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DECREE NO. 52, 2006 OF THE GENERAL ADMINISTRATION OF CUSTOMS, THE MINISTRY OF FINANCE, THE PEOPLE’S BANK OF CHINA AND THE STATE ADMINISTRATION OF TAXATION

Decree No. 52, 2006 of the General Administration of Customs, the Ministry of Finance, the People’s Bank of China and the State Administration
of Taxation

No. 52

For the purpose of regulating the administration of processing trade and making an equal competitive market environment for enterprises,
authorized by the State Council, the relevant issues concerning adjustment of imposition of the tax-deferred interest of bonded goods
for processing trade are hereby announced as follows:

1.

Interest rate of the tax-deferred interest

The rate of interest on delayed tax payment of bonded goods for processing trade for domestic market shall be implemented by referring
to the annual percentage rate released by the People’s Bank of China for short term loans that are more than six months but within
one year (including one year)(hereinafter referred to as the “annual percentage rate for short term loans”),. The current tax-deferred
interest shall come in accordance with the current “annual percentage rate for short term loans”, which is 6.12% as newly released
by the People’s Bank of China. From now on, the Customs shall make adjustment and implement as soon as the latest “annual percentage
rate for short term loans” is released by the People’s Bank of China.

As for an expired contract that cannot be granted a further extension or cannot be sold in domestic market because of the adjustment
of processing trade policies, the tax-deferral interest shall be levied according to the interest on current deposits released by
the People’s Bank of China in the previous year filled in the Customs tax pay-in warrant; as for tax imposition for the goods for
processing trade, which fail to be cancelled after verification after exceeding the time limit, and under the handbook for the sale
in domestic market, the imposition of their interest of delayed tax payment shall be dealt with according to the above regulations.

2.

Imposition and calculation formula for the interest of delayed tax payment:

The Interest of delayed tax payment for processing trade shall be daily levied according to the latest interest rate of delayed tax
payment, which is filled in the Customs tax pay-in warrant, released by the General Administration of Customs. The calculation formula
for the interest of delayed tax payment is as follows:

Payable interest of delayed tax payment = payable tax amount ￿￿term of interest calculation ￿￿interest rate of delayed tax payment
/ 360.

Detailed measures concerning imposition of interest of delayed tax payment for tax recovered for bonded goods for processing trade
for the sale in domestic market will be separately promulgated by The General Administration of Customs.

This Announcement shall enter into force as from October 10, 2006.

the General Administration of Customs

the Ministry of Finance

the People’s Bank of China

the state Administration of Taxation

September 20, 2006



 
The General Administration of Customs, the Ministry of Finance, the People’s Bank of China, the state Administration
of Taxation
2006-09-20

 






INTERIM MEASURES FOR THE ADMINISTRATION OF THE PLEDGE BUSINESS OF SMALL- SUM PAYMENT SYSTEM

The People’s Bank of China

Interim Measures for the Administration of the Pledge Business of Small- sum Payment System

Yin Ban Fa [2006] No. 24

February 5, 2006

Article 1

These Measures are formulated in accordance with the Law of the People’s Republic of China on the People’s Bank of China and other
relevant laws and regulations for the purpose of regulating the pledge business of the small-sum payment system, preventing from
and dissolving the payment risks and safeguarding the operation of the small-sum payment system in the efficient, safe and stable
way..

Article 2

The following terms used in these Measures shall have the meaning as follows :

(1)

The “pledge business of the small-sum payment system” refers to such an act whereby a member bank pledges the bonds to the People’s
Bank of China (hereinafter referred to as PBC) through the system of pledge business of the small- sum payment system to acquire
the pledge quota, and then distribute the pledge quota to itself and its branches as the net marginal debit and to use it as the
guarantee for the small-sum netting capital liquidation.

(2)

The “member banks” refers to the legal person institutions of commercial banks and their authorized branches that are established
within the territory of the People’s Republic of China according to law and engaged in the pledge business of the small-sum payment
system upon approval of the PBC.

(3)

The “branches of member banks” refers to the branches of commercial banks that act as the direct participants in the payment system
but do not directly handle the pledge business of the small- sum payment system.

(4)

The “China National Advanced Payment System” (hereinafter referred to as the Payment System) refers to the application system that
is developed, constructed and operated by the PBC and mainly handles all kinds of payment businesses and capital settlements as well
as the trading fund settlement of the money market between different places or within the same city of all the banks , and that is
composed of the large-sum payment system and the small-sum payment system.

(5)

The “Central Comprehensive Bond Business System” (hereinafter referred to as the Bond System) refers to the application system that
is operated by China Government Securities Depository Trust & Clearing Co. Ltd. (hereinafter referred to as CGSDTC) for providing
the participants in the bond market with the services on issuing, registering, entrusting and liquidating of bonds and repaying the
principal and interests on behalf and other services.

(6)

The “system of pledge business of the small- sum payment system” (hereinafter referred to as the system of pledge business) refers
to the application system that is supported by the Payment System and the Bond System and is used to realize the impawning , discharge
of impawning and replacement of pledges as well as the distribution and reclamation of pledge quotas.

(7)

The “alternative pledges” refers to the bonds or other securities that are appointed by the PBC and are trusted in the CGSDTC) by
the member banks for conducting the pledge business of the small- sum payment system.

(8)

The “pledge quota” refers to the guarantee quota of small-sum netting capital liquidation obtained by a member bank through conducting
the pledge registration of a certain amount of alternative pledges in the Bond System.

(9)

The “rate of bond pledge” refers to the proportion of the pledge quota for a single bond to the value of the bond, and it is expressed
as a percentage, of which, the value of the bond shall be temporarily counted according to the price of issuance thereof.

(10)

The “minimum quota of bond pledge” refers to the minimum par value during the process of handling the pledge business for a single
bond.

(11)

The “shortest term for payment of the pledges” refers to the shortest term for the compensation of the bonds that are used for the
pledge business.

Article 3

The PBC shall determine the member banks according to the qualification conditions of financial institutions. A member bank shall
meet the conditions as follows:

(1)

being the legal person institution of a commercial bank, and any of its branches to handle the pledge business of the small-sum payment
system shall be authorized by its legal person;

(2)

being a Grade A or B settlement member that has opened a bond account at the CGSDTC;

(3)

having no bad record in the inter-bank market in the latest three years;

(4)

other conditions required by the PBC.

