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CIRCULAR OF THE STATE FOOD AND DRUG ADMINISTRATION ON THE RELEVANT ISSUES CONCERNING THE BUSINESS SCOPE OF THE FOREIGN-FUNDED ENTERPRISES ENGAGING IN THE PRODUCTION OF HERBAL MEDICINES FOR DECOCTION

e037742006011020060110the State Food and Drug Administrationepdf/e04723.pdfB3,A4traditional Chinese medicines prepared in ready-to-use forms, foreign investmente04723Circular of the State Food and Drug Administration on the Relevant Issues concerning the Business Scope of the Foreign-funded Enterprises
Engaging in the Production of Herbal Medicines for DecoctionGuo Shi Yao Jian An [2006] No. 14The food and drug administration bureaus (drug administration bureaus) of all provinces, autonomous regions, and municipalities directly
under the Central Government,According to the provisions of the Industrial Catalogue for Guiding Foreign Investment (promulgated by the Order No. 24 of the State
Development and Reform Commission of the People’s Republic of China and the Ministry of Commerce of the People’s Republic of China)
which came into force as of January 1, 2005, “the application of preparing techniques of traditional Chinese medicine in small pieces
ready for decoction and the products of secret recipe of traditional Chinese medicine already prepared” falls within the category
of industries prohibited from foreign investment.According to the General Rules on Processing Medicine Materials as prescribed in the Drug Code of the People’s Republic of China (2005):
“The term ‘processing of medicine materials’ refers to that medicine materials are manufactured into herbal medicines of certain
specimen for decoction after cleaning, cutting, roasting and boiling so as to meet the requirements of medical treatment and mixture
or preparation, and guarantee the safety and effectiveness of medication.” The processing of medicine materials includes cleaning,
cutting, roasting and boiling. The application of preparing techniques of herbal medicines for decoction refers to the application
of the aforesaid processing techniques.In order to make the foreign investment compatible with the planning of the national economy and social development of China, the
administrative departments of food and drug of all provinces (regions and cities) shall strictly implement the state policies and
guard the access to the industries prohibited from foreign investment. As to any foreign-funded enterprise that has obtained the
approval of access to prohibited industries, the administrative department of food and drug at the provincial level shall, when the
relevant enterprise that engages in the production of herbal medicine for decoction renews its Pharmaceutical Production License,
clearly indicate “cleaning and cutting” on the License so as to restrict the production scope thereof.State Food and Drug AdministrationJanuary 10, 2006



 
the State Food and Drug Administration
2006-01-10

 






THE INTERIM MEASURES FOR THE PENALTIES RELATING TO THE ACT OF UNDER-ISSUING EXPORT INVOICES

Ministry of Commerce, General Administration of Customs, State Administration of Taxation

Order of the Ministry of Commerce, General Administration of Customs and State Administration of Taxation

No. 26

The Interim Measures for the Penalties Relating to the Act of Under-issuing Export Invoices which were deliberated and adopted at
the 15th executive meeting of the Ministry of Commerce, on October 19,2005, and with the consent of the General Administration of
Customs and the State Administration of Taxation, are hereby promulgated, and shall come into force after 3 months as of the date
of promulgation.

Ministrer of Ministry of Commerce, Bo Xilai

Director General of General Administration of Customs, Mou Xinsheng

Director General of State Administration of Taxation, Xie Xuren

January 10, 2006

The Interim Measures for the Penalties Relating to the Act of Under-issuing Export Invoices

Article 1

These Measures are formulated in accordance with the Foreign Trade Law of the People’s Republic of Chin, the Law on Administrative
Penalty and other relevant laws and regulations for the purpose of regulating the foreign trade order and maintaining the interests
of the foreign trade of the state

Article 2

The export invoices can be divided into the export invoices printed under supervision and the self-produced export invoices. The former
refers to the export invoices uniformly printed, produced and supervised by all the local taxation bureaus; and the latter refers
to the export invoices printed by foreign trade operators themselves.

Article 3

The “under-issuance of export invoices” as mentioned in the present Measures refers to the action whereby foreign trade operators
provide importers with the self-produced export invoices whose face value is lower than that of the invoices as provided at the time
of export declaration in the foreign trade.

Article 4

If any of the following circumstances occurs, the Ministry of Commerce shall conduct investigation together with the State Administration
of Taxation, and the General Administration of Customs shall offer the cooperation:

(1)

A tip-off that a domestic enterprise or the relevant trade organization is suspected of being involved in the action of the under-issuance
of export invoices;

(2)

The relevant governmental department of an import country officially circulates a notice that the under-issuance of export invoices
is suspected of being involved;

(3)

A foreign trade operator is suspected of being involved in the under-issuance of export invoices through the customs mutual assistance
and cooperation; or

(4)

Any other tip-off that the under-issuance of export invoices is suspected of being involved.

Article 5

The Ministry of Commerce shall, within 10 days upon receipt of a request for investigation, conduct elementary examination and verification
for it and according to the examination and verification conclusion, to the case of damaging the foreign trade order and interests
of the state, transfer the relevant materials to the General Administration of Customs. The General Administration of Customs shall,
within 50 days upon receipt of the materials transferred by the Ministry of Commerce, verify the fact of the suspected under-issuance
of export invoices, and transfer the verification conclusion to the Ministry of Commerce.

The Ministry of Commerce shall, within 10 days upon receipt of the verification conclusion of the General Administration of Customs,
transfer the relevant materials to the State Administration of Taxation where the fact of suspected under-issuance of export invoices
is affirmed preliminarily. The State Administration of Taxation shall, within 50 days upon receipt of the materials transferred
by the Ministry of Commerce, conduct the investigation whether the foreign trader operator is being involved in the action of under-issuance
of export invoices and transfer the investigation conclusion to the Ministry of Commerce, and it is no need to do so for the tax
evasion or fraud is suspected and needs to be transferred to the inspection department for placing the case on file and investigation.
The Ministry of Commerce shall terminate the investigation where the action of suspected under-issuance of export invoices is not
existed upon the preliminary verification.

