Guo Shui Fa [2006] No. 129

The state taxation bureaus and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central
Government, and the cities specifically designated in the state plan,

In recent years, all localities accumulated certain experience in abundant exploration and practices in respect of classified administration
of enterprise income tax in light of the local actual situation, and have achieved preferable results. For the purpose of advancing
further the scientific and delicate administration of enterprise income tax, the State Administration of Taxation has enacted the
Guiding Opinions on Classified Administration of Enterprise Income Tax in light of the demands of “verifying tax base, improving
final settlement and payment, strengthening evaluation, and running classified administration”, which is hereby printed and distributed
to you. Please carefully carry out the said Opinions according to your actual situation, and report the circumstances and issues
arising out of the implementation to the State Administration of Taxation in time.

The State Administration of Taxation

August 25, 2006

Guiding Opinions on Classified Administration of Enterprise Income Tax

For the purpose of advancing further the scientific and delicate administration of enterprise income tax, improving the quality and
efficiency of administration of levy of enterprise income tax, the guiding opinions regarding the work of classified administration
of enterprise income tax are hereby given as follows:

I.

Significance of Classified Administration of Enterprise Income Tax

On the basis of territorial administration, classified administration of enterprise income tax follows certain standards, concerning
the different features of enterprise income tax payers, to distinguish the administration methods, clarify the administration contents
and emphasize the key administration points so that the pertinence and effects of the administration of enterprise income tax are
enhanced, and the enterprise income tax sources are effectively controlled.

Classified administration of enterprise income tax is the demand for scientific and delicate administration of enterprise income tax.
It is instrumental to allocate tax collectors and administrators, seize bottlenecks, stand out administration keystones, intensify
the means of administration, and optimize services for tax payment. It also has important significance to effectively strengthen
the supervision and control of enterprise income tax sources, and further improve the quality and efficiency of administration of
levy of enterprise income tax.

II.

Principles of Classified Administration of Enterprise Income Tax

(1)

Principle of distinguishing taxpayers. On the basis of the features of different taxpayers￿￿classified administration shall target
at classifying the objects of administration, differentiating key points of administration, taking pertinent administering measures,
and fully embodying the functions of classified administration.

(2)

Principle of efficiency. For classified administration, the taxation authorities shall firmly get hold of the outstanding problems
and weak points in the administration of enterprise income tax sources, as well as attach importance to the key points of administration
on the one hand, and convenience the operation on the other, so as to save tax levy and payment costs, and enhance the efficiency
of levy administration.

(3)

Principle of coordination. For classified administration of enterprise income tax, the taxation authorities shall be cooperative in
the all-sided administration with regard to levy, audit, statistics, etc. and the administration of multifarious taxes on the one
hand, and reinforce the coordination with the external departments in respect of public finance, industry and commerce, statistics,
banking, cultural affairs, sports, labor and audit, etc. on the other, in order to form a joint force of levy administration.

(4)

Principle of service. Concerning the demands of different classes of taxpayers for services, the taxation authorities shall intensify
the consciousness of providing services for tax payment, elevate the tax payment service ways, optimize and innovate the measures
of providing services for tax payment, and achieve the organic combination of administration with service.

III.

Classification of Enterprise Income Tax Payers

For classified administration of enterprise income tax, the taxation authorities shall consider fully the scale of taxpayers’ tax
sources, accounting conditions, ways of tax payment, tax payment credit standing grades, durations and other elements, analyze the
common demands and characters of enterprise income tax administration, synthetically decide the effective methods which conduce to
intensive administration and embody the rule of levy administration of enterprise income tax on the basis of territorial administration.
Enterprise income tax payers may be classified in the ways as follows:

(1)

In accordance with the scale of their tax sources (chiefly covering the amount of annual taxable income or the amount of annual payable
income taxes or annual profits, etc.), they may be classified as primary taxpayers and non- primary taxpayers;

(2)

In accordance with their accounting conditions, they may be classified as enterprises following levy of tax upon check of accounts
and enterprises following levy of tax upon assessment of the amount;

(3)

In accordance with their ways of tax payment, they may be classified as enterprises of united (combined) tax payment and enterprises
of on-the-spot tax payment;

(4)

In accordance with their credit standing grades, they may be classified as taxpayers of Grade A, Grade B, Grade C and Grade D; and

(5)

Other reasonable methods of classification.

In view of the actual situation on tax sources and the current levy administration staff of the locality, the taxation authorities
in all localities may consider fully the ways of classification mentioned above and utilize them schismatically, and confirm the
explicit standards for classification and the classification making sure processes to classify the taxpayers. With reference to:
the taxpayers’ scale of tax source, integrating the completeness of accounting books, taxpayers may be classified as primary taxpayers,
non- primary taxpayers and taxpayers following levy of tax upon assessment of the amount; in accordance with the credit standing
grades of taxpayers, combined with the tax source scale and methods of levy, taxpayers may be classified as enterprises with good
credit standing and large scale (enterprises of Class A), enterprises with common credit standing and scale (enterprises of Class
B), and enterprises with awful credit standing and small scale (enterprises of Class C and Class D); taxpayers may, on the basis
of the completeness of accounting books, in combination with the tax source scale, be classified as enterprises with abundant tax
source and credible accounting bylaws, enterprises with deficient tax source but credible accounting bylaws, enterprises with abundant
tax source but incredible accounting bylaws, and enterprises with deficient tax source and incredible accounting bylaws in accordance.

IV.

Administration of Primary Taxpayers

In regard to the primary enterprise income tax payers, the taxation authorities shall mainly carry out all-sided administration, focus
on supervision and control of tax sources and daily administration, take tax source analysis and foresee as well as tax payment evaluation
as the means, and practice all-round and delicate administration at all stages.

(1)

Supervision and control of tax sources. The taxation authorities shall reinforce daily administration, fully grasp the taxpayers’
dynamic changes in respect of production, operation, funds turnover, accounting conditions, tax-related indices (including revenues,
costs, expenses, profits, amount of taxable income, amount of payable income taxes) in an all-round way, collect the fundamental
information on production, operation, financial management and the administration information on the range of changes in consumption
of energy and materials, acquaint themselves with the market situation and profit rate situation of the industry to which the taxpayers
belong, as well as set up and elevate an index parameter system on accounting and taxation.

(2)

Administration of primary tax-related matters. Emphasizing doing a good job in the following works:

(a) The taxation authorities shall strictly examine on the base of the formulated procedures and standards, before consenting any
approval, the enterprise income tax exemptions or reductions, pre-tax deduction of property losses, pre-tax deduction of management
expenses drawn by the head office, pre-tax deduction of technical advancement fees drawn in consolidation, and shall operate properly
in the aspect of verifying and archiving the documents on the projects for which approval is cancelled.

(b) The taxation authorities shall reinforce the administration of tax-related matters, such as enterprises’ investment, merger, division,
associated transactions, etc., analyze and decide whether the application of taxation policies is right, whether the determination
of the appraisable cost of assets is correct, and whether there is any intended tax evasion

(c) The taxation authorities shall set up a separate ledger for each taxpayer, as well as note down the information on production,
operation, accounting, tax payment, tax exemption or reduction, losses or cover of losses, carry-over of advertisement fees, wage
balance (for enterprises that connect wages with performance), appraisable cost of assets for enterprise restructuring and reform,
depreciation of fixed assets, tax credit against investment of home-made equipment in technical innovation projects, and so on.

(3)

Final settlement and payment. The taxation authorities shall reinforce the publicity and direction of enterprise income tax policies
and the administration on the levy thereof, especially the new enterprise income tax policies, final settlement and payment procedures,
demands and legal obligation in the current year. Intensifying the logic check and information comparison after the filing of tax
returns, and comparing the revenue items and deduction items in tax returns against the relevant items in enterprises’ turnover tax
returns and the sales (business) income, investment income, non-business income and other income in accounting statements. Analyzing
and comparing the deduction items, the tax exemption or reduction items against the data of the deduction of research and development
expenses, tax exemption or reduction, cover of losses, tax credit against investment of home-made equipment, and daily management
ledgers. Utilizing the “one-account” deposit information and the daily administration information to analyze the accuracy of tax
payment adjustment including depreciation of fixed assets, amortization of intangible assets, and “three items” of expenses, etc.

(4)

Tax payment evaluation. The qualified taxation authorities shall evaluate tax payment of primary enterprise income tax payers individually
in each year. Namely, after the end of final settlement and payment of enterprise income tax, they shall make enterprise income tax
payment evaluation of the primary taxpayers one by one on the basis of the annual tax returns of key taxpayers and accounting statements,
tax-related check and examination materials, industrial information, and levy administration information aware of from their daily
management, and shall timely cope with the results of the tax payment evaluation.

(5)

Analysis and forecast of tax sources. The taxation authorities shall, make full use of computerized methods, and take comprehensive
advantages of comparative analysis means, the method of correlation analysis, the method of structural analysis, etc. to make vertical
and horizontal analysis on each key taxpayer in respect of total amount, range of increase, increment, increment contribution rate,
etc. of items such as the amount of income, amount of taxable income, amount of payable income taxes. The taxation authorities concerned
shall timely join into the enterprise to make clear the reasons of the change, analyze the effects on the change of income from following
aspects, including economic change, taxation policies, and levy administration situation, etc, and take interrelated measures in
time if the conterminous amount or range of increase or decrease of any relevant item is relatively large.

V.

Administration of Ordinary Taxpayers Subject to Levy of Tax upon Check of Accounts

As far as ordinary enterprise income tax payers subject to levy of tax upon check of accounts are concerned, the taxation authorities
shall strengthen the supervision and control of tax sources by sticking to fastening on the administration of matters, taking industrial
administration as the key point and tax payment evaluation as the means.

(1)

Administration of tax-related matters.

(a) Run excellently in examination, approval, and archival administration. The taxation authorities shall pay more attention to investigation,
verification, examination, approval and check of the matters subject to approval including enterprise income tax exemption or reduction,
property losses, administration fees, technological development fees, tax credit against investment of home-made equipment, and shall
improve the archival filing and follow-up management of the projects for which approval is cancelled.

(b) Establishing ledgers separately. When required by the actual situation of administration, the taxation authorities shall clarify
the relevant information to be handed over at the time of filing tax returns and shall run ledger-based administration of the continuous
pre-tax deduction items, such as cover of losses, tax exemption or reduction, wage balance (for enterprises connecting wages with
performance), assessable cost of assets in enterprise restructuring or reform, depreciation of fixed assets, advertisement fees,
tax credit against investment of home-made equipment in technical renovation projects, etc..

(c) Reinforcing the administration of enterprises established newly and enterprises in deficit. The taxation authorities shall timely
carry out follow-up administration of newly established enterprises, congregate the information on their production, operation and
their industry, as well, push them to make accounting exactly, and file enterprise income tax returns correctly. For enterprises
in deficit, especially the enterprises which have been in deficit for several continuous years and those contradicting the boom industry
to which they belong, the taxation authorities shall clarify the real reason of their losses, whether the losses are brought from
transfer of profits between associated enterprises or by other ways of tax evasion, or whether any enterprise forms losses by working
out false account books.

(2)

Final settlement and payment. The taxation authorities shall pay more attention to the tax payment adjustment of income tax and accounting
differentia items, tax exemption or reduction policies and final settlement and payment demands to make tax payment publicity, policy
guidance and interpretation, and elevate the quality of enterprise income tax returns. They shall strive to accelerate tax returns
and payment in order to assure the enterprise income taxes to be turned over to the treasury in time.