Article 4

Where a member bank is the legal person institution of a nationally commercial bank, its application for handling the pledge business
of the small- sum payment system shall be accepted by the head office of the PBC; and for any other member bank to apply for handling
the pledge business of the small- sum payment system, an application shall be submitted to the branch or business management department
of the PBC at the local province (autonomous region or municipality directly under the Central Government) or the central sub-branch
of the capital city of province, and the application shall be subject to the preliminary examination by the branch (sub-branch) of
the PBC, and then be reported to the head office of the PBC for acceptance.

Article 5

To apply for handling the pledge business of the small- sum payment system to the PBC, a member bank shall submit the materials as
follows:

(1)

an application form for handling the pledge business of the small- sum payment system;

(2)

a photocopy of the license for financial businesses and the account opening confirmation letter issued by the CGSDTC and

(3)

other relevant materials required to be submitted by the PBC.

In case a member bank is a branch as authorized by a commercial bank, it also needs, except the materials mentioned above, to provide
a letter of attorney issued by the legal person institution to the PBC.

Article 6

A financial institution shall not provide false information to the PBC when it applies for becoming a member bank.

Article 7

For handling the pledge business of the small- sum payment system, a member bank shall conclude a main agreement with the PBC concerning
the pledge business of the small-sum payment system.

Article 8

The CGSDTC shall handle the pledge business of the small-sum payment system for the member banks through the system of pledge business
upon the authorization of PBC.

Article 9

When a member bank fails to timely complete the small-sum netting capital liquidation or has credit risks, its pledge quota shall
immediately be used for guaranteeing the creditor’s rights formed in payment system by PBC for it.

Article 10

Where a member bank fails to discharge the state of bond pledge for the pledged bonds before the expiration of the day for bond transfer,
the CGSDTC shall deposit the capital converted from the bonds that are not discharged from pledge after the expiration of the time
limit, and timely report it to the PBC.

Article 11

If the capital converted from the bonds is deposited by the CGSDTC, a member bank may file an application for discharging the deposit
of the converted capital to the PBC, after the PBC approved upon the examination, notify the CGSDTC to remit the deposited capital
converted from the bonds to the member bank provided that the relevant business restriction conditions are satisfied, and report
the handling circumstance to the PBC.

Article 12

When a member bank has credit risks, the PBC may entrust the CGSDTC to handle the pledge so as to liquidate the small-sum netting
capital.

Article 13

The pledge quota that a member bank obtains during the process of handling the pledge business of the small- sum payment system shall
be confirmed by the financial data recorded down in the Bond System.

Article 14

The pledge business of the small-sum payment system shall be composed of the pledge management business and the pledge quota management
business.

Article 15

The “pledge management business” refers to the increase, decrease and replacement of pledges handled through the system of pledge
business by the member banks.

The “increase of pledges” means that the alternative pledges are impawned to the PBC through the system of pledge business by a member
bank so as to obtain the pledge quota to satisfy its own and its branches’ requirements for handling the small-sum payment business
in the payment system.

The “decrease by adjustment of pledges” means that a member bank discharges the pledged bonds and correspondingly reduces the pledge
quota through the system of pledge business.

The “replacement of pledges” means that a member bank discharges the pledged bonds, simultaneously impawns new alternative pledges
and correspondingly adjusts the pledge quota through the system of pledge business.

Article 16

The “pledge quota management business” refers to the distribution and reclamation of pledge quotas handled by the member banks for
themselves and their respective subordinate branches through the system of pledge business.

The “distribution of pledge quotas” means that a member bank distributes the partly or totally pledge quotas that are not yet distributed
to itself and its branches for use through the system of pledge business, and correspondingly increase the net debit quota of all
the institutions.

The “reclamation of pledge quotas” means that a member bank reclaims the distributed and used pledge quotas and correspondingly reduces
the net debit quota of all the institutions through the system of pledge business.

Article 17

No branch of any member bank may directly handle the pledge business of the small-sum payment system, and its pledge quota shall be
distributed by the member bank at higher level..

Article 18

The PBC shall be responsible for determining the alternative pledge varieties, the rate of pledge bonds, the minimum quota of bond
pledge, the shortest period for payment of the pledges and other business indices and regularly publish them, of which, the pledge
rate of any kind of bonds shall not be more than 90%.

Article 19

All the entities involved in the system of pledge business shall strengthen the mutual coordination and cooperation, and establish
an emergency handling scheme.

Article 20

A member bank shall seriously maintain and guarantee the normal operation on the client-end of the system of pledge business.

Article 21

The PBC shall be responsible for maintaining the Payment System for the pledge business of the small-sum payment system, and the CGSDTC
shall be responsible for maintaining the Bond System for the pledge business of the small-sum payment system, and both parties shall
guarantee the normal operation of the relevant systems, and shall not provide convenience for the member banks to commit illegal
acts.

Article 22

If a member bank violates Article 20 of these Measures or the PBC or the CGSDTC violates Article 21 , and which delays or interrupts
the impawn, discharge or replacement of pledges or the distribution or withdrawal of pledge quotas and causes losses to the relevant
parties, it shall assume the corresponding liabilities and compensate for the losses.

Article 23

In case the force majeure, power supply obstacle, communications transmission obstacle or any other unforeseeable or uncontrolled
accident with a reasonable scope makes the system of pledge business unable to operate normally, or delays or interrupts the impawn,
discharge or replacement of pledges or the distribution or withdrawal of pledge quotas and causes losses to the relevant parties,
the compensation liability of the parties involved shall be partly or totally exempted according to the degree of influences of the
force majeure or accident, however, the relevant parties shall be obliged to timely remove the obstacles and take remedial measures.

Article 24

The CGSDTC may, in accordance with these Measures and the relevant provisions on the business system, formulate the Operating Rules
for the Pledge Business of the Small- sum Payment System, and implement them after reporting them to the PBC for archival filing.

Article 25

The service on pledge business of the small-sum payment system provided by CGSDTC to the member banks shall be paid , and the specific
charging standard shall be implemented after being reported to the PBC for archival filing.