Where the Ministry of Commerce affirms the action of under-issuance of export invoices in light of the above-mentioned investigation
conclusion, it shall, within 15 days upon receipt of the investigation conclusion of the State Administration of Taxation conduct
preliminary ruling to the action of under-issuance of export invoices in accordance with laws, and serve the ruling to the relevant
foreign trade operator in written form within 10 days, and shall terminate the investigation where there is no fact to be confirmed
of under-issuance of export invoices upon verification.

Article 6

Within 7 days after the relevant foreign trade operator received the preliminary ruling , If the relevant foreign trade operator had
any demurral, he/it may submit the written defence materials to the Ministry of Commerce and file an application for holding the
hearing.

Article 7

Where the Ministry of Commerce holds the hearing for the act of under-issuing export invoices of the relevant foreign trade operator,
the Law on Administrative Penalty shall be abided by.

Article 8

Within 50 days after the day when the preliminary ruling is given, the Ministry of Commerce shall give the final ruling for the fact
that the relevant foreign trade operator is suspected of being involved in the under-issuance of export invoices.

Article 9

As to those foreign trade operators that the action of under-issue export invoices existed, the Ministry of Commerce shall, in accordance
with the relevant provisions in the Law on Administrative Penalty, give a warning to the enterprise that violates the provisions
for the first time; and shall give a warning to and may impose a fine of RMB 30,000 Yuan upon the enterprise that violates the provisions
for the second time within two years after the first warning; where any of the above-mentioned illegal acts seriously affects the
foreign trade business order, the enterprise that violates the provisions may be prohibited from engaging in the relevant foreign
trade business operations for a term of one up to three years in light of its circumstances. The main responsible legal representative
of the enterprise may be prohibited from acting as the legal representative of foreign trade enterprises for a term of one up to
three years in light of his circumstances.

The above-mentioned penalties shall be announced in accordance with the Foreign Trade Law and other relevant provisions.

An administrative penalty decision shall be served to the relevant foreign trade operator within 7days after the administrative penalty
is made.

Article 10

Any party has any objection to the administrative penalty mentioned in Article 9 , it may apply for an administrative reconsideration
or file a lawsuit to the people’s court in accordance with the law.

Article 11

The relevant entities and individuals shall offer cooperation and assistance to the Ministry of Commerce, the General Administration
of Customs, and the State Administration of Taxation for their investigation. The Ministry of Commerce, the General Administration
of Customs, and the State Administration of Taxation shall have the obligation to keep the state secrets and business secrets in
their investigations. The investigation functionaries of the Ministry of Commerce, the General Administration of Customs and the
State Administration of Taxation shall abide by the relevant state laws, regulations and rules during the course of investigation.

Article 12

During the course of investigation, if any foreign trader operator is found to be suspected of being involved in the under-issuance
of the export invoices printed under supervision, the State Administration of Taxation shall conduct the investigation and punishment
according to the relevant provisions in the Measures of the People’s Republic of China for the Administration of Invoices. Any person
or entity involved in smuggling or violation of customs supervisory provisions, shall be punished by customs according to the Customs
Law of the People’s Republic of China and the Regulation of the Customs of the People’s Republic of China on the Implementation of
Administrative Punishment.

Article 13

All the dates for investigation procedures as mentioned in the present Measures refer to the working days.

Article 14

The power to interpret the present Measures shall remain with the Ministry of Commerce, the General Administration of Customs and
the State Administration of Taxation.

Article 15

The present Measures shall come into force as of three months after the date of promulgation.



 
Ministry of Commerce, General Administration of Customs, State Administration of Taxation
2006-01-10

 






ANNOUNCEMENT NO.2, 2006 OF THE GENERAL ADMINISTRATION OF CUSTOMS OF THE PEOPLE”S REPUBLIC OF CHINA

the General Administration of Customs

Announcement No.2, 2006 of the General Administration of Customs of the People”s Republic of China

[2006] No.2

State Council has approved to offer the “Roasted coffee, not decaffeinated” (with tariff code of 09012100) originating from Uganda
preferential zero customs duty as from Jan 1, 2006, the standards of origin are subject to Customs of the People’s Republic of China
Regulations on Implementation of Regulations on Origins of Commodities under the Preferential Customs Duties Treatment of the People’s
Republic of China to the least developed countries of Africa (General Administration of the Customs Decree No.123). Those complying
with above regulations and having finished declaration formalities and paid customs duties after Jan 1, 2006 may enjoy tax-refund.

The declaration forms of above commodities should be filled in accordance with General Administration of Customs Announcement No.69,
2005 “Specific Filling Requirements of Un-net-working Administration of Origins Certificate”. The code for favorable trade negotiation
is “05”.

General Administration of Customs

Jan 12, 2006



 
the General Administration of Customs
2006-01-12

 






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE EFFECTIVENESS OF THE EXCHANGE OF LETTERS FOR MUTUAL EXEMPTION OF TAX ON INTERNATIONAL TRANSPORT INCOME BETWEEN CHINA AND TURKEY

State Administration of Taxation

Circular of the State Administration of Taxation on the Effectiveness of the Exchange of Letters for Mutual Exemption of Tax on International
Transport Income between China and Turkey

Guo Shui Fa [2006] No.5

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

The Exchange of Letters between the Government of the People’s Republic of China and the Government of the Republic of Turkey for
mutual exemption of value-added tax, business tax or other taxes of the similar nature on international transport income from the
other party of contracting state of air transport enterprises in one contracting state was signed by the authorized representatives
of both governments, and became effective on November 18, 2005, and is hereby printed and distributed to you. Please implement accordingly.