(3)

Tax payment evaluation.

(a) The taxation authorities shall gather the materials of tax payment evaluation such as the proportion of input to output in different
industries, the proportion of products to energy consumption, the average industrial profit rate, and the average industrial tax
burden, etc., and shall define enterprise income tax payment evaluation index systems for different industries.

(b) The taxation authorities shall further summarize the rules of the industry, set up the enterprise income tax payment evaluation
models and the index parameters, and also build the industrial enterprise income tax payment evaluation mechanisms, through making
investigation and analysis enterprise by enterprise in a same industry.

(c) The taxation authorities shall attach more attention to make tax payment evaluations on the abnormal tax payment enterprises which
largely deviate from the index parameters, make slight profits in the whole year, file returns of zero tax burden or have been in
loss for 3 continuous years.

(4)

Routine inspections. The taxation authorities shall unite routine management with the prepayment of income tax, emphasize examining
the authenticity of the affairs of enterprises that make abnormal enterprise income tax payment, for example, consumption of materials
and energy, employee wages and pre-tax deduction of other costs and expenses. They shall intensify the management of associated dealings,
stress supervising and controlling whether enterprises transfer profits by making use of the situation that the associated party
is within a tax holiday, or a period of losses, and so on.

VI.

Administration of Taxpayers Subject to Levy of Tax upon Assessment of the Amount.

In term of the enterprise income tax payers subject to levy of tax upon assessment of the amount, the taxation authorities shall mainly
surround normal tax returns of taxpayers and make reasonable assessment, and by means of domiciliary administration, investigation
and verification, elevate the authenticity, accuracy and entirety of tax returns, and gradually show the enterprises to turn to the
method of tax levy upon check of the account.

(I)

Domiciliary administration. The taxation authorities shall communicate regularly with the administrative departments for industry
and commerce, and acquaint timely themselves with taxpayers’ domiciliary changes by comparing the domiciles registered by the taxation
authorities and those registered by the administrative departments for industry and commerce. The bureaus of state taxes and those
of local taxes shall reinforce regular communication on the number of enterprises newly established that have made tax registration,
the number of modified enterprises, the number of enterprises that have moved away, and the number of nullified enterprises, etc.,
and shall contact each other at regular intervals and share mutual information, so that prevent omissions in levy and administration.

(II)

Identification and adjustment of tax levy upon assessment of the amount.

1. After investigation, the taxation authorities shall clarify information about enterprise income tax payers subject to levy of tax
upon assessment of the amount in the aspect of production, operation, financial management, and performance of tax payment obligation,
etc., so as to provide ways to determining levying enterprise income tax.

2. In light of the taxpayers’ industrial characteristics in respect of production and operation, the taxation authorities shall take
full consideration into location, operational scale, income level and profit level in the same class of enterprises in the same region,
and assess the amount of payable income taxes or rate of taxable income enterprise by enterprise through classification, so as to
make sure the tax levy upon assessment of the amount to be fair and reasonable.

3. In light of daily circuit inspection, the taxation authorities shall command the major changes in taxpayers’ production and operation
scope, and the major business, and shall adjust the amount of taxable income or the rate of taxable income timely. If an enterprise
accords with the conditions for tax levy upon check of accounts, the taxation authority shall adjust the way of collection and operate
the tax levy upon check of accounts timely.

4. The taxation authorities shall strengthen management for taxpayers subject to collection upon assessment of the rate of taxable
income tax by differentiating the different methods of assessment. As far as the taxpayers whose rates of taxable income are determined
on the basis of the sales revenues are concerned, the taxation authorities shall consolidate the supervision and control of the sales
(business) revenues on the accounting statements, and compare the total amount of the enterprise income tax revenues which enterprises
declare with the total amount of VAT and business tax revenues they declared on time. In term of the taxpayers whose rates of taxable
income are determined on the basis of costs and expenditures, the taxation authorities shall strengthen the control and administration
of the authenticity of costs and expenditures by strengthening the administration of invoices, wage forms, lists on the exit of materials
from the warehouse and other expense vouchers

5. The taxation authorities shall guide the taxpayers subject to levy of tax upon assessment of the amount of enterprise income tax
to set up accounts and bylaws. They shall, by means of strengthening tax payment guidance and policy publicity, concentrative trainings,
individual guidance, etc., elevate the accounting level of the enterprises, and make the enterprises gradually turn to the method
of tax levy upon check of accounts. They shall guide and regulate public intermediary institutions to assist the taxpayers subject
to levy of tax upon assessment of the amount of enterprise income tax in setting up accounts and bylaws, and to record accounts on
behalf of those enterprises.

6. The assessed amount of payable income taxes shall be divided monthly and quarterly, and the taxpayers shall be propelled to file
tax returns or make prepayment by month or by quarter within the prescribed period. The taxation authorities shall urge the enterprise
income tax payers subject to levy of tax upon assessment of the rate of taxable income to do a nice job in their year-end final settlement
and payment.

VII.

Actively Exploring into the Administration by Different Industries.

On the basis of territorial and classified administration, the taxation authorities shall probe into the administration by different
industries, and shall mainly do a nice job in the work as follows.

(1)

Control and administration of costs and expenses. The taxation authorities shall carry out industrial investigation and clarify business
operation including production, operation and accounting, such as the process flow, the ratio of input to output, the energy consumption,
the stock of materials, etc, and finance accounting information, and shall find out the intrinsic rule for administration of costs
and expenses.

(2)

Analyzing revenues, tax burdens and flexibility at regular intervals. The analysis of the yearly quarterly and monthly enterprise
income tax revenues of different industries shall be intensified. Researching to set up a scientific and practical industrial enterprise
income tax revenue forecast model, and improving the revenue forecast mechanisms. The flexibility and macro-tax burden increase of
enterprise income tax revenues in different industries shall be outstandingly analyzed, horizontal and vertical comparison shall
be made, the bottleneck shall be found out, and the administering measures shall be intensified.

(3)

Tax payment evaluation. The taxation authorities shall implement typical investigations as well as comprehensive analysis and estimation,
set up the index systems for profit rates, average tax burden, average material consumption and energy consumption, input and output,
etc. of different industries, and in view to the factors of such industries, for example, macro-data, industrial historic data, and
the data collected in the administration, reasonably determine the pre-warning value. On the basis of clearly knowing the industrial
rules, they shall set up mathematical models on industrial evaluation. They shall also make full use of the models and the method
of comparative analysis to make industrial evaluations.

(4)

Inspections. By means of daily management and industrial evaluation, the key inspections and special industrial inspections shall
be made by the taxation authorities on the industries in which the tax burden rate is obviously low or the daily management is problematic,
the flaws in administration shall be found, and the administering measures shall be improved.

VIII.

Administration of Taxpayers of Special Types

(I)

Consolidated (combined) tax payment enterprises, group enterprises and their member enterprises.

1. Examination, approval and checks. Before granting the approval, the taxation authorities shall rigorously examine and approve the
enterprises’ applications such as property losses, administration fees drawn in consolidation, technological development fees, tax
exemption or reduction, income tax credit against investment of home-made equipment, etc., do a nice job in the follow-up administration
of enterprise income tax examination and approval items that have been called off or delivered to the lower authorities for administration,
and set up corresponding administration bylaws and administration ledgers.

2. Information feedback. The taxation authorities shall, be aware of the production and operation of consolidated (combined) tax payment
enterprises and their member enterprises at regular intervals, as well as their accounting bylaws and the implementation and changes
thereof, and shall propel the member enterprises to submit a “List of Feedback of Tax Payment Information of Member Enterprises of
Consolidated (Combined) Tax Payment” at the appointed time, and do a nice job in ledger-based administration of the feedback information.

3. Associated enterprises business. On the basis of the types and nature of business transactions, the taxation authorities shall
carefully analyze and confirm the amount of business transactions, appraise whether the business transactions are reasonable, whether
they accord with the ordinary operational routines, and whether the prices and fees paid or charged for business transactions are
the fair transaction prices. If any price or fee is the unfair transaction price, corresponding method shall be selected to make
tax payment adjustment. The taxation authorities shall attach more attention to the administration of the business transactions to
which either party is within the period of tax reduction, tax exemption or period of loss while the other party is within the profiting-making
period or tax-levying period, so as to hinder consolidated (combined) tax payment enterprises and their member enterprises from evading
taxes by using associated transactions.

4. On-the-spot supervision. The taxation authorities shall strictly control on-the-spot supervision over the member enterprises of
consolidated (combined) tax payment, make daily inspections at regular intervals, effectively carry out the work of turning the supplementary
taxes over to the treasury, and timely deliver the inspection results to the capable taxation authorities at the localities of the
headquarters of the consolidated (combined) tax payment enterprises.

5. Joint audit. The taxation authorities shall explore effective joint taxation audit, enhance the cooperation of the taxation authorities
at the localities of the enterprise headquarters and those at the localities of the member enterprises, advance steadily the rationality
and accuracy checks of the financial management, production, operation and business transactions of the consolidated (combined) tax
payment enterprises which implement trans-regional business operation, their group enterprises and their member enterprises, as well
as their tax returns, so that the taxation authorities in different areas may operate joint taxation audit of the consolidated (combined)
tax payment enterprises, their group enterprises and their member enterprises at the same time.

(II)

Public institutions, social organizations and private non-enterprise entities.

1. Strengthening registration management. The taxation authorities shall communicate regularly with the administrative departments
of industry and commerce, of civil affairs, of education, of health, etc., confirm public institutions, social organizations and
private non-enterprise entities to carry out the procedures for legal person registration, non-profit-making legal person registration,
and tax registration, and timely subject them to income tax administration.

2. Enhancing the administration of tax-exempted income. The proof documents on fiscal allocations, the proof documents on incorporating
governmental funds into budgetary administration or special-account administration of extra-budgetary funds, the ratification documents
of the administrative department of public finance for not turning the funds over to the special fiscal account for administration,
the proof documents on allocation of special subsidy income, the reply documents on charge of membership fees, the proof documents
on government fund supports, etc. shall be paid more attention to check by the taxation authorities.

3. Strengthening tax- free administration of non-profit organizations. The non-profit organizations must fulfill legal person registration,
shall not target at making profits but engaging in public welfare service activities. The institutions’ properties and proceeds shall
not be distributed, and the properties remaining after nullification of the institutions shall be used for public welfare purposes.
The contributors shall not preserve or enjoy any property right over the contributed properties, while the earnings of the working
staff and the administrators shall be controlled at the range of the local average level, and the institutions’ properties shall
not be distributed in any disguised form, otherwise they shall not be under tax-exemption administration.

4. Boosting up the administration of costs and expenses. The taxation authorities shall be in strict accordance with the prescribed
scope and rates to calculate the costs, expenses and losses allowed for pre-tax deduction. They shall calculate separately the costs
and expenses concerning taxable income and those relevant to tax-exemption income. If such costs and expenses are not easy to be
distinguished, the taxation authorities shall reasonably confirm the apportioning proportion of the expenditure items relevant to
the taxable income to the expenditure items relevant to the tax-exemption items.

5. Reinforcing the administration of financial and accounting system. The taxation authorities shall require public institutions,
social organizations and non-enterprise private entities to strictly carry out the accounting bylaws for non-profit organizations,
or strictly implement the accounting bylaws for enterprises if transformed into enterprises.

6. Enhancing checks. The taxable income and tax-exemption income in the tax returns and the accounting statements and the information
on daily administration shall be checked and compared by the taxation authorities. They shall analyze the tax payment adjustment
of the deduction items and the rationality of all items of expenditures.