Article 26

The power to interpret these Measures shall be remained with the PBC.

Article 27

These Measures shall be implemented as of February 20, 2006.



 
The People’s Bank of China
2006-02-05

 






REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE EXAMINATION AND APPROVAL PURVIEW RELATING TO EXPORT TAX REFUND OR EXEMPTION

State Administration of Taxation

Reply of the State Administration of Taxation on the Examination and Approval Purview Relating to Export Tax Refund or Exemption

Guo Shui Han[2006] No. 148

To the Bureau of State Taxation of Liaoning Province,

Your Request for Instructions about Transferring the Examination and Approval Power Relating to Export Tax Refund or Exemption to
Lower Levels (Liao Guo Shui Fa [2005] No. 204) has been received. Upon deliberation, we hereby give a reply as follows:

I.

On the Examination and Approval Purview Relating to Tax Exemption, Offset and Refund for the Products Regarded as Self-made Products

As to the products that are regarded as self-made products and exported by production enterprises, the competent taxation authority
shall carry out the tax exemption, offset and refund after verification in accordance with the relevant provisions in the Notice
of the Ministry of Finance and the State Administration of Taxation on Further Promoting the Measures for Tax Exemption, Offset and
Refund for Import and Export Goods (Cai Shui [2002] No.7) and the Notice of the State Administration of Taxation on Printing and
Distributing the Operational Rules for the Administration of Tax Exemption, Offset and Refund for Goods Exported by Production Enterprises
(for Trail Implementation) (Guo Shui Fa [2002] No.11) no matter whether the quantity thereof has exceeded 50% of the export amount
of self-made products of the present month, and may not report them to the bureau of state taxation of the province, autonomous region
or municipality directly under the Central Government for examination and approval.

II.

On the Examination and Approval Purview Relating to the Tax Exemption, Offset and Refund for the Newly-established Production Enterprises

As prescribed by the Article 8 of the Notice of the State Administration of Taxation on Some Issues Concerning Tax Refund or Exemption
for Export Goods (Guo Shui Fa [2003] No. 139), where a newly established enterprise, whose total domestic and overseas sales volume
is 5 million Yuan or more, and whose overseas sales volume accounts for 50% or more of its total sales volume, really faces difficulty
in handling the tax refund within 12 months as of the date of its establishment, the tax exemption, deduction or refund thereof may
be uniformly and monthly calculated on the basis of strict control and upon the approval of the bureau of state taxation of the province,
autonomous region or municipality directly under the Central Government. We consider that these provisions would strengthen the administration
and would not add a very large workload to the bureau of state taxation of the province, autonomous region or municipality directly
under the Central Government, therefore, we do not agree to transfer the examination and approval purview relating to the tax exemption,
offset and refund for the newly established production enterprises according to the aforesaid provisions to the bureau of state taxation
at the level of city or prefecture.

III.

On the Examination and Approval Purview Relating to Whether the Verification and Writing-off Forms of Export Proceeds of Foreign Exchange
Shall Be Provided

As prescribed by the Article 3 of the Supplementary Notice of the State Administration of Taxation on Relevant Issues Concerning
the Administration of Tax Refund or Exemption of Export Goods (Guo Shui Fa [2004] No.113) , for any export enterprise that is newly
established due to reorganization, restructuring, and merger or division and that re-handles registration on export tax refund or
exemption, it need not provide the verification and writing-off form of export proceeds of foreign exchange when declaring tax refund
or exemption upon the approval of the provincial taxation authority, and the subsequent examination may be adopted in accordance
with No. 64 [2004] Document of the State Administration of Taxation if the original export enterprise is not under any circumstance
as mentioned in Guo Shui Fa [2004] No. 64. These provisions are good for strengthening the administration, therefore, we do not agree
to transfer the examination and approval purview relating to the non-providing of verification and writing-off forms of export proceeds
of foreign exchange to the bureau of state taxation at the level of city or prefecture.

State Administration of Taxation

February 13, 2006



 
State Administration of Taxation
2006-02-13

 






ACCOUNTING STANDARDS FOR ENTERPRISES NO. 17 – BORROWING COSTS

the Ministry of Finance

Accounting Standards for Enterprises No. 17 – Borrowing Costs

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

With a view to regulating the recognition and measurement of borrowing costs, and the disclosure of relevant information, the present
Standards are formulated according to the Accounting Standards for Enterprises – Basic Standard.

Article 2

The term “borrowing costs” refers to the interest and other relevant costs, which are incurred by an enterprise in the borrowing of
loans.

The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses,
and exchange balance on foreign currency borrowings.

Article 3

The financing costs related to the financing leases shall be subject to the Accounting Standards for Enterprises No. 21 – Leases.

Chapter II Recognition and Measurement

Article 4

Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production
of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs
shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses.

The term “assets eligible for capitalization” shall refer to the fixed assets, investment real estate, inventories and other assets,
of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.

Article 5

The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:

(1)

The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest bearing debts
paid for the acquisition and construction or production activities for preparing assets eligible for capitalization;

(2)

The borrowing costs has already incurred; and

(3)

The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have
already started.

Article 6

During the period of capitalization, the to-be-capitalized amount of interests (including the amortization of discounts or premiums)
in each accounting period shall be determined according to the following provisions:

(1)

As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization, the to-be-capitalized
amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the present period
minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment.

The term “specifically borrowed loan” shall refer to a fund which is borrowed specifically for the acquisition and construction or
production activities of assets eligible for capitalization.

(2)

Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the enterprise
shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average
asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of
the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest
rate of the general borrowing.

The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs,
excluding the period of suspension of capitalization of the borrowing costs.

Article 7

Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period
shall be determined by the real interest rate method, and an adjustment shall be made to the amount of interests in each period.

Article 8

During the period of capitalization, the amount of interest capitalized during each accounting period shall not exceed the amount
of interest actually incurred to the relevant borrowings in the current period.

Article 9

During the period of capitalization, the exchange balance on foreign currency borrowings shall be capitalized, and shall be recorded
into the cost of assets eligible for capitalization.