Annex:

I. Letter of the Finance Minister of Republic of Turkey Kemal Unakitan Addressed to the Director General Xie Xuren of the State Administration
of Taxation of the People’s Republic of China (translation)

II. Reply Letter of the Director General Xie Xuren of the State Administration of Taxation of the People’s Republic of China Addressed
to the Finance Minister of the Republic of Turkey Kemal Unakitan (translation)

State Administration of Taxation

January 12, 2006 Annex: ILetter of the Finance Minister of Turkey Addressed to the Director General Xie Xuren of the State Administration of Taxation of the
People’s Republic of China (translation)

Mr. Xie Xuren

Director of the State Administration of Taxation of the People’s Republic of China

Your Excellency,

I am honored to refer to the issue of exemption of tax on the profits and incomes obtained from undertaking international transport
by the air transport enterprises of both countries, and suggest making the following arrangements on behalf of the Government of
the Republic of Turkey:

According to the Agreement of the Republic of Turkey and the People’s Republic of China on Avoidance of Double Tax Collection and
Prevention of Evasion of Taxes, which was signed on May 23rd, 1995, the income tax shall be exempted in another contracting state.
on the profits and incomes obtained from another contracting state through undertaking international transport business by the air
transport enterprises of one contracting state . Value-added tax, business tax or any other tax of the similar nature shall be exempted
in another contracting state on the income obtained from another contracting state through undertaking international transport business
by the air transport enterprises of one contracting state.

I am honored to suggest that this Letter and the Letter of Reply acknowledged by Your Excellency on behalf of the government of the
People’s Republic of China’s acceptance of the aforesaid suggestions proposed by the Government of the Republic of Turkey shall constitute
an agreement between the governments of both countries.

Finance Minister of the Republic of Turkey

Kemal Unakitan (Signature)

October 21, 2005 Annex: IIReply Letter of the Director General Xie Xuren of the State Administration of Taxation of the People’s Republic of China Addressed
to the Finance Minister of Turkey (Translation)

Kemal Unakitan, finance minister of the Republic of Turkey,

Your Excellency,

I am honored to acknowledge the receipt of your Letter dated October 21, 2005, which reads as follows,

I am honored to refer to the issue of exemption of tax on the profits and incomes obtained from undertaking international transport
by the air transport enterprises of both countries, and suggest making the following arrangements on behalf of the Government of
the Republic of Turkey:

According to the Agreement of the Republic of Turkey and the People’s Republic of China on Avoidance of Double Tax Collection and
Prevention of Evasion of Taxes, which was signed on May 23rd, 1995, the income tax shall be exempted in another contracting state
on the profits and incomes obtained from another contracting state through undertaking international transport business by the air
transport enterprises of one contracting state. Value-added tax, business tax or any other tax of the similar nature shall be exempted
in another contracting state on the income obtained from another contracting state through undertaking international transport business
by the air transport enterprises of one contracting state..

I am honored to suggest that this Letter and the Letter of Reply acknowledged by Your Excellency on behalf of the government of the
People’s Republic of China’s acceptance of the aforesaid suggestions proposed by the Government of the Republic of Turkey shall constitute
an agreement between the governments of both countries.

I am honored to confirm and accept the said suggestions on behalf of the government of the People’s Republic of China and refer to
that the said agreement shall come into effect from the date of this Letter of Reply.

Director General of the People’s Republic of China

Xie Xuren (Signature)

November 18, 2005



 
State Administration of Taxation
2006-01-12

 






DETAILED RULES FOR THE IMPLEMENTATION OF QUALIFICATION EVALUATION OF AUTOMOBILE DISTRIBUTOR AND BRAND DISTRIBUTOR

General Office of Ministry of Commerce

Circular of the General Office of Ministry of Commerce on Printing and Distributing the Detailed Rules for the Implementation of Qualification
Evaluation of Automobile Distributor and Brand Distributor

Shang Jian Zi [2006] No. 4

All the automobile industry association

In accordance with Measures for the Implementation of Management of Automobile Brand Sales for the purposes of evaluating qualifications
of automobile distributor and brand distributor, regulating evaluation activities, the Detailed Rules for the Implementation of Qualification
Evaluation of Automobile Distributor and Brand Distributor is hereby printed and distributed to you, and shall be implemented accordingly.

General Office of Ministry of Commerce

January 12, 2006

Detailed Rules for the Implementation of Qualification Evaluation of Automobile Distributor and Brand Distributor

Article 1

These detailed rules are formulated in accordance with Measures for the Implementation of Management of Automobile Brand Sales for
the purposes of evaluating qualifications of automobile distributor and brand distributor, regulating evaluation activities, ensuring
the evaluation going fairly, justly and orderly.

Article 2

These detailed rules apply to the evaluation of qualification of automobile distributor and brand distributor.

Article 3

The competent commercial authority of the State Council guides and authorizes automobile industry associations to build Expert Database
for Automobile Brand Sales (“Export Database” in short below).

Article 4

Experts in Expert Database are consist of the experts of automobile production, sales and service, economy, law and management.

Article 5

The experts in Expert Database should meet following requirements:

1.

enjoy good health, usually younger than 65 years old;

2.

have senior professional post_titles or be a university graduate or higher;

3.

have fine professional quality and work ethic, no bad record;

4.

Understand national policies and related laws and regulations about automobile development, keep abreast of the status of domestic
automobile production, sales and service, and development of corresponding industry in foreign countries; be equal to the qualification
evaluation of automobile distributor or brand distributor;

5.

the experts of automobile production, sales and service have worked in automobile industry for more than 5 years.