(III)

Taxpayers in

LAW OF THE PEOPLE’S REPUBLIC OF CHINA ON ENTERPRISE BANKRUPTCY

Order of the President of the People’s Republic of China No. 54 The Law of the People’s Republic of China on Enterprise Bankruptcy, which has been adopted at the 23rd meeting of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on August 27, 2006, is hereby promulgated and shall come into force as of June 1, 2007. Hu Jingtao, President of the People’s Republic of China August 27, 2006 Law of the People’s Republic of China on Enterprise Bankruptcy (2006) (Adopted at the 23rd meeting of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on August 27, 2006) Table of Contents Chapter I General Provisions Chapter II Application and Acceptance Section I Application Section II Acceptance Chapter III Custodian Chapter IV Assets of Debtors Chapter V Bankruptcy Expenses and Community Debts Chapter VI Declaration of the Creditor’s Rights Chapter VII The Meeting of Creditors Section I Common Provisions Section II Committee of Creditors Chapter VIII Rectification Section I Application for and Period of Rectification Section II Formulation and Approval of a Rectification Plan Section III Implementation of a Rectification Plan Chapter IX Reconciliation Chapter X Bankruptcy Liquidation Section I Bankruptcy Declaration Section II Conversion and Distribution Section III Termination of the Procedures for Bankruptcy Chapter XI Legal Liabilities Chapter XII Supplementary Provisions Chapter I General Provisions Article 1 The present Law is formulated to regulate the procedures of enterprise bankruptcy, fairly liquidate the credits and debts, safeguard the legitimate rights and interests of creditors and debtors and maintain the market order of the socialist economy. Article 2 Where an enterprise legal person fails to pay off its debts, and that if its assets are not enough to pay off all the debts or if it is obviously incapable of paying off its debts, its debts shall be liquidated in accordance with the provisions of the present Law. Where an enterprise legal person is under the aforesaid circumstance or it is obviously likely that it is incapable of paying off its debts, it may be subject to rectification in accordance with the provisions of the present Law. Article 3 The bankruptcy case shall be under the jurisdiction of the people’s court where the relevant debtor is domiciled. Article 4 Where the procedures for hearing a bankruptcy case are not prescribed in the present Law, they shall be subjected to the relevant provisions of the Civil Procedure Law. Article 5 The procedures for bankruptcy, which have been initiated according to the present Law, shall have binding force upon the assets of relevant debtors outside of the territory of the People’s Republic of China. Where any legally effective judgment or ruling made by a foreign court over a bankruptcy case involves any debtor’s asset within the territory of the People’s Republic of China, if the debtor applies with or requests the people’s court to accept or execute it, the people’s court shall, in light of the relevant international treaties that China has concluded or joined or the principles of reciprocity, carry out an examination thereon and, when holding that it does not violate the basic principles of the laws of the People’s Republic of China, does not damage the sovereignty, safety or social public interests of the state, does not damage the legitimate rights and interests of the debtors within the territory of the People’s Republic of China, accept and execute the judgment or ruling.. Article 6 When hearing a bankruptcy case, the people’s court shall guarantee the legitimate rights and interests of the employers in the insolvent enterprise and investigate its administrators’ legal liabilities. Chapter II Application and Acceptance Section I Application Article 7 A debtor, under the circumstance as prescribed in Article 2 of the present Law, may file an application with the people’s court for rectification, reconciliation or bankruptcy liquidation. Where the debtor fails to pay off its due debts, the creditor may file an application with the people’s court for rectification or bankruptcy liquidation. Where an enterprise legal person has been dissolved without any liquidation or without completing the liquidation, and the relevant assets are not enough to pay off the debts, the person liable for liquidation shall apply with the people’s court for bankruptcy liquidation. Article 8 When applying for bankruptcy, an Application for Bankruptcy and the related evidences shall be submitted to the people’s court: The following items shall be indicated in the Application for Bankruptcy: (1) Basic introduction of the applicant and the respondent; (2) Purpose of the application; (3) Facts and ground for the application; and (4) Other items that the people’s court deems necessary to be indicated. Where a debtor files an application, it shall submit the statement on financial status, checklist of debts, checklist of the creditor’s rights, relevant financial statements, a plan for employees’ arrangement as well as the payment documents of wages and social insurance premiums. Article 9 Before the people’s court accepts an application for bankruptcy, the applicant may request for withdrawing its application. Section II Acceptance Article 10 Where a creditor files an application for bankruptcy, the people’s court shall, within 5 days as of the receipt of the application, notify the related debtor. Where the debtor has any objection to the application, it shall bring forward its objection to the people’s court within 7 days as of the receipt of the notice from the people’s court. The people’s court shall decide whether or not to accept the case within 10 days as of expiration of the term for filing an objection. Except for the circumstance as prescribed in the preceding paragraph, the people’s court shall decide whether or not to accept an application for bankruptcy within 15 days as of the receipt of the application. Under any special circumstance where the term for accepting a case as prescribed in the preceding two paragraphs is required to be extended, it may be extended for another 15 days upon the approval of the people’s court at the next higher level. Article 11 Where the people’s court accepts an application for bankruptcy, it shall, within 5 days as of the day when the decision is made, serve it on the relevant applicant. Where a creditor files an application, the people’s court shall, within 5 days as of the day when a decision is made, serve it on the relevant debtor. The relevant debtor shall, within 15 days as of the day when the decision is served, submit to the people’s court its statement on financial status, checklist of debts, checklist of the creditor’s rights, the relevant financial statements as well as the payment documents of wages and social insurance premiums. Article 12 Where the people’s court decides not to accept an application for bankruptcy, it shall, within 5 days as of the day when the decision is made, serve its decision on the applicant with its reasons. If the applicant is dissatisfied with the decision, it may, within 10 days as of the day when the decision is served, appeal to the people’s court at the next higher level. During the period from the day when the people’s court accepts an application for bankruptcy to the day when a bankruptcy is announced, if it is found that the relevant debtor is not under the circumstance as prescribed in Article 2 of the present Law, its application may be rejected. If the applicant is dissatisfied with the decision, it may, within 10 days as of the day when the decision is served on, appeal to the people’s court at the next higher level. Article 13 Where the people’s court accepts an application for bankruptcy, it shall meanwhile designate a bankruptcy custodian. Article 14 The people’s court shall, within 25 days as of the day when it decides to accept an application for bankruptcy, notify the relevant creditors and announce its decision as well. The following items shall be indicated in the aforesaid notice and announcement: (1) Names of the applicant and the respondent; (2) The time when the people’s court accepts the application for bankruptcy; (3) Term, address and points of attention in the declaration of the creditor’s rights; (4) Name of the custodian as well as the address where it undertakes its business; (5) Requirements that the debtors or asset holders of the debtor shall pay off the debts or deliver the assets; (6) When and where the first creditors’ meeting is held; and (7) Other items that the people’s court deems necessary to be notified and announced. Article 15 During the period from the day when the people’s court’s decision which accept the application for bankruptcy is served on the debtor to the day when the procedures for bankruptcy are terminated, the relevant personnel of the debtor shall bear the following obligations: (1) Well preserving the assets, seals and account books as well as documents under its occupation and management; (2) Working in light of the requirements of the people’s court and the bankruptcy custodian, and answering their inquiries faithfully; (3) Attending the creditor’s meeting as a nonvoting delegate and answering the creditor’s inquiries according to the fact; (4) Not leaving its domicile if without the permission of the people’s court; and (5) Not assuming any post of director, supervisor or senior manager in any other enterprise. The term “relevant personnel” as mentioned in the preceding paragraph refers to the legal representatives of an enterprise, which may, upon the approval of the people’s court, include the financial managers and other operators of the enterprise. Article 16 After the people’s court accepts an application for bankruptcy, any repayment of debts made by a debtor to any individual creditors shall be deemed as invalidated. Article 17 After the people’s court accepts an application for bankruptcy, the debtors or asset holders of the debtor shall pay off the debts or deliver the relevant assets to the bankruptcy custodian. Where any debtor or asset holder deliberately violates the provisions of the preceding paragraph by paying off its debts or delivering the assets to the debtor, and thus incurs loss to the relevant creditors, its obligation of paying off the debts or delivering the assets shall not be exempted. Article 18 After the people’s court accepts an application for bankruptcy, the relevant custodian shall have the right to decide to unchain or continue to perform a contract that has been established before the acceptance yet has not been fully performed by both parties concerned, and notify the opposite party concerned of its decision. Where the bankruptcy custodian fails to notify the opposite party concerned within 2 months as of the acceptance or to make any reply to an urge made by the opposite party concerned, it shall be deemed that the contract is unchained. Where the bankruptcy custodian decides to continue a contract, the opposite party concerned shall continue to perform the contract yet has the right to request the custodian to provide guarantee. Where the custodian does not provide any guarantee, it shall be deemed that the contract is unchained. Article 19 After the people’s court accepts an application for bankruptcy, the relevant measures for preserving the debtor’s assets shall be released and the procedures for execution shall be suspended. Article 20 After the people’s court accepts an application for bankruptcy, any civil action or arbitration related to the debtor, which has been started yet not ended, shall be suspended. The civil action or arbitration can be resumed after a bankruptcy custodian takes over the debtor’s assets. Article 21 After the people’s court accepts an application for bankruptcy, the relevant debtor’s civil action shall be filed to the very people’s court only. Chapter III Custodian Article 22 A bankruptcy custodian shall be designated by the people’s court. Where it is considered at the creditors’ meeting that the custodian fails to perform or fulfill its duties and functions in a lawful and impartially manner, the creditors’ meeting may apply with the people’s court for the change of the custodian. The measures for designating bankruptcy custodians and deciding the remunerations for bankruptcy custodians shall be formulated by the Supreme People’s Court. Article 23 A bankruptcy custodian shall, in accordance with the provisions of the present law, fulfill its functions and duties, report its work to the people’s court and accept the supervision of the creditors’ meeting and the creditors’ committee. The bankruptcy custodian shall attend the creditors’ meeting as a nonvoting delegate, report the fulfillment of its duties and functions and answer the relevant inquiries. Article 24 The post of a bankruptcy custodian may be assumed by a liquidation group comprised of personnel from relevant departments and organs or by such lawfully established social intermediary agencies as a law firm, an accounting firm, a bankruptcy liquidation firm and etc.. The people’s court may, in light of the real status of a debtor and upon consulting the opinions of the relevant social intermediary agencies, designate the relevant personnel who have a good command of special knowledge and have obtained the practice qualification as a bankruptcy custodian. Under any of the following circumstances, one may not assume the post of bankruptcy custodian: (1) Having a record of criminal punishment for deliberate crime; (2) Having been revoked of the relevant practice qualification certificate of related specialty; (3) Having any interest with the case; or (4) Any other circumstance under which the people’s court deems it improper for it to act as a bankruptcy custodian. Where an individual assumes the post of a bankruptcy custodian, he shall purchase the responsibility insurance for practice. Article 25 A bankruptcy custodian shall fulfill the following functions and duties: (1) Taking over the asset, seals as well as the account books and documents of the debtor; (2) Surveying the financial status of the debtor and formulating the financial statements; (3) Determining the internal management of the debtor; (4) Determining the daily expenditure and