point to note is that as acquisition will have the effect of converting.the domestic enterprise into an FIE, , but as a foreign-invested construction or design/engineering under Decree No. 113 or Decree No. 114. Thus, in addition to complying with all the relevant requirements as discussed above under the relevant mergers and acquisition rules, an acquisition of a domestic PRC construction, design or engineering company by a foreign enterprise would also be subject to the approval and qualification requirements under Decree Nos.113 or 114, as appropriate. This means that all the requirements or limitations in relation to Decree No. 113 or Decree No. 114 entities as discussed above should apply similarly to all FIEs created by means of acquisitions.