Article 6

The authorized automobile industry associations engages the experts in Expert Database from the society in light of the need of the
evaluation works.

Article 7

Evaluation procedures for recommending experts in Expert Database

1.

the experts in Expert Database are recommended by their units. The recommendation units should submit the recommended name list and
corresponding materials to the authorized automobile industry associations according to the requirements of Expert Recommendation
Form for evaluation of automobile brand sales (see Appendix);

2.

the authorized automobile industry associations should notify the recommendation unit of the examination result and issue Letter of
Appointment to the experts who have passed the examination within 20 days at receipt of the recommendation materials.

Article 8

If any false content are found in expert recommendation materials, the authorized automobile industry associations will not accept
and handle all the recommendation materials of the recommendation unit.

Article 9

The experts in Expert Database are employed for a term of 4 years. At the end of the term, after reviewing of the authorized automobile
industry associations, the experts who meet the requirements may remain in Expert Database.

Article 10

If any expert transfers or retires from his unit, his original unit and himself should notify in time the authorized automobile industry
associations in writing.

Article 11

The total number of the experts in Expert Database is usually 40 to 50 every year.

The authorized automobile industry association should report the name list of the experts in Expert Database to the competent commercial
authority of the State Council for record.

Article 12

When relative experts withdraw from the Expert Database, the authorized automobile industry associations should augment experts in
time according to relative regulations.

Article 13

The experts in Expert Database should abide by national laws and regulations, strictly observe work ethics, fairly engaged in qualification
evaluation of automobile distributor or brand distributor, should not provide the application materials, evaluation content and other
relative materials of the evaluated party to any other unit or individuals. During the qualification evaluation of automobile distributor
or brand distributor, they should not get in touch secretly with corresponding automobile supplier, brand distributor and other interested
parties.

Article 14

The experts in Expert Database should sign confidentiality agreement and take part in the evaluation works according to the requirements.

Article 15

The authorized automobile industry associations should notify relative experts in writing to withdraw from the Expert Database and
inform their units in one of following circumstances:

1.

not equal to qualification evaluation of automobile distributor or brand distributor because of physical problem;

2.

have no complete civil disposing capacity;

3.

have been given criminal sanction;

4.

violate the content stipulated in confidentiality agreement;

5.

violate the provision of Article 13 of these measures and the case is serious.

Article 16

While accepting and handling the application of automobile distributors or brand distributors, the competent commercial authority
of the State Council may authorizes automobile industry associations to organize expert committee to make evaluation on their qualifications
if it doubts that.

Article 17

The authorized automobile industry associations should select experts from Expert Database and form the expert committee according
to the authorization of the competent commercial authority of the State Council and the need of evaluation.

Article 18

Selecting the experts of automobile industry expert committee should be compliance with the following principles:

1.

principle of combination of random selecting and professional structure. The expert committee should make random selecting from the
Expert Database according to the need of evaluation and give expression to the representativeness of different professions;

2.

avoidance principle. The experts who have direct interest relationship with the evaluated party should not take part in the evaluation.
If any one has already been selected, the expert himself should make public and avoid initiatively;

3.

principle of change. The members of expert committee should be changed in proportion, generally speaking, one expert should not take
part in the evaluation consecutively for more than twice.

Article 19

The number of expert committee should be 5 or 7.

Article 20

Major content of qualification evaluation of automobile distributor:

1.

The information of written authorization of automobile production enterprises, including legal validity of authorization materials,
brand name of sold automobile by authorization, the name, trademark and sign of the shops used by authorization;

2.

the ability of automobile marketing, including explanation materials about the concrete content, organizational structure, professionals
and their structure in market investigation and study, marketing and planning, advertisement and promotion, network construction
and guidance, product service and technical training and consultation, fitting supply and logistics management, among them, the network
layout, scale and process should be made clear in the content of network construction;

3.

whether or not the content of automobile brand sales in the business scale accord with the content authorized by automobile production
enterprises;

Article 21

Major content of evaluating the qualifications of automobile brand distributor:

1.

The written authorization of automobile supplier, including legal validity of authorized materials, brand name, selling areas of automobile
sold by authorization, name, trademark or sign of the shop used by authorization;

2.

whether or not the content of automobile brand sales in business scale is consistent with the content authorized by automobile supplier,
and whether or not the name, sign and trademark of the shop to be used are consistent with the ones authorized by the automobile
supplier;

3.

whether or not the business place, facilities and professional service staffs meet the requirements of the business range or scale.

Article 22

The automobile industry associations organize expert committee to hold evaluation meetings according to the evaluation trust. The
expert evaluation meeting is held by expert joint checkup. It may be held in the forms of “check and approve separately, discuss
together” or “check and approve together, discuss together”.

Article 23

The members of expert committee should attend the meeting as experts and take part in the evaluation objectively and fairly.

Article 24

The check and approval comments adopted by the expert committee should be agreed and signed by more than half of the members in expert
committee. The authorized automobile industry associations should provide a report according to the check and approval comments of
the expert committee.

Article 25

If thinking the evaluated party has some problems to be investigated or the application materials are not completed, the expert committee
may put off the evaluation comments with the agreement of more than half members attending the meeting.

The authorized automobile industry associations should report in time their opinion on putting off the evaluation comments and corresponding
information to the competent commercial authority of the State Council.

Article 26

The automobile industry associations accepting evaluation trust should establish an expert committee, finish evaluation and provide
evaluation report to the competent commercial authority of the State Council within 15 working days at receipt of the applicant￿￿s
application materials of the automobile distributor and brand distributor provided by the competent commercial authority of the State
Council.

Article 27

The qualification evaluation of automobile distributor or brand distributor should accept the supervision of the competent commercial
authority of the State Council and the society.