other necessary expenditures of the debtor; (5) Determining, before the holding of the first meeting of creditors, whether to continue or terminate the debtor’s business; (6) Managing and disposing of the debtors’ assets; (7) Appearing in actions, arbitrations or any other legal procedures on behalf of the debtor; (8) Suggesting the hold of creditors’ meetings; and (9) Fulfilling other functions and duties that the people’s court believes it should perform. In the case of any separate provision on the bankruptcy custodian’s functions and duties in the present Law, it shall prevail. Article 26 Before the first meeting of creditors is held, where a bankruptcy custodian decides to continue or terminate the business operation of a debtor or has any of the acts as prescribed in Article 69 of the present Law, it shall be subject to the approval of the people’s court. Article 27 A bankruptcy custodian shall be diligent and devoted to their duties, and shall faithfully fulfill its (his) duties as well. Article 28 A bankruptcy custodian may, upon the approval of the people’s court, employ relevant work staff as it is necessary. The remunerations of a bankruptcy custodian shall be decided by the people’s court. In case the meeting of creditors has any objection to the remuneration of a bankruptcy custodian, it shall have the right to file demurral to the people’s court. Article 29 A bankruptcy custodian shall not quit its post without any justifiable reason. The resignation of a bankruptcy custodian shall be subject to the approval of the people’s court. Chapter IV Assets of Debtors Article 30 The assets of a debtor refer to all the assets that belong to the debtor when an application for bankruptcy is accepted, as well as the assets as obtained by the debtor during the period from the day when an application for bankruptcy is accepted to the day when the procedures for bankruptcy are ended. Article 31 Within 1 year before the people’s court accepts an application for bankruptcy, the bankruptcy custodian has the right to request the court to revoke any following act related to the debtor’s assets: (1) Transferring the assets free of charge; (2) Trading at an obviously unreasonable price; (3) Offering asset guarantee to those debts without any asset guarantee; (4) Paying off the undue debts in advance; or (5) Giving up the creditor’s rights. Article 32 Within 6 months before the people’s court accepts an application for bankruptcy, where a debtor is under any circumstance as prescribed in paragraph 1, Article 2 of the present Law where it makes repayment to individual creditors, its bankruptcy custodian has the right to request the people’s court to revoke it, except that the individual repayment may do good to the debtor’ assets. Article 33 Any of the following acts concerning the assets of a debtor shall be deemed as invalid: (1) Concealing or transferring the assets so as to avoid the debts; or (2) Fabricating any debt or acknowledging any inauthentic debt. Article 34 As for any asset of a debtor as obtained under any circumstance as prescribed in Article 31 , 32 or 33 of the present Law, the relevant bankruptcy custodian shall have the right to recover it. Article 35 After the people’s court accepts an application for bankruptcy, where any capital contributor of a debtor fails to fulfill its obligation of capital contribution, the relevant bankruptcy custodian shall require the capital contributor to make full contribution of the capital it has subscribed to, irrespective of the term for capital contribution. Article 36 In case any director, supervisor or senior manger takes advantage of his powers to obtain any abnormal income from his enterprise or embezzles any enterprise asset, the relevant bankruptcy custodian shall recover it. Article 37 After the people’s court accepts an application for bankruptcy, the bankruptcy custodian may take back its pledge or lien by means of paying off its debts or providing guarantee that can be accepted by the relevant creditor. As to the payment of debts or substitutive guarantee, where the value of the pledge or lien is lower than that of the amount of the creditor’s rights, a bottom line shall be set on the contemporary market value of the pledge or lien. Article 38 After the people’s court accepts an application for bankruptcy, where what the relevant debtor occupies are not its own assets, the owner of the assets may take the assets back via the bankruptcy custodian, unless it is otherwise prescribed by the present law. Article 39 When the people’s court accepts an application for bankruptcy, if the seller has sent the object matter to the debtor of the buyer and the latter has not yet received the goods and not paid off the price, the seller may take back the goods on the way. However, the relevant bankruptcy custodian may pay off the price and request the seller to deliver the object matter. Article 40 Where a creditor is indebted to its debtor before an application for bankruptcy is accepted, it may claim for offset against the bankruptcy custodian. However, under any of the following circumstances, the relevant debts may not be offset: (1) Where a debtor of the debtor obtains the creditor’s rights of any other party against the debtor after the application for bankruptcy is accepted; (2) Where the creditor learns that a debtor is incapable of paying off its due debts or is in the process of applying for bankruptcy and it is indebted to the debtor, except that the creditor assumes its liabilities in accordance with the provisions of law or for any reason as incurred 1 year before the application for bankruptcy is filed; (3) Where a debtor of the debtor learns that the debtor is incapable of paying off its debts or is in the process of applying for bankruptcy, and therefore obtains the creditor’s rights from the debtor, except that the debtor’s debtor obtains the creditor’s rights according to law or for any reason as incurred 1 year before the application for bankruptcy. Chapter V Bankruptcy Expenses and Community Debts Article 41 The following expenses that occur after the people’s court accepts an application for bankruptcy shall be the bankruptcy expenses: (1) The legal fare on bankruptcy cases; (2) The expenses for managing, conversion and distributing the debtor’s assets; and (3) The expenses for the bankruptcy custodian’s fulfillment of its functions and duties, for its (their) remunerations and expenses for the recruitment of employees. Article 42 The following debts that occur after the people’s court accepts an application for bankruptcy shall be community debts: (1) The debts generated when the bankruptcy custodian or debtor requests the opposite party concerned to perform a contract that is not fulfilled completely by both parties concerned; (2) The debts generated from the custodial management of the debtor’s assets; (3) The debts generated from improper gains; (4) The labor cost for the continuance of business operation, social insurance premiums as well as other debts as incurred therefrom; (5) The debts generated from the damage that occurs during the performance of functions and duties by a bankruptcy custodian or other relevant personnel; and (6) the debts generated from any damage due to the debtor’s assets. Article 43 The bankruptcy expenses and community debts shall be paid off with the debtor’s assets at any time. Where the debtor’s assets are not enough to pay off all the bankruptcy expenses and community liabilities, the bankruptcy expenses shall be paid off in priority. Where the debtor’s assets are not enough to pay off the bankruptcy expenses or community liabilities, the liquidation shall be conducted in light of the relevant proportion. Where the debtor’s assets are not enough to pay off the bankruptcy expenses, the relevant bankruptcy custodian shall apply with the people’s court for terminate the procedures for bankruptcy. The people’s court shall, within 15 days as of the day when an application is received, decide to terminate the procedures for bankruptcy and announce its decision as well. Chapter VI Declaration of the Creditor’s Rights Article 44 The creditor enjoying the creditor’s rights against its debtor, when the people’s court accepts an application for bankruptcy, may exercise its right pursuant to the procedures as prescribed herein. Article 45 The people’s court shall, after accepting an application for bankruptcy, decide the time limit for a creditor to declare its creditor’s rights. The time limit for declaration of the creditor’s rights shall be calculated as of the day when the people’s court announces its acceptance of the application for bankruptcy within a range of not less than 30 days and not more than 3 months. Article 46 When the relevant application for bankruptcy is accepted, any undue creditor’s rights shall be deemed as due. The calculation of the interests of any creditor’s right shall be ceased when the relevant application for bankruptcy is accepted. Article 47 As for any creditor’s rights attached with certain conditions or time limit or any creditor’s right that fails to be settled through an action or arbitration, the relevant creditor may declare it. Article 48 A creditor shall, within the time limit as decided by the people’s court, declare its creditor’s rights against the custodian. The wages, subsidies for medical treatment and disability and comfort and compensatory funds as owed by a debtor, the fundamental old-age insurance premiums, fundamental medical insurance premiums that shall have been transferred into the employees’ personal accounts as well as the compensation for the employees as prescribed by relevant laws and administrative regulations are not required to be declared, for which the relevant bankruptcy custodian shall make a corresponding checklist upon investigation and make an announcement on them as well. Where any employee has any objection to the relevant checklist, he may request the bankruptcy custodian to make corrections. In case the bankruptcy custodian fails to correct it, the relevant employee may lodge a complaint to the people’s court. Article 49 Where a creditor declares its creditor’s rights, it shall make a written statement on the amount of the creditor’s rights and whether there is any property guarantee, and submit the relevant evidences as well. In the case of any joint and several creditors’ rights, an explanation shall be made. Article 50 The joint and several creditors may choose one of them to declare their creditor’s rights or may declare the creditor’s rights together. Article 51 Where the guarantor of a debtor or any other related joint and several debtor has paid off the liabilities on behalf of the debtor, it may declare its creditor’s rights on the basis of its rights to recourse against the debtor. Where the guarantor of a debtor or any other related joint and several debtor has not yet paid off the debts on behalf of the debtor, it may declare its creditor’s rights on the basis of its future right to recourse against the debtor, unless the creditors have declared all the creditor’s rights against the relevant bankruptcy custodian. Article 52 Where several joint and several debtors are ruled to be subjected to the procedures as prescribed in the present law, the creditors thereof shall have the right to declare their whole creditors’ rights in each bankruptcy case respectively. Article 53 Where a bankruptcy custodian or creditor unchains a contract in accordance with the provisions of the present law, the opposite party concerned may declare its creditor’s rights on the basis of the right to compensation for the damage as generated therefrom. Article 54 Where a debtor is the entrusting party of an entrustment contract which has been ruled to be subjected to the procedures as prescribed in the present law, if the entrusted party has not learned the aforesaid facts and continues to deal with the entrusted business, the entrusted party may declare its creditor’s rights on the basis of the rights of claim as generated therefrom. Article 55 Where a debtor is a remitter of bills which have been ruled to be subjected to the procedures as prescribed in the present law, if the relevant payer of the bills continues its payment or acceptance, the payer may declare its creditor’s rights on the basis of the rights of claim as generated therefrom. Article 56 Within the time limit for declaration of the creditor’s rights as decided by the people’s court, if the creditor fails to claim its creditor’s rights, it may supplement its declaration before the final distribution of insolvent assets. However, if the relevant distribution has already been made, no more declaration may be supplemented. The expenses for examining and confirming the supplementary declaration of the creditor’s rights shall be borne by the party who has applied for supplementary declaration. Where a creditor fails to declare its creditor’s rights in accordance with the provisions of the present law, it may not exercise the relevant right pursuant to the procedures prescribed in the present law. Article 57 Where a bankruptcy custodian receives the declaration materials on the creditor’s rights, it shall register them into a book, conduct an examination on the declared creditor’s rights and formulate a form of the creditor’s rights as well. The form of the creditor’s rights and the declaration materials of the creditor’s rights shall be kept by the relevant bankruptcy custodian for reference by the interested parties. Article 58 The form of the creditor’s rights formulated pursuant to the provisions of Article 57 of the present law shall be submitted to the first meeting of creditors for examination. Where the relevant debtors and creditors have no objection to the form of the creditors’ rights, it shall be ruled and confirmed by the people’s court. Where any debtor or creditor has any objection to the form of the creditors’ rights, it may file an action to the people’s court that has accepted the application for bankruptcy. Chapter VII The Meeting of Creditors Section I Common Provisions Article 59 The creditor declaring its creditor’s rights according to law shall be a member of the creditors’ meeting, and have the right to attend the creditors’ meeting and enjoy the right to vote. Any creditor whose creditor’s right has not