As part of China's strategy in positively adapting to a possible influx of merger and acquisition prospects following China's accession to the WTO, new regulations have been introduced that more specifically set forth procedures for mergers and divisions of PRC joint venture companies.

The "Regulations on Merger or Separation of Foreign Investment Corporations", as selected from the "Investment of Foreign Clients in Pudong" guidelines, went into effect on November 1,1999. Although these regulations are intended provide guidance where existing law has been silent as to mergers or divisions of PRC joint ventures, there are some areas that actually raise more questions.

Firstly, these regulations offering guidelines as to how joint ventures may make investments into other entities seem to contradict existing stipulations that hold that joint ventures have no function for investment (other than the foreign corporate investment that went into the creation of the joint venture).

Secondly, it is questionable whether the regulations assist investors with the restructuring of debt through the dividing or restructuring of the company to form what is substantially a liability company.

The above questions notwithstanding, these regulations do generally achieve their goal of solidifying merger procedures for joint venture companies, thus better positioning joint venture companies to be able to more readily able to address merger and acquisition issues after China's accession to the WTO.
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　--Steven Gong