Appendix: Expert Recommendation Form for Evaluation of Automobile Brand Sales (omitted)



 
General Office of Ministry of Commerce
2006-01-12

 






MEASURES OF CHINA BANKING REGULATORY COMMISSION FOR THE IMPLEMENTATION OF ADMINISTRATIVE LICENSING MATTERS CONCERNING COOPERATIVE FINANCIAL INSTITUTIONS

China Banking Regulatory Commission

Order of China Banking Regulatory Commission

No. 3

The “Measures of China Banking Regulatory Commission for the Implementation of Administrative Licensing Matters Concerning Cooperative
Financial Institutions”, which were adopted at the 40th chairman’s meeting of China Banking Regulatory Commission on November 10,
2005, are hereby promulgated, and shall come into force on February 1, 2006.

Chairman Liu Mingkang

January 12, 2006

Measures of China Banking Regulatory Commission for the Implementation of Administrative Licensing Matters Concerning Cooperative
Financial Institutions

Chapter I General Provisions

Article 1

The present measures are formulated in accordance with the “Law of the People’s Republic of China on the Regulation of the Banking
Industry”, the “Administrative License Law of the People’s Republic of China”, the “Law of the People’s Republic of China on Commercial
Banks” as well as other laws, administrative regulations, and the relevant decisions of the State Council for the purpose of regulating
China Banking Regulatory Commission (hereinafter referred to as CBRC) and its dispatched offices in their granting administrative
licenses to cooperative financial institutions, clarifying the administrative licensing matters, conditions, applicable operational
flows and term, and protecting the lawful rights and interests of the applicants.

Article 2

Cooperative financial institutions as mentioned in the present measures shall include: rural credit cooperatives, associate rural
credit cooperative unions of the counties (cities, districts), rural credit cooperative unions of the counties (cities, districts),
associate rural credit cooperative unions of the prefectures (cities), associate rural credit cooperative unions of the provinces
(autonomous regions, municipalities directly under the Central Government), rural cooperative banks, and rural commercial banks.

Article 3

CBRC and its dispatched offices shall comply with the present measures and the “Provisions of China Banking Regulatory Commission
on the Procedures for Granting Administrative Licenses” when granting administrative licenses to cooperative financial institutions.

Article 4

The following matters of a cooperative financial institution shall be subject to administrative license of CBRC or its dispatched
office: establishment, modification or termination of the institution, adjustment of the business scope, addition of new varieties
of business, qualifications for holding the positions of council members (directors) and senior managers, and so on.

Article 5

An applicant shall submit the application materials in accordance with the “Catalogue of China Banking Regulatory Commission on Application
Materials for Administrative Licensing Matters and the Format Requirements”.

Chapter II Establishment of Legal Person Institutions

Section 1 Establishment of Rural Credit Cooperatives

Article 6

For the establishment of a rural credit cooperative, the applicant shall meet the following conditions:

(1)

It has the articles of association conforming to the provisions of CBRC;

(2)

It is established by means of initiation and there shall be no less than 500 initiators;

(3)

The minimum amount of registered capital shall be RMB 1 million Yuan, which shall be paid-in capital;

(4)

It has council members and senior managers who meet the qualification conditions for holding their respective positions;

(5)

There are no less than 2 persons who hold the positions of director general and vice director general(s);

(6)

No less than 80% of practitioners have engaged in financial work for at least 1 year or have the technical secondary school diploma
or above majoring in finance or similar field;

(7)

It has a sound organizational structure and management rules; and

(8)

It has qualified business place, safety protection measures and other relevant facilities for its business.

Article 7

For the establishment of a rural credit cooperative, the applicant shall meet the following conditions on prudence in addition:

(1)

It has a sound risk management system, and is capable of effectively controlling the risks in associated transactions;

(2)

It has scientific and effective human resources management rules, and has professional talents with high qualities;

(3)

It has an effective capital restraint and supplement mechanism;

(4)

It contain no shares held by the local people’s government in the form of fiscal funds; and

(5)

Other conditions on prudence as prescribed by CBRC.

Article 8

For the establishment of a rural credit cooperative, there shall be qualified initiators. Such initiators may include: natural persons,
domestic non-financial institutions, domestic financial institutions, overseas financial institutions and other initiators acknowledged
by CBRC.

The expression “overseas financial institutions” as mentioned in the preceding paragraph shall include the financial institutions
from Hong Kong, Macao and Taiwan regions.

Article 9

A natural person initiator shall meet the following conditions:

(1)

He has full capacity for civil conduct;

(2)

He has good social prestige as well as honesty and credibility records;

(3)

His share funds are owned by himself and the sources are lawful, and he shall not hold shares by contributing loans or contributing
funds commissioned by others;

(4)

He is a resident of the locality of the rural credit cooperative to be established, or a non-local resident who has a fixed domicile
at the said locality and has resided for at least 3 years; and

(5)

Other conditions on prudence as prescribed by CBRC.

Article 10

The proportion of the shares of a single natural person shall not exceed 2%, and the proportion of the total shares of employees shall
not exceed 25%.

Article 11

As an initiator, a domestic non-financial institution shall meet the following conditions:

(1)

It has been registered in the administrative department for industry and commerce, and has the status as a legal person;

(2)

It has good social prestige, honesty and credibility records, as well as tax payment records;

(3)

It is in good financial situation, and made profits continuously in the latest 2 accounting years;

(4)

It has strong management capabilities and fund strength;

(5)

After the year-end distribution of profits, its net assets reach 30% of the total assets or even higher (by standard of consolidated
accounting statements);

(6)

The balance of its equity investments shall generally not exceed 50% of its net assets (including the amount of current investments,
by standard of consolidated accounting statements);

(7)

His share funds are owned by himself and the sources are lawful, and he shall not hold shares by contributing loans or contributing
funds commissioned by others;

(8)

Its place of registration is within the jurisdiction of the rural credit cooperative to be established; and

(9)

Other conditions on prudence as prescribed by CBRC.