yet been decided may not be enpost_titled to exercise its right to vote, unless the people’s court can temporarily decide the amount of the creditor’s right for the sake of exercising the right to vote. Any creditor, which has the right to make guarantee on the particular assets of its debtor and has not given up the priority right to be repaid, may not enjoy the right to vote for any matter as prescribed in Item (7) or (10) paragraph 1 of Article 61 of the present law. A creditor may entrust its agent to attend the creditors’ meeting and exercise the right to vote. When an agent attends the creditors’ meeting, it shall submit a Power of Attorney to the people’s PARTNERSHIP ENTERPRISE LAW OF THE PEOPLE’S REPUBLIC OF CHINA (AMENDED IN 2006) Order of the President of the People’s Republic of China No. 55 The Partnership Enterprise Law of the People’s Republic of China has been amended and adopted at the 23rd session of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on August 27, 2006. The amended Partnership Enterprise Law of the People’s Republic of China is hereby promulgated, and shall come into force as of June 1, 2007. Hu Jintao, the President of the People’s Republic of China August 27, 2006. Partnership Enterprise Law of the People’s Republic of China (Amended in 2006) (Adopted at the 24th session of the Standing Committee of the 8th National People’s Congress on February 23, 1997; amended at the 23rd session of the Standing Committee of the 10th National People’s Congress of the People’s Republic of China on August 27, 2006) Table of Contents Chapter I General Provisions Chapter II Common Partnership Enterprises Section 1 Establishment of a Partnership Enterprise Section 2 Property of a Partnership Enterprise Section 3 Execution of Partnership Affairs Section 4 Relationship between a Partnership Enterprise and a Third Person Section 5 Admission to and Withdrawal from a Partnership Section 6 Special Common Partnership Enterprises Chapter III Limited Liability Partnership Enterprises Chapter IV Dissolution and Liquidation of Partnership Enterprises Chapter V Legal Liabilities Chapter VI Supplementary Provisions Chapter I General Provisions Article 1 The present law is formulated in order to regulate the acts of partnership enterprises, protect the legitimate rights and interests of partnership enterprises as well as their partners and creditors, maintain the social and economic order and promote the development of the socialist market economy. Article 2 The term “partnership enterprise” as mentioned in the present Law refers to the common partnership enterprises and limited liability partnership enterprises which are established within China by natural persons, legal persons and other organizations according to the present law. A common partnership enterprise comprises of common partners who bear unlimited and joint liabilities for the debts of the partnership enterprise. Where the present Law has any special provision on the way by which the common partners shall bear liabilities, these special provisions shall prevail. A limited liability partnership enterprise comprises of common partners and limited partners. The common partners shall bear unlimited and joint liabilities for the debts of the limited liability partnership enterprise, and the limited partners shall bear the liabilities for its debts to the extent of their capital contributions. Article 3 No wholly state-funded company, state-owned company, listed company, public-welfare-oriented institution or social organization may become a common partner. Article 4 The partnership agreement shall be concluded in written form and upon the consensus of all partners. Article 5 The principles of willingness, equality, fairness and good faith shall be followed in the conclusion of a partnership agreement and in the establishment of a partnership enterprise. Article 6 As for the production and business operation incomes and other incomes of a partnership enterprise, the partners shall pay their respective income taxes according to the relevant taxation provisions of the state. Article 7 A partnership enterprise and its partners shall observe the laws, administrative regulations, social morals and commercial morals, and bear social liabilities. Article 8 The legitimate properties, rights and interests of a partnership enterprise and its partners are protected by law. Article 9 When applying for the establishment of a partnership enterprise, the applicant shall file with the enterprise registration organ a registration application, the partnership agreement, identity certificates of the partners and other documents. Where the business scope of a partnership enterprise contains any item that is subject to approval prior to registration according to laws or administrative regulations, such business shall be subject to approval according to law, and the approval document shall be submitted at the time of registration. Article 10 Where the registration application materials submitted by an applicant are complete and conform to the legal form, and the enterprise registration organ is able to complete the registration on the spot, the enterprise registration organ shall do so and shall issue a business license to the applicant. Except for the circumstance as described in the preceding Paragraph, the enterprise registration organ shall, within 20 days after it accepts an application, decide whether or not to register it. If it decides to register it, it shall issue a business license to the applicant; if it decides not to register it, it shall give a written reply to the applicant and make an explanation. Article 11 The date of issuance of the business license of a partnership enterprise shall be the date of establishment of the partnership enterprise. Before a partnership enterprise draws a business license, its partners may not engage in any partnership business in the name of a partnership enterprise. Article 12 Where a partnership enterprise intends to establish a branch, it shall go to the enterprise registration organ of the place where the to-be-established branch is located to apply for registration and obtain a business license. Article 13 Where any of the partnership enterprise registration items is changed, the partners executing the partnership affairs shall, within 15 days after they make the decision of change or after the cause of change occurs, apply to the enterprise registration organ for modifying the registration. Chapter II Common partnership Enterprises Section 1 Establishment of a Partnership Enterprise Article 14 To establish a partnership enterprise, the following conditions shall be met: (1) having two or more partners. If the partners are natural persons, they shall have complete civil capacity; (2) having a written partnership agreement; (3) having capital contributions subscribed to or actually paid by the partners; (4) having a name and a production and business operation place for the partnership enterprise; and (5) other conditions as prescribed by laws and administrative regulations. Article 15 The words “Common Partnership” shall be indicated in the name of a partnership enterprise. Article 16 A partner may make capital contributions by currency, in kind, or by intellectual property right, land use right or other properties, or labor services. When a partner intends to make capital contributions in kind, by intellectual property right, land use right or other properties, if the prices thereof need to be assessed, the price may be determined by all partners through negotiation or may be assessed by a statutory assessment institution entrusted by all partners. Where a partner makes capital contributions by labor services, the assessment method shall be determined by all partners through negotiation, and shall be stated in the partnership agreement. Article 17 A partner shall fulfill the capital contribution obligation in light of the way and amount of capital contribution and the time limit for payment as stipulated in the partnership agreement. As for the capital contributions in non-monetary properties for which the formalities for the transfer of property right shall be gone through according to laws or administrative regulations, the partner shall go through the said formalities. Article 18 The partnership agreement shall clearly state the following matters: (1) the name and address of the main business operation place of the partnership enterprise; (2) the purpose and business scope of the partnership; (3) the name and domicile of each partner; (4) the ways and amounts of capital contribution by partners and the time limits for payment; (5) the ways for profit distribution and loss sharing; (6) the execution of the partnership affairs; (7) the admission to and withdrawal from the partnership; (8) the settlement of disputes; (9) the dissolution and liquidation of the partnership enterprise; and (10) the liabilities for breach of contract. Article 19 The partnership agreement shall become effective after all partners affix their signatures or seals to it. The partners shall, in light of the partnership agreement, enjoy their rights and perform their duties. The modification or supplement of a partnership agreement shall be subject to the unanimous consent of all partners, unless it is otherwise stipulated in the partnership agreement. The matters that are not stipulated or not clearly stipulated in the partnership agreement shall be decided by the partners through negotiation. In the case of failure of negotiation, they may be handled according to the present Law, other laws and administrative regulations. Section 2 Property of a Partnership Enterprise Article 20 All the capital contributions made by partners, the proceeds and other properties acquired in the name of the partnership shall be the properties of the partnership enterprise. Article 21 Prior to the liquidation of a partnership enterprise, no partner may request to divide the properties of the partnership enterprise, unless it is otherwise provided for in the present Law. Where a partner privately transfers or disposes the properties of a partnership enterprise prior to liquidation, the partnership enterprise may not challenge any third party with good faith. Article 22 When a partner transfers its entire or partial share of his properties in a partnership enterprise, he shall acquire the unanimous consent of all other partners, unless it is otherwise provided for in the partnership agreement. In the case of transfer of a partner’ entire or partial share of properties in a partnership enterprise to another partner, the other partners shall be notified of this transfer. Article 23 Where a partner intends to transfer his entire or partial share of properties in a partnership enterprise to a non-partner, the other partners have preemptive rights to purchase the properties under the same conditions, unless it is otherwise provided for in the partnership agreement. Article 24 Where a non-partner accepts a partner’s share of properties in a partnership enterprise according to law, he becomes a partner of the partnership enterprise as soon as the partnership agreement is modified, and shall enjoy the rights and perform the obligations according to the present Law and the post-modification partnership agreement. Article 25 Where a partner puts his share of properties in the partnership enterprise in pledge, it shall acquire the unanimous consent of other partners. Without the unanimous consent of other partners, his act shall be invalidated. In case such an act results in any loss to the bona fide third party, the act doer shall assume the liabilities for compensation. Section 3 Execution of Partnership Affairs Article 26 The partners shall enjoy equal rights to the execution of partnership affairs. In accordance with the stipulations in the partnership agreement or upon the decision of all partners, one or several partners may be authorized to execute the partnership affairs on behalf of the partnership enterprise. Where a legal person partner or any other organization partner executes the partnership affairs, the representative it authorizes shall executes the partnership affairs. Article 27 Where one or several partners are entrusted to execute the partnership affairs according to Paragraph 2 of Article 26 of the present Law, the other partners may no longer execute the partnership affairs. The partners, who do not execute the partnership affairs, shall have the right to supervise the execution of the partnership affairs. Article 28 Where one or several partners execute the partnership affairs, they shall regularly report to the other partners the conditions on the execution of relevant affairs, the business operations and financial status of the partnership enterprise. The proceeds derived from the execution of the partnership affairs shall attribute to the partnership enterprise, and the expenses and losses incurred from it shall be paid by the partnership enterprise. In order to know the conditions on the business operation and financial status of the partnership enterprise, the partners shall have the right to inquire the account books and other financial materials of the partnership enterprise. Article 29 Where each partner execute the partnership affairs respectively, the affair-executing partners may raise objections to the affairs executed by other partners. When raising objections, the execution of such affairs shall be suspended temporarily. In case any dispute arises, a decision shall be made according to Article 30 of the present Law. Where a partner, entrusted to execute the partnership affairs, fails to execute the partnership affairs according to the partnership agreement or the decision of all partners, the other partners may decide to revoke the entrustment. Article 30 The partners shall make a resolution on the relevant matters of the partnership enterprise, and shall handle them by voting as stipulated in the partnership agreement. If it is not stipulated or not clearly stipulated in the partnership agreement, the voting method of “one partner, one vote” and “pass upon more than half of the votes of all partners” shall be adopted. If it is otherwise provided for in the present Law for the voting method of a partnership enterprise, thee provisions shall prevail. Article 