Against the backdrop of intensifying global economic volatility and complex cross-border capital flows,

overseas M&A and bankruptcy liquidation have become core channels for enterprises to realize global

asset allocation, risk divestment and resource restructuring. Whether expanding market presence

and integrating technologies via cross-border M&A, or resolving debt crises of overseas subsidiaries

and revitalizing non-performing assets through bankruptcy liquidation, enterprises face multiple

compliance challenges including

multi-jurisdictional legal conflicts, cross-border debt recovery, asset ownership confirmation and

employee rights protection. This article focuses on the core regulatory rules governing overseas

M&A and bankruptcy liquidation, sorts out key compliance risks, and establishes a full-process risk

prevention and control system, providing practical guidelines for enterprises’ cross-border capital

operations.

The overseas M&A compliance system is underpinned by four pillars: foreign investment access

review, transaction due diligence, antitrust filing and cross-border capital compliance, subject to

multiple constraints imposed by national investment regulators, competition law enforcement authorities

and foreign exchange regulations. In the early stage of M&A, legal and financial due diligence serves as

the core prerequisite for risk prevention. It is necessary to fully verify the target company’s asset ownership,

debt structure, major contractual disputes, intellectual property defects and historical compliance records,

and focus on identifying potential risks such as hidden debts, pending litigations, environmental penalties

and labor disputes. For instance, the EU Merger Regulation and the U.S. Hart-Scott-Rodino (HSR) Act

explicitly stipulate that cross-border M&As meeting specific turnover or market share thresholds must be

declared to regulators in advance, prohibiting gun-jumping — completing asset delivery prior to regulatory

approval. Violating enterprises may face fines up to 10% of global annual turnover. In addition, many

countries implement national security reviews on foreign M&As, targeting transactions involving critical infrastructure, core technologies and sensitive industries. A Chinese enterprise’s acquisition of a European semiconductor firm was rejected in 2024 for failing the regulatory review, serving as a typical case.

 

Post-transaction, overseas subsidiary governance and compliance integration become top priorities.

Enterprises shall optimize governance structures in accordance with the Company Law of the host

country and standardize the exercise of shareholder rights. Special attention shall be paid to the stringent

rules on minority shareholder protection in many jurisdictions. For example, the UK Companies Act requires

major decisions by controlling shareholders to be publicly announced and approved by minority shareholders; otherwise, such decisions shall be invalid. Meanwhile, enterprises need to align systems in finance, taxation, labor employment and data compliance to avoid compliance loopholes caused by institutional differences. If an

overseas subsidiary suffers operational deterioration and insolvency, it will trigger cross-border bankruptcy liquidation proceedings. Enterprises must strictly abide by the host country’s bankruptcy laws and cross-border bankruptcy convention rules, with core risks covering bankruptcy property confirmation, cross-border creditor

claim filing, debt repayment order and exercise of bankruptcy revocation rights.

 

Brazil’s bankruptcy law stipulates that individual debt repayment and gratuitous asset transfer within

90 days prior to a bankruptcy application may be deemed void, and administrators have the right to recover

relevant assets. The EU Insolvency Regulation clarifies jurisdiction and judgment mutual recognition rules

for cross-border bankruptcy proceedings to ensure fair repayment for creditors.

 

The core compliance difficulty of cross-border bankruptcy liquidation lies incross-border asset recovery

and debt isolation. Enterprises shall engage professional bankruptcy administrators to sort out global asset distribution, investigate debtors’ concealment and transfer of assets, lawfully exercise bankruptcy

revocation rights, and recover improperly disposed assets. Meanwhile, it is critical to separate legal liabilities

between parent companies and insolvent subsidiaries, and avoid joint and several liabilities incurred by

corporate personality confusion. In debt repayment, enterprises must follow the statutory repayment order

of the host country, including priority claims, secured claims and ordinary claims, and prioritize the

settlement of employee salaries and taxes to prevent creditor litigations arising from irregular repayment.

In addition, cross-border bankruptcy involves multi-currency settlement of claims and debts, which requires compliance approval for cross-border capital remittance in accordance with foreign exchange control rules

to guard against foreign exchange violations.

 

Building a full-process compliance governance system for overseas M&A and bankruptcy liquidation

adheres to the principles of risk pre-positioning, professional empowerment and dynamic monitoring.

Enterprises shall set up professional teams consisting of cross-border M&A lawyers, bankruptcy

liquidation experts, financial consultants and tax advisors, and customize transaction plans and bankruptcy

disposal strategies compatible with host country regulations. Conduct in-depth due diligence and

design risk isolation structures before M&A; strictly fulfill regulatory declaration and approval

procedures during transactions; establish compliance monitoring mechanisms for overseas subsidiaries

post-M&A; and lawfully advance proceedings and prevent asset loss once bankruptcy liquidation is

triggered. By embedding compliance into the entire chain of cross-border capital operations,

enterprises can effectively reduce legal risks, safeguard asset security, and achieve sustainable

development of global layout.

 

 

Hyperlink List

● EU Commission, Merger Procedures (https://competition-policy.ec.europa.eu/mergers/procedures_en)

● HSR Act (https://www.justice.gov/atr/hart-scott-rodino-act)

● Central Enterprises Global Legal Risk Prevention Guidelines(https://www.gov.cn/gongbao/content/2014/content_2600087.htm)

 

 

 

 

This article is for reference only and does not constitute tax or legal advice. All interpretations and operations shall be subject to the latest official regulations of relevant overseas competent authorities.