Article 10

For the ancillary expense incurred to a specifically borrowed loan, those incurred before a qualified asset under acquisition, construction
or production is ready for the intended use or sale shall be capitalized at the incurred amount when they are incurred, and shall
be recorded into the costs of the asset eligible for capitalization; those incurred after a qualified asset under acquisition and
construction or production is ready for the intended use or sale shall be recognized as expenses on the basis of the incurred amount
when they are incurred, and shall be recorded into the profits and losses of the current period.

The ancillary expenses arising from a general borrowing shall be recognized as expenses at their incurred amount when they are incurred,
and shall be recorded into the profits and losses of the current period.

Article 11

Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts
for more than 3 months, the capitalization of the borrowing costs shall be suspended. The borrowing costs incurred during such period
shall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till the acquisition and
construction or production of the asset restarts. If the interruption is a necessary step for making the qualified asset under acquisition
and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue.

Article 12

When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the capitalization
of the borrowing costs shall be ceased. The borrowing costs incurred after the qualified asset under acquisition and construction
or production is ready for the intended use or sale shall be recognized as expenses at the incurred amount when they are incurred,
and shall be recorded into the profits and losses of the current period.

Article 13

The qualified assets under acquisition and construction or production, which have been ready for the intended use or sale, shall be
judged from the following aspects:

(1)

The substantial construction (including installation), or the production of the qualified assets has been finished completely or substantially;

(2)

The qualified assets under acquisition and construction or production meet or basically meet the design requirements, contractual
provisions or production requirements, even if there is any specific discrepancy between it and the design, contractual or production
requirements, its normal use or sale is not affected;

(3)

The amount of continuing disbursements for the qualified assets under acquisition and construction or production is very small, or
nearly no such disbursement incurs.

Where a qualified asset under acquisition and construction or production needs trial production or trial operation, it shall be deemed
to be ready for the intended use or sale, when the result of the trial production indicates that the asset is able to normally produce
qualified products, or when the trial operation result indicates that the asset is able to run or operate normally,.

Article 14

Where each part of a qualified asset under acquisition and construction or production is completed separately and is ready for use
or sale during the continuing construction of other parts, and if the acquisition and construction or production activities which
are necessary to prepare this part of the asset for the intended use or sale have already been completed substantially, the capitalization
of the borrowing costs in relation to this part of asset shall be ceased.

Where each part of a asset under acquisition and construction or production is completed separately and is ready for use or sale during
the continuing construction of other parts, but it can not be used or sold until the asset is entirely completed, the capitalization
of the borrowing costs shall be ceased when the asset is completed entirely.

Chapter III Disclosure

Article 15

An enterprise shall, in its notes, disclose the following information related to the borrowing costs:

(1)

the amount of the borrowing costs which is capitalized in the current period; and

(2)

the capitalization rate, which is used for calculating and determining the amount of the borrowing costs to be capitalized in the
current period.



 
the Ministry of Finance
2006-02-15

 






LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING APPROVING INDIA UTI BANK LIMITED TO ESTABLISH SHANGHAI REPRESENTATIVE OFFICE

Letter of China Banking Regulatory Commission concerning Approving India UTI Bank Limited to Establish Shanghai Representative Office

India UTI Bank Limited,

This Commission has received the letter which was signed by Mr. P. J. Nayak, the Chairman of the board of directors and the executing
director of your bank,

You are hereby approved to establish a representative office in Shanghai, whose Chinese name is “ӡ￿￿￿￿￿￿￿￿￿￿￿￿˾￿￿￿￿￿”
and whose name in English is ” UTI Bank Limited, Shanghai Representative Office “, according to the Measures on the Administration
of Foreign-funded Financial Institutions’ Representative Offices in China (Order No. 8, 2002 of the People’s Bank of China) (hereinafter
referred to as these Measures)

According to the related provisions of these Measures, upon approval, Raj Kumar Khosa is granted to have the qualifications as the
chief representative of this Representative Office.

China Banking Regulatory Commission

March 2, 2006



 
China Banking Regulatory Commission
2006-03-02

 






INTERIM PROVISIONS CONCERNING THE ADMINISTRATION ON OVERSEAS INVESTMENT OF THE NATIONAL SOCIAL SECURITY FUND

National Council for Social Security Fund

Interim Provisions concerning the Administration on Overseas Investment of the National Social Security Fund

National Council for Social Security Fund

March 14, 2006

Chapter I General Provisions

Article 1

The present Provisions are formulated in accordance with the relevant laws and regulations of the state for the purpose of regulating
the overseas investment by the national social security fund (hereinafter referred to as the NSSF) and preventing and solving the
relevant risks arising from the NSSF investment.

Article 2

The overseas investment of NSSF shall follow the principles of security and stability .

Article 3

The overseas investment of NSSF shall be organized and carried out by the National Council for Social Security Fund (hereinafter referred
to as the NCSSF).

Article 4

In cooperation with the Ministry of Labor and Social Security (hereinafter referred to as the MOLSS) and the State Administration
of Foreign Exchange (hereinafter referred to as the SAFE), the Ministry of Finance (hereinafter referred to as the MOF) shall formulate
the relevant policies for the administration and operation of overseas investment of NSSF and scrutinize the operation thereof.

China Securities Regulatory Commission (hereinafter referred to as the CSRC) and China Banking Regulatory Commission (hereinafter
referred to as the CBRC) shall, in accordance with their respective functions and duties, carry out supervision on relevant matters
of the overseas investment of NSSF.

Chapter II Overseas Investment Managers of the National Social Security Fund

Article 5

The NCSSF shall entrust overseas investment managers that meet the requirements as prescribed in Article 6 of the present Provisions
to carry out the overseas investment of NSSF.

Article 6

An overseas investment manager of NSSF shall meet the requirements as follows:

(1)

Having stable financial status, good creditworthiness and risk control indicators that meet the provisions of laws and regulations
as well as the relevant requirements of the regulatory organs in the country or region where it is located;

(2)

Having a work experience on asset management for more than 6 years and the assets under its management is no less than US $ 5 billion
(or equivalent currency) in the latest fiscal year;

(3)

The practitioners meeting the relevant requirements for qualification of practice in the country or region where it is located;

(4)

Having a sound management structure and perfect internal control rules as well as standardized business operation;

(5)

No major punishment given by the regulatory organs of the country or region where it is located for the latest 3 years; and

(6)

Having been established and registered outside the territory of China, the legal system and financial regulatory rules in a country
or region where it is located are perfect and the regulatory organ of which has concluded an Understanding Memorandum with the CSRC
for Supervisory Cooperation and maintains an effective supervisory cooperation relationship therewith.

