China allows foreign-invested enterprises to make equity investments within China from the capital account – liberalization of the domestic mergers and acquisitions market beckons

Ever since China began opening up to the outside world, the right of foreign-invested enterprises (FIEs) to make equity investments within China using capital contributions (i.e., registered capital or a capital increase) has been a privilege rather than a right – the unqualified right to reinvest was reserved for certain, specific investment-type FIEs.

However, more recently there has been renewed momentum to relax these restrictions. On 25 October 2019 the State Administration of Foreign Exchange published new rules marking a further relaxation of China's foreign exchange controls.

In this note, we will examine the implications of this significant and eagerly awaited change that effectively opens up the domestic mergers and acquisitions market to all FIEs, as well as the impact that this may have on other aspects of the Chinese foreign exchange control regime.

Read More: China allows foreign-invested enterprises to make equity investments within China from the capital account – liberalization of the domestic mergers and acquisitions market beckons


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