31 Unless it is otherwise prescribed in the partnership agreement, the following items of a partnership enterprise shall be subject to the unanimous consent of all partners: (1) changing the name of the partnership enterprise; (2) changing the business scope and the address of the main business place of the partnership enterprise; (3) disposing of the real property of the partnership enterprise; (4) transferring or disposing of the intellectual property and other property rights of the partnership enterprise; (5) providing guarantees to others in the name of the partnership enterprise; and (6) hiring a non-partner to act as a business manager of the partnership enterprise. Article 32 No partner may, solely or jointly with others, operate any business competing with the partnership enterprise. Unless it is otherwise prescribed in the partnership agreement or is unanimously approved by all partners, no partner may have any trade with the partnership enterprise. No partner may engage in any activity that may impair the interests of the partnership enterprise. Article 33 The distribution of profits or share of losses of the partnership enterprise shall follow the stipulations in the partnership agreement. In case it is not stipulated or not clearly stipulated in the partnership agreement, a decision shall be made by the partners through negotiation. In case it is failed to conclude any negotiation, the distribution of profits or share of losses shall be made in proportion to the actual capital contributions made by the partners. In case it is unable to determine the proportions of capital contributions, the profits or losses shall be distributed or shared equally by the partners. It shall not be stipulated in the partnership agreement that all profits will be distributed to only part of the partners or that part of the partners will bear all losses. Article 34 The partners may, in accordance with the stipulations in the partnership agreement or the decision of all partners, increase or decrease their capital contributions to the partnership enterprise. Article 35 A business manager hired by the partnership enterprise shall perform his duties within the scope authorized by the partnership enterprise. Where a business manager hired by the partnership enterprise performs his duties beyond the scope authorized by the partnership enterprise, or he brings any loss to the partnership enterprise because of his intentional or serious fault, he shall be liable for compensation according to law. Article 36 The partnership enterprise shall, according to laws and administrative regulations, establish an enterprise financial and accounting system. Section 4 Relationship between a Partnership Enterprise and a Third Person Article 37 The restrictions of a partnership enterprise on the partners’ execution of partnership affairs as well as on their rights to represent the partnership enterprise in the face of outsiders shall not challenge any bona fide third party. Article 38 As for its debts, the partnership enterprise shall first pay with all of its properties. Article 39 Where a partnership enterprise fails to discharge any mature debt, the partners shall bear unlimited joint liabilities. Article 40 Where the amount of payment made by a partner exceeds the loss-sharing proportion as prescribed in Paragraph 1 of Article 33 of the present Law since he bears unlimited and joint liabilities, he shall have right to demand the other partners to make reimbursements. Article 41 Where any debt irrelevant to the partnership enterprise occurs with a partner, the relevant creditor may not offset its credit against the debt it owes to the partnership enterprise, nor may it exercise the said partner’s rights in the partnership enterprise by substituting this partner. Article 42 In case the partner’s own properties are insufficient to pay off its debt irrelevant to the partnership enterprise, this partner may use the proceeds acquired from the partnership enterprise to pay for the debt. The creditor may also request the people’s court to enforce the repayment of the debt with the said partner’s property shares in the partnership enterprise according to law. When the people’s court enforces the repayment of the debt with the said partner’s property shares, it shall send a notice to all partners. The other partners have the preemptive right to the property shares of the said partner. If the other partners neither purchase it, nor consent to transfer it to others, a withdrawal settlement shall be made for this partner according to Article 51 of the present Law, or a settlement shall be made to decrease the property shares of this partner correspondingly. Section 5 Admission to and Withdrawal from Partnership Article 43 The admission of a new partner shall be subject to the unanimous consent of all partners, and a written agreement shall be concluded, unless it is otherwise prescribed in the partnership agreement. When concluding an agreement on the admission to the partnership, the original partners shall faithfully inform the new partner(s) of the business operation and financial status of the original partnership enterprise. Article 44 The new partners admitted to a partnership enterprise shall enjoy the same rights and bear the same liabilities as the original partners. If it is otherwise prescribed in the partnership agreement, the prescriptions shall prevail. The new partners shall bear unlimited and joint l liabilities for the debts of the partnership enterprise incurred before it is admitted to a partnership enterprise. Article 45 Where the term of operation of a partnership business has been set in the partnership agreement, a partner may, during the period of existence thereof, withdraw from partnership in any of the following cases: (1) Any cause for withdrawal from partnership as stipulated in the partnership agreement occurs; (2) All partners agree to the withdrawal; (3) Any cause to make the said partner difficult to remain in the partnership occurs; or (4) Other partners seriously violate their obligations as stipulated in the partnership agreement. Article 46 Where a partnership agreement fails to stipulate the term of partnership, a partner may withdraw from the partnership, provided that the execution of the affairs of the partnership enterprise will not be affected, but he shall inform the other partners 30 days prior to his withdrawal. Article 47 Where any partner withdraws from a partnership in violation of Articles 45 and 46, he shall compensate for the losses that he has incurred to the partnership enterprise. Article 48 Where any partner is under any of the following circumstances, the said partner shall be deemed to have withdrawn naturally from the partnership: (1) A natural person partner is deceased or declared deceased according to law; (2) He is insolvent of repayment capacity; (3) where the partner as a legal person or any other organization is suspended of his business license, or is ordered to close up for revocation, or is declared bankrupt; (4) where a partner loses the relevant qualifications as required by law or as stipulated in the partnership agreement; or (5) where a partner’s entire property shares in the partnership business have been executed by the people’s court. Where a partner is determined as a person without civil capacity or with limited civil capacity according to law, he may be changed into a limited partner upon the unanimous consent of the other parties, and the common partnership enterprise shall be changed into a limited partnership enterprise according to law. In case it fails to conclude the unanimous consent of the other partners, this partner without civil capacity or with limited civil capacity shall withdraw from the partnership. The withdrawal from the partnership shall take effect on the date when it is actually made. Article 49 Where a partner is under any of the following circumstances, a resolution may be made to remove the said partner upon the unanimous consent of the other partners: (1) failing to perform the obligation to make capital contributions; (2) bring any loss to the partnership enterprise due to intentional or serious wrongful act; (3) conducting any improper act when executing the partnership affairs; and (4) other causes as stipulated in the partnership agreement. A written notice of the resolution on the removal of a partner shall be sent to the person who is removed. The removal shall become effective on the date when the person who is removed receives the removal notice, and the to-be-removed person shall withdraw from the partnership. Where the removed person challenges the removal resolution, he may initiate a lawsuit to the people’s court within 30 days as of the receipt of the removal notice. Article 50 Where a partner is dead or declared to be dead, the heritor who enjoys the legitimate right to inherit the said partner’s property shares in the partnership enterprise shall, in light of the stipulation of the partnership agreement or upon the unanimous consent of all partners, obtain the qualification as a partner of the said partnership enterprise as of the date of succession. Under any of the following circumstances, the partnership enterprise shall return the property shares of the inherited partner to his heritor: (1) where the heritor is unwilling to become a partner; (2) where the heritor has not obtained the qualification as a partner as required by any law or as stipulated in the partnership agreement; or (3) any other circumstances as stipulated in the partnership agreement, under which the heritor can not become a partner. Where the heritor of the said partner is a person without civil capacity or with limited civil capacity, he may, upon the unanimous consent of all partners, become a limited partner according to law, and the common partnership enterprise changes into a limited partnership enterprise. In the case of the failure of unanimous consent of all partners, the partnership enterprise shall return the property shares of the inherited partner to the heritor. Article 51 When a partner withdraws from the partnership, the other partners shall, in light of the property status of the partnership enterprise at the time of withdrawal, make a settlement and return the property shares to him. If the partner is liable to compensate the losses to the partnership, the amount of compensation shall be deducted from the aforesaid property shares. If there is any unfinished partnership affair at the time of withdrawal from the partnership, the settlement shall not be made until it is finished. Article 52 The measures for the return of property shares of the partnership enterprise to a partner who withdraws from the partnership shall be stipulated in the partnership agreement or be decided by all partners. The return of property shares may be in money or in kind. Article 53 The partner who withdraws from the partnership shall bear unlimited and joint liabilities for the debts that have been incurred to the partnership enterprise before his withdrawal. Article 54 When a partner withdraws from the partnership, if the properties of the partnership enterprise are less than its debts, he shall share the losses according to Paragraph 1 of Article 33 of the present Law. Section 6 Special Common Partnership Enterprises Article 55 A professional service institution, which provides its clients with paid services on the basis of professional knowledge and special skills, may be set up as a special common partnership enterprise. The term “special common partnership enterprise” as mentioned in the Law refers to a common partnership enterprise in which the partners bear liabilities according to Article 57 of the Law. A special common partnership enterprise shall be subject to the provisions of this Section. If any matter is not provided for in this Section, it shall be subject to the provisions of Sections 1 through 5 of this Chapter. Article 56 In the name of a special common partnership enterprise, the words “special common partnership” shall be indicated clearly. Article 57 A partner or several partners shall bear unlimited liabilities or unlimited and joint liabilities for the debts incurred to the partnership enterprise due to his (their) intentional or serious wrongful act, and other partners shall bear liabilities in the limit of their respective shares of property in the partnership enterprise. All partners shall bear unlimited and joint liabilities for the debts incurred by any partner to the partnership enterprise due to his intentional or serious wrongful act, and for other debts of the partnership enterprise. Article 58 After the debts incurred by any partner to the partnership enterprise due to his intentional or serious wrongful act are paid with the properties of the partnership enterprise, the said partner shall, in light of the stipulations of the partnership agreement, be liable to compensate for the losses to the partnership enterprise. Article 59 The special common partnership enterprise shall prepare a practicing risk fund and buy an occupational insurance. The practicing risk fund shall be used for repaying the debts incurred by the partners during their practices, and shall be managed by opening a separate bank account. The concrete measures for its management shall be formulated by the State Council. Chapter III Limited Partnership Enterprises Article 60 A limited partnership enterprise and its partners shall be subject to the provisions of this Chapter. In case any matter is not covered in this Chapter, it shall be subject to the provisions of Sections 1 through 5 of Chapter II of the Law on common partnership enterprises and their partners. Article 61 A limited partnership enterprise shall be established by not less than 2 but not more than 50 partners, unless it is otherwise prescribed by law. A limited partnership enterprise shall have at least one common partner. Article 62 In the name of a limited partnership enterprise, the words “limited partnership” shall be indicated clearly. Article 63 A partnership agreement shall not only meet the provisions of Article 18 of the Law, but also shall state the following items: (1) the names and addresses of the common partners and limited partners; (2) the conditions which the partners to execute the partnership affairs