Article 7

The NCSSF shall, by referring to the current international conventions, organize an appraisal in order to determine an overseas investment
manager of NSSF. The appraisal result shall, within 10 days as of the day after an appraisal is concluded, be reported to the MOF,
the MOLSS, the CSRC and the SAFE.

Article 8

The NCSSF shall conclude a Contract on the Management of Entrusted Assets with an overseas investment manager of NSSF, except for
meeting the conventions of general entrusted operation, the Contract on the Management of Assets shall satisfy the following provisions:

(1)

The Chinese shall prevail in the written languages of Contract, whereas in case any foreign language is required by the Contract itself,
market situation or any convention, a Chinese version shall be attached thereto;

(2)

Clarifying that the trustee shall be subject to the principles of withdrawal from the conflict of interest;

(3)

Clarifying the responsibilities and faithful obligation of the trustee ;

(4)

Clarifying the restrictions about the investment varieties or tools;

(5)

Clarifying the restrictions on the total investment amount in stocks, bonds or other securities of any listed company;

(6)

Clarifying the restrictions on the proportion of the stock investment of a listed company in the company’s total amount of stocks
as publicly offered;

(7)

Clarifying the calculating method of the net asset value and yield rate of the NSSF;

(8)

Clarifying that the NCSSF may employ an accounting firm to implement an auditing on the NSSF assets managed by an overseas investment
manager of NSSF;

(9)

Clarifying the relevant terms for rescinding and terminating the contract; and

(10)

Other necessary matters need to be clarified.

Before the NCSSF concludes a Contract on the Entrusted Management of NSSF Assets, a clean legal opinion shall be produced by a professional
lawyer with an experience on practice more than 5 years.

The NCSSF shall report the contract , together with the legal opinion thereof to the MOF, the MOLSS, the CSRC and the SAFE within
15 days as of the day when a Contract on the Entrusted Management of NSSF Assets is concluded.

Chapter III Overseas Assets Trustee of NSSF

Article 9

The NCSSF shall entrust overseas assets trustee that meet the provisions of Article 10 of the present Provisions to take charge of
the overseas asset trust business of NSSF.

Article 10

An overseas assets trustee of NSSF shall meet the requirements as follows:

(1)

Its paid-up capital in the lasted fiscal year shall be not less than US $ 5 billion (or equivalent currency) or the scale of the trust
assets shall be not less than US $ 500 billion (or equivalent currency);

(2)

Its long-term credit having been rated as Grade A /equivalent grade or above for the latest 3 years by an internationally accepted
rating agency ;

(3)

Having enough special personnel who are familiar with the trusted operation;

(4)

Having capability of conducting settlement and delivery in a safe and highly efficient manner;

(5)

Having a business place, facilities for security protection that meets the relevant requirements and any other facilities related
to the trusted operation of NSSF ;

(6)

Having a perfect internal audit and inspection and control system as well as a perfect risk control system;

(7)

No major punishment is given by the regulatory organ in the country or region where it is located in the latest 3 years; and

(8)

Having been established and registered outside the territory of China, the legal system and financial regulatory rules are perfect
in a foreign country or region where it is located, and the regulatory organ of which has concluded an Understanding Memorandum for
Supervisory Cooperation with the CSRC and maintains an effective supervisory cooperation relationship therewith.

Article 11

In the light of the international conventions, the NCSSF shall organize an appraisal in order to determine an overseas assets trustee
of NSSF. The appraisal result shall, within 10 days as of the day when an appraisal is concluded, be reported to the MOF, the MOLSS,
the CBRC, the CSRC and the SAFE.

Article 12

The NCSSF shall conclude with an overseas assets trustee of NSSF a Contract on the Overseas Assets Trust of NSSF, which shall satisfy
the provisions as follows except for satisfying the conventions of the general contracts on trust:

(1)

The Chinese shall prevail in the written languages of Contract, in case any foreign language is required by the Contract itself, market
situation or any convention, a Chinese version shall be attached thereto;

(2)

Clarifying the responsibilities and faithful obligation of a trustee;

(3)

Clarifying that the NCSSF may employ an accounting firm to carry out an auditing on the NSSF Assets as mandated by the overseas assets
trustee of NSSF ;

(4)

Clarifying the relevant terms for rescinding and terminating a contract; and

(5)

Other necessary matters need to be clarified.

Before the NCSSF concludes a Contract on the Custody of Overseas NSSF Assets, a clean legal opinion shall be produced by a professional
lawyer with an experience on practice more than 5 years.

The NCSSF shall report the contract, together with the legal opinion thereof to the MOF, the MOLSS, the CBRC, the CSRC and the SAFE
within 15 days as of the day when a Contract on the NSSF Assets is concluded.

Article 13

An overseas assets trustee of NSSF shall make a written commitment to the NCSSF on the terms as follows:

(1)

Being subject to the provisions of Articles 22 and 23 of Chapter V herein on the range of incomes and expenditures of an overseas
NSSF foreign exchange account;

(2)

Carrying out the obligation of information reporting prescribed in Article 25 of Chapter V herein; and

(3)

Supervising the investment operation of an overseas investment manager of NSSF and, in case any overseas investment manager of NSSF
is found to have broken the relevant provisions of Article 22 or 23 of Chapter V herein on the range of incomes and expenditures
of an overseas NSSF foreign exchange account, it shall be reported to the NCSSF and the SAFE in time.

If an overseas assets trustee of NSSF fails to perform the aforesaid obligations without any justifiable reason, the MOF, the MOLSS,
and the SAFE may advise the NCSSF to rescind the relevant Contract on the Custody of Overseas NSSF Assets.

Chapter IV Overseas investment of NSSF

Article 14

The capital source of the overseas NSSF investment shall come from the proceeds as generated from the reduction of overseas held state
shares, which are turned over in foreign exchange. The proportion of overseas investment of NSSF shall be calculated in the light
of costs and shall not exceed 20% of the total NSSF assets.