Article 12

The proportion of the total shares of a single domestic non-financial institution and its associated parties shall not exceed 10%.

Article 13

As an initiator, a domestic financial institution shall meet the following conditions:

(1)

Its capital adequacy ratio shall not be lower than 8% if it is a bank, and the total amount of its capital shall not be lower than
10% of the total amount of its risk-weighted assets if it is a non-bank financial institution;

(2)

The balance of its equity investments shall not exceed 50% of its net assets (including the amount of current investments, by standard
of consolidated accounting statements);

(3)

It made profits continuously in the latest 2 accounting years;

(4)

It has good corporate governance, as well as sound and effective internal control rules;

(5)

Its main prudent regulatory indices meet the regulatory requirements; and

(6)

Other conditions on prudence as prescribed by CBRC.

None of the associate rural credit cooperative unions of the provinces (autonomous regions, municipalities directly under the Central
Government), associate rural credit cooperative unions of the prefectures (cities), or associate rural credit cooperative unions
of the counties (cities, districts) may hold shares of a rural credit cooperative.

Article 14

The proportion of the total shares of a single domestic financial institution and its associated parties shall not exceed 20%.

Article 15

As an initiator, an overseas financial institution shall meet the following conditions:

(1)

Its total year-end assets in the latest year shall generally be no less than 1,000 million USD;

(2)

If it is an international rating institution acknowledged by CBRC, its long-term credit was rated by CBRC as good in the latest 2
years;

(3)

It has been keeping a favorable balance in the latest 2 accounting years;

(4)

Its capital adequacy ratio shall reach the average level of capital adequacy ratio for the banking sector at the place of its registration
and shall not be lower than 8% if it is a bank, or the total amount of its capital shall not be lower than 10% of the total amount
of risk-weighted assets if it is a non-bank financial institution;

(5)

It has sound internal control rules;

(6)

The financial institution at the place of registration has sound supervision and management rules;

(7)

Its home country (region) is in good economic situation; and

(8)

Other conditions on prudence as prescribed by CBRC.

CBRC may, when required by the risk situation of the financial industry and the supervision thereof, adjust the conditions for overseas
financial institutions to hold the shares.

Article 16

The proportion of the shares held by a single overseas financial institution in a single rural credit cooperative shall not exceed
20%. The proportion of the total shares of more than one overseas financial institution shall not exceed 25%.

The expression “proportion of the shares” as mentioned in the preceding paragraph shall refer to the proportion of the total shares
held by an overseas financial institution in a rural credit cooperative. The proportion of shares held by an associated party of
the overseas financial institution shall be counted into that of the overseas financial institution.

Article 17

The establishment of a rural credit cooperative shall include two stages, namely, preparatory establishment and initiation of the
business.

For the establishment of a rural credit cooperative, a preparatory establishment team shall be formed, and the initiators of the rural
credit cooperative shall entrust the preparatory establishment team as the applicant.

Article 18

The application for preparatory establishment of a rural credit cooperative within the jurisdiction of a banking regulatory branch
office of China Banking Regulatory Commission (hereinafter referred to as banking regulatory branch office) shall be subject to the
acceptance and preliminary examination of the banking regulatory branch office, and be subject to the examination of the supervisory
office of China Banking Regulatory Commission (hereinafter referred to as banking regulatory office) for decision. The banking regulatory
office shall, within 4 months as of receipt of the entire application materials, make a written decision on approval or disapproval.

The application for the preparatory establishment of a rural credit cooperative within the jurisdiction of the city where the banking
regulatory office is located shall be subject to the acceptance and examination of the banking regulatory office for decision. The
banking regulatory office shall, within 4 months as of the acceptance, make a written decision on approval or disapproval.

Article 19

The term of preparatory establishment of a rural credit cooperative shall be 6 months as of the day when the decision on approval
is made. In the case of any particular circumstance, the applicant shall, within 1 month prior to expiry of the time limit for preparatory
establishment, submit the application for postponing the preparatory establishment to the banking regulatory office. The banking
regulatory office shall, within 20 days as of receipt of the written application, make a decision on whether to approve the postponement
or not, and the maximum period postponed for preparatory establishment shall be 3 months.

The applicant shall, prior to the expiry of the time limit prescribed in the preceding paragraph, submit the application for the initiation
of business. If it fails to submit the application within the time limit, the deciding organ shall nullify the license for preparatory
establishment, and take back the approval document for preparatory establishment.

Article 20

The application of a rural credit cooperative within the jurisdiction of a banking regulatory branch office for the initiation of
business, shall be subject to the acceptance and preliminary examination of the banking regulatory branch office, and be subject
to the examination of the banking regulatory office for decision. The banking regulatory office shall, within 2 months as of receipt
of the entire application materials, make a written decision on ratification or refusal.

The application of a rural credit cooperative within the jurisdiction of the city where the banking regulatory office is located for
the initiation of business, shall be subject to the acceptance and examination of the banking regulatory office for decision. The
banking regulatory office shall, within 2 months as of the acceptance, make a written decision on ratification or refusal.

Article 21

A rural credit cooperative shall, after receiving the ratification document for the initiation of business and obtaining a financial
business permit, go to the administrative department for industry and commerce to apply for a business license.

A rural credit cooperative shall initiate the business within 6 months as of obtaining the business license. In the case of any particular
circumstance, the applicant shall, within 1 month prior to the expiry of the time limit for the initiation of business, submit the
application for postponing the initiation of business to the banking regulatory office. The banking regulatory office shall, within
20 days as of receipt of the written application, make a decision on whether to approve the postponement or not, and the maximum
period postponed for the initiation of business shall be 3 months.