shall meet, and the procedures for selecting such partners; (3) the limits on the power of the partners to execute the partnership affairs, and the measures for disposing of their breach of contract; (4) the conditions for removing partners to execute the partnership affairs, and the procedures for replacing them by new ones; (5) the conditions and procedures for the admission and withdrawal of limited partners, and other relevant liabilities; and (6) the procedures for the mutual conversion of limited partners and common partners. Article 64 A limited partner may make capital contributions in money, in kind, or by intellectual property right, land use right or other properties. No limited partner may make capital contributions by labor services. Article 65 The limited partner shall make full payment of the capital contributions within the time limit as stipulated in the partnership agreement. In case it fails to do so, it shall be obliged to make up the payment, and shall bear the liabilities for breach of the contract to the other partners. Article 66 The registration items of a limited partnership enterprise shall specify the name of each limited partner and the amount of capital contributions subscribed to by him. Article 67 The partnership affairs of a limited partnership enterprise shall be executed by the common partners. The partners to execute the partnership affairs may request to confirm their remunerations and the way of obtaining the remunerations in the partne CIRCULAR OF THE PEOPLE’S BANK OF CHINA AND CHINA SECURITIES REGULATORY COMMISSION CONCERNING TRANSFERRING THE RELOANS FOR THE RISK DISPOSAL OF SECURITIES COMPANIES TO CHINA SECURITIES INVESTOR PROTECTION FUNDS LIMITED LIABILITY COMPANY Circular of the People’s Bank of China and China Securities Regulatory Commission concerning Transferring the Reloans for the Risk Disposal of Securities Companies to China Securities Investor Protection Funds Limited Liability Company Yin Fa [2006] No. 301 Shanghai Headquarters of the People’s Bank of China, branches and business management departments of Guangzhou and Wuhan, as well as the central sub-branches of the People’s Bank of China in Zhengzhou, Fuzhou and Shenzhen; the Securities Regulatory Bureaus of Beijing, Shanghai, Guangdong, Hubei, Henan, Fujian and Shenzhen as well as the China Securities Investor Protection Funds Limited Liability Company; the clearing (trust) institutions of D’Hong Securities Company, Hengxin Securities Company, Hantang Securities Company, China Eagle Securities Company, Asia Securities Company, China Northern Securities Company, China Southern Securities Company, MF Securities Company, Wuzhou Securities Company, Min’an Securities Company, and Wuhan Securities Company: During the recent years, for the purpose of cooperating with the disposal of securities companies with high risk, maintaining the stability of the securities market and the society, the People’s Bank of China has, upon the approval of the State Council, extended reloans for the financial stability, which is used to make up the gap of the settlement funds of customer securities trading and to purchase individual credit rights. At present, the China Securities Investor Protection Funds Limited Liability Company (hereafter referred to as the Protection Funds Company) has been set up. In order to further smooth the relations of the extending of reloans to the securities companies for risk disposal, the Headquarter of the People’s Bank of China has decided to uniformly modify the risk disposal reloans which was extended by Shanghai Head Office and other related branches and sub-branches of the People’s Bank of China to the disposed trust and clearing institutions of securities companies before the foundation of the Protection Funds Company into that extended by the Business Management Department of the People’s Bank of China (hereafter referred to as the Business Management Department) to the Protection Funds Company. Hereby related issues are noticed as follows: 1. After transferring the reloans, the borrower of the reloans shall be modified from the trust and clearing institutions of disposed securities companies into the Protection Funds Company; and the lender shall be modified from Shanghai Head Office and other related branches and sub-branches of the People’s Bank of China into the Business Management Department. 2. The extended quotas shall be distributed by the Headquarters of the People’s Bank of China to the Business Management Department (which shall be the actually extended amount within the quotas approved by the State Council); after signing an agreement concerning the extending of reloans with the Protection Funds Company, the Business Management Department shall extend the sum of reloans to the Protection Funds Company; the Protection Funds Company shall sign an “Agreement concerning the Transferring of Reloans To the Securities Company for Risk Disposal” jointly with the other four parties, namely , Shanghai Head Office or other branches concerned of the People’s Bank of China, Business Management Department, the trust and clearing institution of the disposed securities company, and the regulatory department, and repay the reloans of Shanghai Head Office or other branches concerned of the People’s Bank of China on behalf of the trust and clearing institution, while the borrower of all the reloans shall be changed from the trust and clearing institution into the Protection Funds Company; and the Headquarters of the People’s Bank of China shall withdraw all the quotas from Shanghai Head Office and other branches concerned of the People’s Bank of China for the extending of reloans to securities companies for risk disposal. 3. All the obligations of repaying the interest of reloans owed by trust and clearing institutions to Shanghai Head Office and other branches concerned of the People’s Bank of China shall be undertaken by the Protection Funds Company, whether it is spot interest payable or off-balance-sheet accrued interest receivable. On the date of transferring the reloans, Shanghai Head Office or any other branches concerned of the People’s Bank of China shall provide a list of spot interest payable and off-balance-sheet accrued interest receivable of each sum of reloan by the date of transfer to Business Management Department, and shall write off the off-balance-sheet accrued interest receivable. After receiving the list of interest, the Business Management Department shall open an off-balance-sheet account to make accurate reckoning of the accrued interest receivable of each sum of reloan. Subject to the principles of “separating old reloans from new ones and calculating interest separately”, the extended reloans shall be applied to the contractual interest rate and to those reloans not yet granted, the interest rate shall be more preferential with 165 basic points than the annual interest rate of the reloans extended by the People’s Bank of China to financial institutions. 4. The transferring work shall be carried out by batches according to the number of the disposed institutions. The transferring procedures for each disposed institution shall be accomplished within one day (the date of transferring reloans for each disposed institution shall be notified separately). The Protection Funds Company shall open a special account of reloan funds in the Business Management Department before the date of transfer. On the date of transfer, the accounting of the reloans extended by the Business Management Department to the Protection Funds Company shall be treated as: Debit: Loan of other financial institutions – account of the China Securities Investor Protection Funds Credit: Other deposits- account of the China Securities Investor Protection Funds At the same time, the Protection Funds Company shall transfer the related money to Shanghai Head Office or other branches concerned of the People’s Bank of China, and repay the reloans on behalf of the trust and clearing institution. The accounting of the Business Management Department shall be treated as: Debit: Other deposits – account of the China Securities Investor Protection Funds Credit: Large-sum current payments Receive: Accrued interest receivable – account of the China Securities Investor Protection Funds The accounting of the money received by Shanghai Head Office or the branches concerned shall be treated as: Debit: Large-sum current payments Credit: Reserve deposits of other financial institutions – account of the trust and clearing institution ______ (named) Debit: Reserve deposits of other financial institutions – account of the trust and clearing institution ______ (named) Credit: Loan of other financial institutions – account of the trust and clearing institution ______ (named) Pay: Accrued interest receivable – account of the trust and clearing institution ______ (named) The accounting treatment of the Protection Funds Company shall be reflected as the increase of debts to the Business Management Department, and increase of credits over the trust and clearing institution simultaneously. 5. After transferring a certain sum of reloan, the original copies of related materials shall be kept appropriately in archives by Shanghai Head Office or the branches concerned of the People’s Bank of China. Shanghai Head Office or the branches concerned of the People’s Bank of China shall turn over the photocopies of the related materials to the Protection Funds Company, and a list of the materials shall be attached. When transferring, both parties shall sign and confirm the list of transfer. The list of transfer shall be in duplicate, and either party shall keep one. When the Protection Funds Company needs to use the original copies of related materials for declaring credit rights to the bankruptcy court, Shanghai Head Office or the branches concerned of the People’s Bank of China shall cooperate with them. 6. Where the China Security Regulatory Commission has already submitted an application of reloan before May 31, 2006 to the People’s Bank of China, the procedures for the transferring reloans to a certain disposed securities company may not be handled until the People’s Bank of China has examined and extended the said applications. 7. All units must do a good job in preparing all related items prior to the date of transfer. The related units shall strengthen coordination, make close cooperation, and do a good job in smoothing over all stages of the transfer. The Business Management Department shall be responsible for determining the date of transferring the reloans to each institution, then report to the Headquarters in time, and do a good job in organization and coordination. If there is any question, please contact the Headquarters in time. Appendixes: 1. Statistical Statement of the Transferable Reloans To Securities Companies for Risk Disposal 2. Agreement concerning Transferring the Reloans To the Securities Company for Risk Disposal (Template) The People’s Bank of China China Securities Regulatory Commission August 28, 2006 Notes ￿￿ Appendix 1: Statistical Statement of the Transferable Reloans To Securities Companies for Risk Disposal ￿￿ Unit: CNY 100 million Sequential No. Reloans Management Entity Securities Companies under Disposal Quota of Reloans Approved by the State Council  (CNY 100 million) Amount of Granted Reloans (CNY 100 million) Remaining Reloans (CNY 100 million) Remarks 1  The Business Management Department of the People’s Bank of China Hantang Securities 27.24 17.63 9.61 Transfer postponed D’Hong Securities 21.62 4.89 16.73 Transfer postponed Hengxin Securities 2.09 0.45 1.64 Transfer postponed China-fortune Securities 3.75 0.04 3.71 Transferred China Eagle Securities 22.21 15.24 6.97 Transfer postponed 2 Shanghai Branch  Asia Securities 39.14  19.75 19.39 Transferred Northern Securities 13.03 7.00 6.03 Transfer postponed. 3 Shenzhen Central Sub-branch   China Southern Securities 83.38 68.04 15.34 Transfer postponed 4  Fuzhou Central Sub-branch MF Securities 21.04 8.02 13.02 Transferred 5  Zhengzhou Central Sub-branch Wuzhou Securities 4.23 2.95 1.28 Transferred 6  Guangzhou Branch Min’an Securities 6.66 4.00 2.66 Transferred 7  Wuhan Branch Wuhan Securities 5.89 ￿￿ 5.89 Transferred ￿￿  Total 11 250.28 148.01 102.27 ￿￿ ￿￿￿￿Notes: ￿￿￿￿1. The aforesaid amounts (two digits following the radix point shall be reserved after the figure is rounded) are only for reference, and the actually granted amounts shall prevail when transferring. ￿￿￿￿2. The extending of reloans of the five companies under “postponed transfer” may not be transferred until the matters listed in “VI” of the “Notice” have been finished. ￿￿￿￿3. The transfer of reloans to China Southern Securities shall be determined by the People’s Bank of China with consulting the CSRC. Appendix 2: Agreement concerning Transferring the Reloans To Securities Company for Risk Disposal (Template) ￿￿￿￿Party A: Shanghai Head Office or the branch of the People’s Bank of China (lender under the former contract) ￿￿￿￿Party B: Trust and Clearing Institution of ______ Securities Company (borrower under the former contract) ￿￿￿￿Party C: China Securities Investor Protection Fund Limited Liability Company ￿￿￿￿Party D: Business Management Department of the People’s Bank of China ￿￿￿￿Party E: ______ (Commissioners’ Office or Bureau) of China Securities Regulatory Commission ￿￿￿￿ In accordance with the “Notice of the People’s Bank of China on Transferring Reloans To Securities Companies for Risk Disposal to China Securities Investor Protection Fund Limited Liability Company” (No. 301 [2006], shortened as the “Notice” hereafter), and for the purpose of further clarifying the borrowers of the reloans to the securities companies for risk disposal (shortened as “reloans” hereafter), straightening out the credit-debt relationships of the ranting of reloans, and guaranteeing the smooth transfer of the reloans used for the disposal of ______ Securities Limited Liability Company (shortened as “______ Securities” hereafter), after joint negotiations between five parties (shortened as “this Agreement” hereafter), this Agreement on the Transfer of Reloans is hereby concluded. ￿￿￿￿Transfer of reloans shall mean that, before the establishment of the China Securities Investor Protection Fund Limited Liability Company (hereafter