Article 15

An overseas investment of NSSF shall be restricted to the investment varieties and tools as follows:

(1)

Bank deposits;

(2)

Bonds of foreign governments, bonds of international financial organizations, bonds of foreign organizations and foreign companies;

(3)

Bonds issued overseas by the Chinese government or Chinese enterprises;

(4)

Monetary market derivatives, like bank’s bills and large negotiable certificates of deposits;

(5)

Stocks;

(6)

Funds;

(7)

Financial derivatives like swap, forward and etc.; and

(8)

Other investment variety or tool, which the MOF together with the MOLSS has approved.

The term “bank” mentioned in Item (1) herein refers to that an overseas Chinese-funded bank or a foreign bank whose long-term credit
has been rated as Grade A / equivalent grade or above by an internationally accepted rating agency.

The term “bonds” mentioned in Item (2) herein refers to the bonds that have been rated as Grade BBB / equivalent grade or above by
an internationally accepted rating agency.

The term “monetary market derivatives” mentioned in Item (4) herein refers to the monetary market derivatives that have been rated
as Grade AAA /equivalent grade or above by an internationally accepted rating agency.

The term “stocks” mentioned in Item (5) herein refers to the stocks that are listed in an overseas stock exchange;

The term “funds” mentioned in Item (6) herein refers to the funds that have been publicly issued in the securities market, the investment
scope of which shall meet the provisions of this Article on other investment varieties and tools.

The term “financial derivatives like swap, forward and etc.” mentioned in Item (7) herein refers to the current financial derivatives
traded in the financial market. The investment of NSSF on financial derivatives tools shall be limited only for the requirement of
the risk management and be prohibited from the speculation or magnified transaction.

Article 16

The investment of entrusted assets of NSSF made by a single overseas investment manager of NSSF on a single securities or fund issued
by an organization shall not be more than 10 % of the said securities or fund. Under the circumstance of cost-based calculation,
it shall not be more than 20 % of the total value of the entrusted overseas assets of NSSF under its management.

Under any of the circumstances as follows, the restrictions on proportion as prescribed in the preceding paragraph may not apply:

(1)

Where an overseas investment manager of NSSF is entrusted by the NCSSF to participate in the listing placement or directional placement
as an institutional investor; or

(2)

Where the stocks, which are held by the NCSSF, are entrusted to an overseas investment manager of NSSF for investment operation.

Article 17

In accordance with the overseas investment operation of NSSF, the MOF together with the MOLSS may make adjustment on the varieties
and proportions of the overseas investment of NSSF.

Article 18

The NCSSF shall entrust overseas investment managers of NSSF for investment operation according to the principles of decentralization.

The assets entrusted by the NCSSF to a single overseas investment manager of NSSF for investment operation shall not exceed 50% of
the total value of the NSSF assets entrusted for overseas investment.

Article 19

The management fee and trust fee for the overseas investment of NSSF shall be decided by referring to the rating standards of international
identical products and shall be reported to the MOF and MOLSS.

Chapter V Administration on Foreign Exchange of the Overseas Investment of NSSF

Article 20

The overseas investment of NSSF shall be subject to the relevant provisions of state foreign exchange administration.

Article 21

In the light of the international conventions as well as requirements for overseas investment, the NCSSF shall establish an overseas
foreign exchange capital account of NSSF in the organization of the relevant trustee of overseas NSSF assets. The NCSSF shall report
it to the SAFE for archival filing within 5 days after an aforesaid foreign exchange account is opened.

Article 22

The scope of incomes in an overseas foreign exchange capital account of NSSF shall include :

(1)

Capital remitted from a foreign exchange deposit account within the territory of China;

(2)

Capital generated from the sale of investment products;

(3)

Proceeds generated from overseas investment; and

(4)

Any other relevant income generated from overseas investment as well as other income that has been approved by the SAFE.

Article 23

The scope of expenditures from an overseas foreign exchange capital account of NSSF shall include :

(1)

Capital remitted back to foreign exchange deposit account within the territory of China;

(2)

Capital paid for the purchase of investment products; and

(3)

Any other relevant expenditure by overseas investment (including the relevant taxes and fees) as well as any other expenditure that
has been approved by the SAFE.

Article 24

Where the NCSSF remits outward, or inward any principal or proceeds over US $50 million (or equivalent currency), it shall report
it to the SAFE for archival filing 3 workdays in advance.

Upon the approval of the State Council, in accordance with the situation of international balance of payments, the SAFE may require
the NCSSF to adjust the time for remitting outward or inward the principals or proceeds.

Article 25

The NCSSF shall, in the Contract on the Overseas Assets Trust of NSSF, require the trustee of NSSF overseas assets to report the relevant
information to the SAFE as follows:

(1)

Reporting the outward or inward remittance within 2 workdays after the NCSSF remits outward or inward the foreign exchange fund;

(2)

Reporting the relevant circumstances about the overseas investment of NSSF in the previous last month within 5 workdays at the beginning
of each month; and

(3)

Reporting the relevant accounting statements of overseas investment of NSSF in the previous year within 3 months at the beginning
of each accounting year.

The term “workday” as mentioned herein shall be based on the workday applied in the country or region where a trustee of overseas
assets of NSSF is located.

Chapter VI Reporting System

Article 26

The NCSSF shall implement supervision, examination and appraisal on the circumstance of management and trust of overseas investment
of NSSF and report the relevant information to the MOF and the MOLSS on a quarterly, 6-month and annual basis. In the case of any
major event in the overseas investment of NSSF, the NCSSF shall report it to the MOF, MOLSS and SAFE immediately.

Article 27

The NCSSF shall incorporate the entrusted overseas assets of NSSF into the total NSSF assets and work out the financial statements
in a unified manner and make disclosure and reports in accordance with the provisions of the Interim Measures for the Administration
of the National Social and Security Fund Investment.

Article 28

The MOF, the MOLSS and the SAFE shall have the right to require the NCSSF to provide the relevant reports on the overseas investment
of NSSF. In case the NCSSF has any act in violation of the present Provisions, the MOF, MOLSS and SAFE shall order it to correct
in the light of their respective functions and duties, and give a punishment thereto in accordance with the relevant provisions.

