BEIJING -- China's Ministry of Commerce tightened its supervision over foreign investors' acquisition of local companies in a modified regulation issued here Tuesday.

Foreign investors should abide by Chinese laws and policies in their acquisition of domestic companies, says the regulation.

The regulation, to take effect as of September 8, says that the acquisition should not affect competition rules of the market or lead to loss of state assets.

Foreign investors should follow local policies on industrial development, land and environmental protection, according to the regulation.

For industries not allowed for solely foreign invested operation, foreign investors can not have full ownership of the company purchased, it says.

Companies required to be dominated by Chinese share holders should remain controlled by the Chinese side even if they are purchased by foreign investors, says the regulation.

The regulation also forbids foreign capitals to buy companies in industries where foreign operation is not allowed, it says.