shortened as the Protection Fund Company), Shanghai Head Office or the branch of the People’s Bank of China shall uniformly modify the reloans granted to the trust and clearing institutions of disposed securities companies for risk disposal into that granted by Business Management Department of the People’s Bank of China to the Protection Fund Company, while Shanghai Head Office or the branch concerned of the People’s Bank of China shall demise the rights and obligations over the credits of the aforesaid reloans to the Protection Fund Company in accordance with law. ￿￿￿￿The duties of all parties in the process of transfer of the reloans and after the transfer are defined by this Agreement as follows: ￿￿￿￿1. The borrower under either the framework agreement on the extending of reloans or each reloan contract as concluded between Party A, Party B and Party E before the conclusion of this Agreement shall be modified from Party B into Party C, and at the same time the lender shall be modified from Party A into Party D. ￿￿￿￿2. The sum of reloans borrowed by Party B under all previous loan contracts is CNY ______. By ____ (date), 2006 (date of handover), CNY ______ has been allotted and used actually (among this sum, CNY ______ of acquisition funds to be raised by the Central Government at the prescribed proportion and to be used to acquire the individual credits of ______Securities is paid on its behalf in advance, and CNY ______ is used to replenish the shortage of customer securities trading settlement funds); the immediate interest payable is CNY ______, and the off-balance-sheet accrued interest receivable is CNY ______. ￿￿￿￿3. After transfer of the reloans, Party D and Party C shall set up a new credit-debt relationship on the granting of reloans, Party A shall demise all its previous credit-based rights over Party B regarding the granting of reloans to Party C in accordance with law, and a credit-debt relationship shall be set up between Party C and Party B . ￿￿￿￿4. The reloans interest owed by Party B to Party A shall all be transferred along with the principal of the reloans, and shall be recovered by Party D, no matter whether it is immediate interest payable or off-balance-sheet accrued interest receivable. ￿￿￿￿5. After the reloans are transferred, the original copies of related materials shall be kept in custody by Party A appropriately in archives, and the photocopies shall, after both parties have signed and confirmed the handover list, be handed over by Party A in earnest time to Party C. When Party C needs to use the original copies of related materials for reporting credits to the bankruptcy court, Party A shall provide them. ￿￿￿￿6. With regard to the problems arising out of the granting of reloans before the conclusion of this Agreement, Party C may not undertake any liability. ￿￿￿￿7. The matter under other clauses of the framework agreement on the extending of reloans or each loan contract that is concluded between Party A, Party B and Party E before the conclusion of this Agreement and the related rights and obligations shall be agreed upon between the modified Party D, Party C and Party E in the new agreement after the transfer of reloans, if previously enjoyed or assumed by Party A, Party B or Party E. ￿￿￿￿8. For the purpose of guaranteeing the work of reloans transfer to be conducted and completed smoothly, Party A and Party B shall cooperate with Party D and Party C in doing well the necessary work for the reloans transfer. ￿￿￿￿9. Party A shall make related accounting treatment in light of a photocopy of the “Notice” and a photocopy of this Agreement that has come into effect upon affixation with each party’s seal. Upon the strength of a photocopy of the “Notice”, a photocopy of this Agreement effective upon affixation with each party’s seal, as well as a list of all sums of lending and a list of detailed interest as provided by Party A, Party C and Party D shall make related accounting treatment. ￿￿￿￿10. In supervising the safe and lawful use of reloans by the trust and clearing institution, Party E shall cooperate with Party C and the on-site working team of the securities company. ￿￿￿￿11. This Agreement may not become effective until being signed by the five parties. Other matters that are not yet stipulated herein shall be settled by the five parties through negotiation in accordance with the presently applicable laws and regulations of the state as well as related provisions of the State Council and those of the related ministries and commissions. ￿￿￿￿12. This Agreement shall be in septuplicate. Party A, Party B, Party C, Party D, Party E, the Financial Stability Office of the People’s Bank of China and the Securities Company Risk Disposal Office of CSRC shall keep one copy respectively. ￿￿￿￿Party A: Shanghai Head Office or the branch concerned of the People’s Bank of China (Seal) ￿￿￿￿Signatory: _____ (Month) ______ (Date) ____( CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE INTERPRETATION OF RELATED ISSUES CONCERNING DEED TAX POLICIES FOR ENTERPRISE REORGANIZATION AND RESTRUCTURING Circular of the State Administration of Taxation on the Interpretation of Related Issues concerning Deed Tax Policies for Enterprise Reorganization and Restructuring Guo Shui Han [2006] No.844 The departments (bureaus) of finance, and the local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the state plan, The Circular of the Ministry of Finance and the State Administration of Taxation on Extending the Execution Period for the Several Deed Tax Policies concerning Enterprise Reorganization and Restructuring (Cai Shui [2006] No.41) provides for that the execution period of the Circular of the Ministry of Finance and the State Administration of Taxation on Several Deed Tax Policies concerning Enterprise Reorganization and Restructuring (Cai Shui [2003] No.184, hereinafter referred to as the No. 184 Document) shall be extended up to December 31, 2008. The related issues are hereby specified as follows in light of the conditions as reflected by all the regions during their implementation: 1. The term “overall restructuring” as stipulated in Paragraph 1 of Article 1 of the No. 184 Document means such a restructuring under which the restructured enterprise succeeds to all the rights and obligations of the original enterprise. 2. The term “enterprises” as mentioned in Articles 2, 3 and 4 of the No. 184 Document means legal person enterprises. 3. The term “equity transfer” as stipulated in Paragraph 1 of Article 2 of the No. 184 Document means such an act whereby the entity or individual not only succeeds to the equities of the original enterprise but also changes the legal representative, investor, business scope and other items of the original enterprise. The equity transfer may, during the process of implementation, be verified according to the enterprise registration of the administrative department for industry and commerce, that is to say, where an enterprise conducts the modification registration, such paragraph shall apply; where an enterprise conducts a new establishment registration, such paragraph may not apply. Where the newly established enterprise succeeds to the land or house property of the original enterprise, the deed tax shall be collected. 4. The term “division of enterprises” as stipulated in Article 4 of the No. 184 Document only means such an act under which the investors of the newly established enterprise, the derivative enterprise and the enterprise being divided are the same ones. 5. The phrase “relationship between the enterprises affiliated to a same investor” as stipulated in Article 7 of the No. 184 Document means the relationship between a parent company and any of its wholly owned subsidiary companies, between any two wholly owned subsidiaries affiliated to a same parent company, between any two sole proprietorship enterprises set up by a same natural person, or between a sole proprietorship enterprise and a one-person company set up by a same natural person. 6. The acceptance of the allotted land of the original restructuring enterprise in the form of assignment dose not fall within the scope of the No. 184 Document. And the deed tax shall be collected on the succeeding party. The present Circular shall come into force as of the issuance date. The State Administration of Taxation August 28, 2006   The State Administration of Taxation 2006-08-28   ANNOUNCEMENT NO.49, 2006 OF THE GENERAL ADMINISTRATIVE CUSTOMS ON ISSUES CONCERNING THE NEGOTIATED TARIFF LEVEL AND SPECIALLY-FAVORED TARIFF LEVEL FOR THE IMPORTED GOODS UNDER THE ASIAN-PACIFIC TRADE AGREEMENT Announcement No.49, 2006 of the General Administrative Customs on Issues Concerning the Negotiated Tariff Level and Specially-favored Tariff Level for the Imported Goods under the Asian-Pacific Trade Agreement No.49 Upon approval by the State Council, the negotiated tariff level and specially-favored tariff level of correlative products agreed in the third round negotiation of Asian-Pacific Trade Agreement on tariff decrease shall be implemented as of September 1, 2006. The relevant issues are hereby announced as follows: Article 1 As from September 1, 2006, negotiated tariff level shall be levied on the imported goods under 1717 tax codes which are originated from Korea, India, Sri Lanka, Bengal and Laos (see Appendix 1). The former Asian-Pacific Trade Negotiated Tax Items and Tariff Level List declared by the General Administrative of Customs (No. 64 [2005]), namely the Asian-Pacific trade negotiated tariff level prescribed in The Provisions on The Importing and Exporting Tariff of the People’s Republic of China [2006] shall be invalidated simultaneously. Article 2 As from September 1, 2006, specially-favored tariff level shall be levied on the imported goods under 162 tax codes which are originated from Laos and Bengal (see Appendix 2). Among the commodities listed in the Specially-favored import Tariff Level List for Cambodia, Burma, Laos and Bengal declared by the General Administrative of Customs (No. 64 [2005] ) namely the Appendix 3 of The Provisions on The Importing and Exporting Tariff of the People’s Republic of China [2006], if the specially-favored tariff level of Laos is levied on them and they are not listed in the Appendix 2 of the present announcement, they are the commodities for which specially-favored tariff level is given by China to Laos under the frame of Sino Eastern Alliance Free Trade Zone, its specially-favored tariff level shall be executed continuously. The specially-favored tariff level for Bengal in the aforesaid List shall be invalidated simultaneously. Article 3 As from September 1, 2006, importers, when declaring for importing goods that are originated from the aforementioned countries and under the negotiated or specially-favored tariff level listed in the appendix of the present announcement, shall make-and-fill the customs declaration on importing goods in accordance with the provisions in the Announcement of the General Administrative of Customs [No.69 (2005) ], while the Customs Department shall audit and confirm the origin of the declared goods in accordance with the regulations of origin as prescribed in the Announcement of the General Administrative of Customs ( No. 94 [2001] ). Appendix 1 Asian-Pacific Trade Negotiated Tax Items and Tariff Level List Appendix 2 Asian-Pacific Trade Negotiated and Specially-favored Tax Items and Tariff Level List for Laos and Bengal the General Administration of Customs August 29, 2006 Annex 2 ￿￿ Annex 2  Asian-Pacific Trade Negotiated Specially-favored Tax Items and Tariff Level List ￿￿ (Laos & Bengal) No. HS coder Description Most-favored Tariff Level Specially-favored Tariff Level 1 03037910 Frozen scabber fish (trichurius)  10.0 0 2 03037920 Frozen yellow croaker 10.0 0 3 03037930 Frozen butterfish 10.0 0 4 03037940 Frozen tilapia 10.0 0 5 03037950 Frozen swordfish 10.0 0 6 03037990 Frozen fish, nes 10.0 0 7 03049000 Fish meat (excl. fillets) 10.0 0 8 03053000 Fish fillets, dried, salted or in brine, but not smoked 10.0 0 9 03054900 Other smoked fish and fish fillet 14.0 0 10 03055910 Dried pipefish and hippocampi, not smoked 2.0 0 11 03055920 Dried shark￿￿s fins, not smoked 15.0 0 12 03055990 Other dried fish, not smoked 16.0 0 13 03056910 Scabber fish, salted or in brine, but not dried or smoked 16.0 0 14 03056920 Yellow croaker, salted or in brine, but not dried or smoked 16.0 0 15 03056930 Butterfish, salted or in brine, but not dried or smoked 16.0 0 16 03056940 Tilapia, salted or in brine, but not dried or smoked 16.0 0 17 03056990 Other fish, salted or in brine, but not dried or smoked 16.0 0 18 03061410 Frozen fresh-water swimming crabs 10.0 0 19 03061490 Other frozen crabs 10.0 0 20 19053100 Sweet Biscuit 15.0 7.5 21 19053200 Waffle & Eucharist Bread 15.0 7.5 22 19059000 Other Bread, Cakes, Biscuits and Baked Confectionery 20.0 10 23 20019010 Garlic marinated in Vinegar 25.0 12.5 24 20019090 Other fruit, vegetables and eatable plants marinated in vinegar 25.0 12.5 25 20079910 Other cooked and boiled jam and jelly cans 5.0 2.5 26 20079990 Other cooked and boiled jam and jelly 5.0 2.5 27 20093110 ￿￿span lang="EN-US">Royal fizz with white sugar less than 20% 18.0 69 28 20093190 Other unmixed citrous juice with white sugar less than 20% 18.0 9 29 20093910 Royal fizz￿￿ with white sugar more than 20% 18.0 9 30 20093990 Other unmixed citrous juice, with white sugar less than 20% 18.0 9 31 20095000 Tomato juice CONSTITUTION ACT, 1982 – page 22 NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as... CONSTITUTION ACT, 1982 – page 21 CONSTITUTION ACT, 1982 – page 20 CONSTITUTION ACT, 1982 – page 19 CONSTITUTION ACT, 1982 – page 18 CONSTITUTION ACT, 1982 – page 17 CONSTITUTION ACT, 1982 – page 16 CONSTITUTION ACT, 1982 – page 12 CONSTITUTION ACT, 1982 – page 11 CONSTITUTION ACT, 1982 – page 10 CONSTITUTION ACT, 1982 – page 9 CONSTITUTION ACT, 1982 – page 8 CONSTITUTION ACT, 1982 – page 7 Disclaimer: There is no confidential attorney-client relationship formed by using Laws.com website and information provided on this site is not legal advice. For legal advice, please contact your attorney. Attorneys listed on this website are not referred or endorsed by this website. By using Laws.com you agree to Laws.com Terms Of Use. Facebook © LAWS.COM NETWORK 2023-2024