Chapter VII Supplementary Provisions

Article 29

The investments of NSSF in Hong Kong SAR and Macao SAR shall be governed by the present Provisions.

Article 30

The present Provisions shall come into force as of May 1, 2006.



 
National Council for Social Security Fund
2006-03-14

 






LETTER OF CHINA BANKING REGULATORY COMMISSION CONCERNING THE APPROVAL FOR THE UNION BANK OF CALIFORNIA, N. A. TO CLOSE UP ITS SHANGHAI REPRESENTATIVE OFFICE

Letter of China Banking Regulatory Commission concerning the Approval for the Union Bank of California, N. A. to Close up Its Shanghai
Representative Office

Union Bank of California N. A.,

The letter which was signed by the president and chief executive officer of your bank, Takashi Morimura, on January 25, 2006, has
been received by this Commission.

You are hereby approved to close up your Shanghai Representative Office according to the Measures for the Administration of Foreign-funded
Financial Institutions’ Representative Offices in China (Order No. 8, 2002 of the People’s Bank of China). Please carry out the related
cancellation formalities in accordance with the related provisions.

China Banking Regulatory Commission

March 21, 2006



 
China Banking Regulatory Commission
2006-03-21

 






NOTICE OF THE NATIONAL DEVELOPMENT AND REFORM COMMISSION AND THE STATE ADMINISTRATION OF TAXATION CONCERNING THE EXEMPTION OF BUSINESS TAXES FROM CREDIT GUARANTY INSTITUTIONS FOR SMALL/MEDIUM-SIZED ENTERPRISES






National Development and Reform Commission, State Administration of Taxation

Notice of the National Development and Reform Commission and the State Administration of Taxation concerning the Exemption of Business
Taxes from Credit Guaranty Institutions for Small/Medium-sized Enterprises

Fa Gai Qi Ye [2006] No. 563

The development and reform commissions, economic and trade commissions (economic commissions), small/medium-sized enterprise bureaus
and local taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities
specifically designated in the state plan and the Xinjiang production and construction corps:

For the purpose of carrying into effect the Law of the People’s Republic of China on Promoting Small/medium-sized Enterprises, the
Notice of the General Office of the State Council concerning Forwarding the Opinions of the State Economic and Trade Commission concerning
Encouraging and Promoting the Development of Small/medium-sized Enterprises (Guo Ban Fa [2000] No. 59) and the Notice of the National
Development and Reform Commission and the State Administration of Taxation about Doing a Better Job of the Exemption of Business
Taxes from Credit Guaranty Institutions for Small/Medium-sized Enterprises (Fa Gai Qi Ye [2004] No. 303 ) as well as the relevant
instructions and spirits of the principals of the State Council concerning promoting the development of credit guaranty institutions
for small/medium-sized enterprises, the relevant issues are hereby notified as follows on getting on with a better job in the exemption
of business taxes for credit guaranty institutions for small/medium-sized enterprises:

I.

Basic Requirements for Tax Exemption for a Credit Guaranty Institution

(1)

After the approval of the authorization department of the government (administrative department of the government with responsibility
for small/medium-sized enterprises), having been registered as an enterprise legal person in accordance with law and being an institution
that mostly provides guaranty services for small/medium-sized enterprises;

(2)

Not aiming at making profits and the charging rates for guaranty services being followed to the approval of the administrative department
of the local people’s government with responsibility for small/medium-sized enterprises as well as the price department of the people’s
government at the same level;

(3)

Having a sound internal management system, the capacity to provide guaranty for small/medium-sized enterprises, outstanding business
achievements, an improved mechanism of beforehand appraisal, ongoing supervision and follow-up recourse and disposal as well as a
registered capital over 20 million Yuan;

(4)

The accumulative guaranteed amount for the loans of small/medium-sized enterprises being occupied 80% of its accumulative guaranteed
amount in total, the guaranteed balance as provided for a single enterprise being no more than 10% of its total paid-in capital,
and the guaranteed amount in a single deal shall be no more than 40 million Yuan at the maximum;

(5)

The amplified proportion between the guarantee fund and the loan under guaranty being no less than 3 times as well as the compensatory
repayment being no more than 5% of the guarantee fund;

(6)

Being subject to the supervision and administration of the administrative department of the local government in charge of small/medium-sized
enterprises and submitting the situations of guaranty undertaking and financial statements to the said department in the light of
the relevant requirements;

A credit guaranty institution, whose term for enjoying the preferential policy of exempting business taxes has expired, may continue
to apply for reducing tax or tax exemption when still meeting the aforesaid requirements.

II.

Procedures for Taxes Exemption

If the credit guaranty institutions voluntarily apply for tax exemption, after the provincial administrative department of small/medium-sized
enterprises and the provincial taxation authorities carry out examination and make recommendation, the State Development and Reform
Commission and the State Administration of Taxation shall examine and approve, and distribute a name list of the institutions that
may enjoy tax exemption. The guaranty institutions on the name list shall go to the administrative tax authority to handle the relevant
formalities for tax exemption with the relevant documents. The relevant guaranty institutions may enjoy the policies for business
tax exemption after the local tax authority examine and approve, and handle the formalities for tax exemption in the light with the
name list as distributed by the State Development and Reform Commission and the State Administration of Taxation.

III.

Term of Tax Exemption

The term for business tax exemption is 3 years, which shall be computed as of the day when the tax authority in charge of guaranty
institutions goes through the formalities for tax exemption.

IV.

The administrative departments of small/medium-sized enterprises and local tax bureaus of all provinces, autonomous regions, municipalities
directly under the Central Government and the cities specifically designated in the state plan shall do a good job in their examination
and recommendation of credit guaranty institutions for small/medium-sized enterprises in accordance with the requirements of this
Notice and the principles of openness and impartiality,.

V.

The administrative departments of small/medium-sized enterprises and local tax bureaus of all provinces, autonomous regions, municipalities
directly under the Central Government and the cities specifically designated in the state plan shall scrutinize the implementation
and effectiveness of business tax exemption for credit guaranty institutions in the preliminary phase and adopt a dynamic administration
on the credit guaranty institutions for small/medium-sized enterprises that enjoy the policy for business tax exemption in accordance
with the real situations. For the credit guaranty institution that violates the relevant provisions and fails to meet the requirements
for tax deduction and exemption, it shall, upon discovery, be reported faithfully to the State Development and Reform Commission
and the State Administration of Taxation to revoke its qualification for further enjoying tax exemption.