Where a rural credit cooperative fails to initiate the business within the time limit as prescribed in the preceding paragraph, the
deciding organ shall nullify the license for the initiation of business, take back the ratification document for the initiation of
business and the financial business permit, and make an announcement.

Section 2 Establishment of Rural Associate Credit Cooperative Unions of Counties (Cities, Districts)

Article 22

For the establishment of an associate rural credit cooperative union of a county (city, district), the applicant shall meet the following
conditions:

(1)

It has the articles of association conforming to the provisions of CBRC;

(2)

The associate union is established by means of initiation and there are no less than 8 rural credit cooperatives within the jurisdiction;

(3)

The minimum amount of its registered capital is RMB 1 million Yuan, which shall be paid-in capital;

(4)

It has council members and senior managers who meet the qualification conditions for holding their respective positions;

(5)

There are no less than 2 persons who hold the positions of director general and vice director general(s);

(6)

No less than 80% of practitioners have engaged in financial work for at least 1 year or have the technical secondary school diploma
or above majoring in finance or similar field;

(7)

It has a sound organizational structure and management rules; and

(8)

It has qualified business place, safety protection measures and other relevant facilities for its business.

Article 23

For the establishment of an associate rural credit cooperative union of a county (city, district), the applicant shall meet the following
conditions on prudence in addition:

(1)

It has a good corporate governance structure;

(2)

It has a sound risk management system, and is capable of effectively controlling the risks in associated transactions;

(3)

It has scientific and effective human resources management rules, and has professional talents with high qualities;

(4)

It has an effective capital restraint and supplement mechanism;

(5)

It contains no shares held by the local people’s government in the form of fiscal funds; and

(6)

Other conditions on prudence as prescribed by CBRC.

Article 24

For the establishment of an associate rural credit cooperative union of a county (city, district), there shall be qualified initiators,
and the initiators shall be rural credit cooperatives within the jurisdiction.

The employees of an associate rural credit cooperative union of a county (city, district) may hold shares by centralizing their funds.

None of the associate rural credit cooperative unions of the provinces (autonomous regions, municipalities directly under the Central
Government), or associate rural credit cooperative unions of the prefectures (cities) shall hold shares of an associate rural credit
cooperative union of a county (city, district).

Article 25

As an initiator, a rural credit cooperative shall meet the following conditions:

(1)

The place of registration is located within the jurisdiction of the associate rural credit cooperative union of the county (city,
district) to be established;

(2)

The balance of its equity investments shall not exceed 50% of its net assets (including the amount of current investments); and

(3)

Other conditions on prudence as prescribed by CBRC.

Article 26

A single rural credit cooperative shall hold no less than 50,000 shares, and the proportion of its shares shall not exceed 20%.

Article 27

Any of the employees of a shareholding associate rural credit cooperative union of a county (city, district) shall meet the following
conditions:

(1)

He has full capacity for civil conduct;

(2)

His share funds are owned by himself and the sources are lawful, and he shall not hold shares by contributing loans or contributing
funds commissioned by others; and

(3)

Other conditions on prudence as prescribed by CBRC.

Article 28

The proportion of the shares of a single employee shall not exceed 2%, and the proportion of the total shares of all employees shall
not exceed 25%.

Article 29

The establishment of an associate rural credit cooperative union of a county (city, district) shall include two stages, namely, preparatory
establishment and initiation of the business.

For the establishment of an associate rural credit cooperative union of a county (city, district), a preparatory establishment team
shall be formed, and the initiators of the associate rural credit cooperative union of the county (city, district) shall entrust
the preparatory establishment team as the applicant.

Article 30

The application of an associate rural credit cooperative union of a county (city, district) within the jurisdiction of a banking regulatory
branch office for preparatory establishment shall be subject to the acceptance and preliminary examination of the banking regulatory
branch office, and shall be subject to the examination of the banking regulatory office for decision. The banking regulatory office
shall, within 4 months as of receipt of the entire application materials, make a written decision on approval or disapproval.

The application for preparatory establishment of an associate rural credit cooperative union of a county (city, district) within the
jurisdiction of the city where the banking regulatory office is located, shall be subject to the acceptance and examination of the
banking regulatory office for decision. The banking regulatory office shall, within 4 months as of the acceptance, make a written
decision on approval or disapproval.

Article 31

The term of preparatory establishment of an associate rural credit cooperative union of a county (city, district) shall be 6 months
as of the day when the decision on approval is made. In the case of any particular circumstance, the applicant shall, within 1 month
prior to expiry of the time limit for preparatory establishment, submit to the banking regulatory office the application for postponing
the preparatory establishment. The banking regulatory office shall, within 20 days as of receipt of the written application, make
a decision on whether to approve the postponement or not, and the maximum period postponed for preparatory establishment shall be
3 months.

The applicant shall, prior to the expiry of the time limit prescribed in the preceding paragraph, submit the application for the initiation
of business. If it fails to submit the application within the time limit, the deciding organ shall nullify the license for preparatory
establishment, and take back the approval document for the preparatory establishment.

Article 32

The application of an associate rural credit cooperative union of a county (city, district) within the jurisdiction of a banking regulatory
branch office for the initiation of business shall be subject to the acceptance and preliminary examination of the banking regulatory
branch office, and be subject to the examination of the banking regulatory office for decision. The banking regulatory office shall,
within 2 months as of receipt of the entire application materials, make a written decision on ratification or refusal.

The application of an associate rural credit cooperative union of a county (city, district) within the jurisdiction of the city where
the banking regulatory office is located for the initiation of business, shall be subject to the acceptance and examination of the
banking regulatory office for decision. The banking regulatory office shall, within 2 months as of the acceptance, make a written
decision on ratification or refusal.

