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MOFCOM’s Interim Regulations on Assets or Business Spin-Off by an Operator participating in a Concentration (MOFCOM Circular 41) - 关于实施经营者集中资产或业务剥离的暂行规定
July 28, 2010
Released and effective on July 5, 2010
The Ministry of Commerce (“MOFCOM”) on July 5, 2010 published the Interim Regulations on the Assets or Business Spin-off by an Operator Participating in the Concentration (“MOFCOM Circular 41”).
Backgrounds:
According to the PRC Anti-monopoly Law (“AML”, effective as of August 1, 2008) and its relevant implementation rules, where an operator's concentration reaches the relevant filing thresholds, it should file a concentration application with the Anti-monopoly Bureau (“AMB”) of MOFCOM. Furthermore, in late November of 2009, MOFCOM promulgated the Review Measures on an Operator's Concentration (effective as of January 1, 2010). These measures specify three types of restrictive conditions that MOFCOM may impose when it approves a proposed concentration, one of which is assets or business spin-off by the operator participating in the concentration.
This MOFCOM Circular 41 provides specific requirements on assets or business spin-off.
Definitions:
· Assets or Business Spin-off: refers to spin-off of assets or business (“Spin-off”) by the business operators participating in the concentration who have the liability to spin-off their assets or business ("Spin-off Obligor") according to the Decision for Examination on Concentration of Business Operators (“Examination Decision”) issued by the MOFCOM.
· Business to be Spun-off: refers to part of the assets or business of the Spin-off Obligor that are subject to Spin-off.
· Supervisory Trustee: refers to a natural person, legal entity or other organization that is entrusted by the Spin-off Obligor to be responsible for supervising the Spin-off.
· Spin-off Trustee: refers to a natural person, legal entity or other organization (entrusted by the Spin-off Obligor) that is responsible for finding the proper purchaser and reaching the assets or business sales agreement or other relevant agreements.
· Potential Purchaser: refers to a qualified operator who has the intention of purchasing the Business to be Spun-off from the Spin-off Obligor.
· Active Spin-off: refers to the situation where a Spin-off Obligor actively find a proper purchaser who wishes to purchase the Business to be Spun-off and reach the relevant agreements within the period determined by the Examination Decision.
· Trusted Spin-off: refers to the situation where a Spin-off Obligor fails to complete the "active spin-off" within the set period, the Spin-off Trustee shall find the proper purchaser who wishes to purchase the Business to be Spun-off and reach the relevant agreements according the timeframe as determined by the Examination Decision.
Requirements of Spin-off:
· According to the Examination Decision, the Spin-off Obligor should engage a Supervisory Trustee and engage a Spin-off Trustee during the Spin-off. The Supervisory Trustee and the Spin-off Trustee shall be independent from the operator participating in the concentration and the purchaser of the spin-off business. A Supervisory Trustee and a Spin-off Trustee can be the same natural person, legal entity or other organization. They should report to MOFCOM and the Spin-off Obligor is not allowed to change them without MOFCOM’s approval.
· Without getting MOFCOM’s approval, neither a Supervisory Trustee nor a Spin-off Trustee is allowed to disclose any information or report to the Spin-off Obligor. They shall also keep secret the trade secrets and other confidential information obtained.
· MOFCOM will evaluate issues of Supervisory Trustee, Spin-off Trustee, the purchaser of Business to be Spun-off, the consignment agreement, the pending sales agreement of spin-off business and other relevant agreements to make sure that they are in compliance with the Examination Decision and requires that the operator participating in the concentration perform certain obligations to maintain the value of the Business to be spun-off before the Spin-off is completed.