Article 33

An associate rural credit cooperative union of a county (city, district) shall, after receiving the ratification document for the
initiation of business and obtaining a financial business permit, go to the administrative department for industry and commerce to
obtain a business license.

An associate rural credit cooperative union of a county (city, district) shall initiate the business within 6 months as of obtaining
a business license. In the case of any particular circumstance, the applicant shall, within 1 month prior to the expiry of the time
limit for the initiation of business, submit an application for postponing the initiation of business to the banking regulatory office.
The banking regulatory office shall, within 20 days as of receipt of the written application, make a decision on whether to approve
the postponement or not, and the maximum period postponed for the initiation of business shall be 3 months.

Where the associate rural credit cooperative union of the county (city, district) fails to initiate the business within the time limit
as prescribed in the preceding paragraph, the deciding organ shall nullify the license for the initiation of business, take back
the ratification document for the initiation of the business and the financial business permit, and make an announcement.

Section 3 Establishment of Rural Credit Cooperatives of Counties (Cities, Districts)

Article 34

For the establishment of a rural credit cooperative of a county (city, district), the applicant shall meet the following conditions:

(1)

It has the articles of association conforming to the provisions of CBRC;

(2)

It is established by means of initiation and there shall be no less than 1,000 initiators;

(3)

Its registered capital shall be RMB 10 million Yuan or more;

(4)

It has council members and senior managers who meet the qualification conditions for holding their respective positions;

(5)

There are no less than 2 persons who hold the positions of director general and vice director general(s);

(6)

No less than 80% of practitioners have engaged in financial work for at least 1 year or have the technical secondary school diploma
or above majoring in finance or similar field;

(7)

It has a sound organizational structure and management rules; and

(8)

It has qualified business place, safety protection measures and other relevant facilities for its business.

The banking regulatory office may, in light of the actual situation of the locality of the rural credit cooperative union of the county
(city, district) to be established, make a proper adjustment to the registered capital in Item (3) of the preceding paragraph, provided
that the amount of registered capital shall not be less than RMB 5 million Yuan.

Article 35

For the establishment of a rural credit cooperative union of a county (city, district), the applicant shall meet the following conditions
on prudence in addition:

(1)

It has a good corporate governance structure;

(2)

It has a sound risk management system, and is capable of effectively controlling the risks in associated transactions;

(3)

It has scientific and effective human resources management rules, and has professional talents with high qualities;

(4)

It has an effective capital restraint and supplement mechanism;

(5)

It contains no shares held by the local people’s government in the form of fiscal funds; and

(6)

Other conditions on prudence as prescribed by CBRC.

For the establishment of a rural credit cooperative union of a county (city, district) by means of consolidation, the applicant shall
meanwhile meet the following conditions in addition:

(1)

Both the rural credit cooperative and the associate rural credit cooperative union of the county (city, district) participate in the
establishment voluntarily;

(2)

The associate rural credit cooperative union of the a county (city, district) has strong management capabilities;

(3)

The rural credit cooperative and the associate rural credit cooperative union of the county (city, district) make an estimation according
to consolidated financial statements, which shows that it is solvent;

(4)

Its core capital adequacy ratio shall be no lower than 2%, and may continue to be raised after establishment.

Article 36

For the establishment of a rural credit cooperative union of a county (city, district), there shall be qualified initiators. The initiators
may include: natural persons, domestic non-financial institutions, domestic financial institutions, overseas financial institutions,
and other initiators acknowledged by CBRC.

Article 37

The initiators shall conform to the provisions in Article 9 and Articles 11 through 16 of the present measures.

The proportion of the shares of a single natural person shall not exceed 5￿￿the proportion of the total shares of the employees
shall not exceed 25%, and the proportion of the total shares of all natural persons shall be no less than 50%.

None of the associate rural credit cooperative unions of the provinces (autonomous regions, municipalities directly under the Central
Government), or of the associate rural credit cooperative unions of the prefectures (cities) shall hold shares of a rural credit
cooperative union of a county (city, district).

Article 38

The establishment of a rural credit cooperative union of a county (city, district) shall include two stages, namely, preparatory establishment
and initiation of the business.

For the establishment of a rural credit cooperative union of a county (city, district), a preparatory establishment team shall be
formed, and the initiators of the rural credit cooperative union shall entrust the preparatory establishment team as the applicant.

Article 39

The application of a rural credit cooperative union of a county (city, district) within the jurisdiction of a banking regulatory branch
office for preparatory establishment shall be subject to the acceptance and preliminary examination of the banking regulatory branch
office, and shall be subject to the examination of the banking regulatory office for decision. The banking regulatory office shall,
within 4 months as of receipt of the entire application materials, make a written decision on approval or disapproval.

The application for preparatory establishment of a rural credit cooperative union of a county (city, district) within the jurisdiction
of the city where the banking regulatory office is located, shall be subject to the acceptance and examination of the banking regulatory
office for decision. The banking regulatory office shall, within 4 months as of the acceptance, make a written decision on approval
or disapproval.

Article 40

The term of preparatory establishment of a rural credit cooperative union of a county (city, district) shall be 6 months as of the
day when the decision on approval is made. In the case of any particular circumstance, the applicant shall, within 1 month prior
to expiry of the time limit for preparatory establishment, submit to the banking regulatory office the application for postponing
the preparatory establishment. The banking regulatory office shall, within 20 days as of receipt of the written application, make
a decision on whether to approve the postponement or not, and the maximum period postponed for preparatory establishment shall be
3 months.

The applicant shall, prior to the expiry of the time limit prescribed in the preceding paragraph, submit an application for the initiation
of business. If it fails to submit the application within the time limit, the deciding organ shall nullify th

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

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