VI.

The administrative departments of small/medium-sized enterprises of all provinces, autonomous regions, municipalities directly under
the Central Government and the cities specifically designated in the state plan in cooperation with local taxation bureaus shall
do well in the relevant work and submit the following materials in duplicate and written form to the Small/medium-sized Enterprise
Department of the State Development and Reform Commission and the Department of Circulation Tax Administration of the State Administration
of Taxation before June 15, 2006.

(1)

The achievements of, existing problems in and suggestion on the work relating to business tax exemption for credit guaranty institutions
for small/medium-sized enterprises in the preliminary four batches;

(2)

A name list of the credit guaranty institutions for small/medium-sized enterprises, which meet the requirements for tax exemption
(the name list shall have been publicized);

(3)

Registration Forms (see Appendix) as well as the photocopies of business licenses and constitutions of the credit guaranty institutions
for small/medium-sized enterprises, which meet the requirements for tax exemption;

(4)

A name list of the credit guaranty institutions for small/medium-sized enterprises, which fail to meet the requirements for tax exemption
in the preliminary four batches after examination as well as the reasons.

Contact entity: Department of Small/Medium-sized Enterprise of the National Development and Reform Commission

Linkman: Zhang Haiying

Contact No.: 68535638

Appendix: Registration Form of the Credit Guaranty Institutions for Small/Medium-sized Enterprises

State Development and Reform Commission

State Administration of Taxation

April 3, 2006 htm/e05058.htmAppendix

￿￿

￿￿

Appendix:

Registration Form of the Credit Guaranty Institutions for Small/medium-sized Enterprises

￿￿

￿￿￿￿Date of Filling in the Form                           

Name of a guaranty institution (full name)

 

Address

 

Nature of legal person

 

Examination opinions produced by the local administrative department of small/medium-sized enterprises of the city

Legal representative (person-in-charge)

 

Person-in-charge:             

Seal:                                 

Contact person

 

Address

 

Telephone

 

Fax

  

Time of establishment

 

Registered capital (in 10, 000 Yuan)

 

Guarantee fund (in 10, 000 Yuan)

Total amount

 

Monetary Capital

 

Examination opinions as produced by the local administrative department of Small/medium-sized enterprises of the province,
autonomous regions or municipalities directly under the Central Government

Practitioners

 

 

Range of guarantee premiums

 

 

Number of guaranteed enterprises

Accumulated number

 

Person-in-charge:               

Seal:                                      

Number of small/medium-sized enterprises

 

Guaranteed number at present

 

Loan under guaranty (in 10, 000 Yuan)

Accumulated amount

 

Guaranteed amount at present

 

Reserve funds for risk and compensatory repayment (in 10, 000 Yuan)

Accumulated withdrawal of reserve funds in total

   

Accumulated compensatory repayment

 

Accumulated losses incurred from compensation

 

Business income (in 10, 000 Yuan)

Accumulated amount

 

 

Income generated from guaranty premiums

 

Total Profits (in 10, 000 Yuan)

 

Accumulated tax return (10, 000 Yuan)

Business taxes

 

Income taxes

 

￿￿￿￿Seal of the Applicant Entity:                       Signature of the Person-in-charge:￿￿   ￿￿      ￿￿￿￿￿￿



PROVISIONS OF THE SUPREME PEOPLE’S COURT ABOUT SEVERAL ISSUES ON THE APPLICATION OF THE COMPANY LAW OF THE PEOPLE’S REPUBLIC OF CHINA (I)

the Supreme People’s Court

Announcement of the Supreme People’s Court of the People’s Republic of China

Provisions of the Supreme People’s Court about Several Issues on the Application of the Company Law of the People’s Republic of China
(I) adopted at the 1382nd meeting of the Adjudication Committee of the Supreme People’s Court on March 27, 2006, are hereby promulgated
and shall enter into effect as of the day of May 9, 2006.

the Supreme People’s Court of the People’s Republic of China

April 28, 2006

Provisions of the Supreme People’s Court about Several Issues on the Application of the Company Law of the People’s Republic of China
(I)

(Adopted at the 1382nd meeting of the Adjudication Committee of the Supreme People’s Court on March 27, 2006 Fa Shi [2006] No. 3)

In order to correctly apply the Company Law of the People’s Republic of China amended at the 18th session of the Standing Committee
of the Tenth National People’s Congress on October 27, 2005, the concrete application of the Company Law by the people’s courts in
the hearing of relevant civil disputes are formulated as follows:

Article 1

If the civil act or event involved in a undecided case of the people’s court or a case newly accepted by the people’s court but which
occurred prior to the implementation of the Company Law, after the Company Law is brought into effect, the laws, regulations and
judicial interpretations effective at that time shall apply to the case.

Article 2

Where a lawsuit is brought to the people’s court prior to the implementation of the Company Law because of the disputes over any civil
act or event, if there is no clear provision in the effective laws, regulations or judicial interpretations at that time, such case
shall be dealt with in the light of the relevant provisions of the Company Law.

Article 3

When a lawsuit is lodged to the people’s court by the plaintiff for either of the reasons mentioned in Paragraph 2 of Article 22
and Paragraph 2 of Article 75 of the Company Law and if it exceeds the time limit as prescribed in the Company Law, the people’s
court shall reject it.

Article 4

The expression “180 consecutive days or more” mentioned in Article 152 of the Company Law shall be a full share-holding period when
the shareholder(s) initiate(s) a lawsuit to the people’s court. The expression “aggregately holding 1% or more of the total shares
of the company” means the aggregate of the shares, which is held by two or more shareholders.

Article 5

The Company Law shall not apply to the review of a case, which a final judgment has been made by the people’s court before the implementation
of the Company Law.

Article 6

These Provisions shall enter into effect as of the day of the promulgation.

 
the Supreme People’s Court
2006-04-28

 



ACCOUNTING STANDARDS FOR ENTERPRISES NO. 36 – DISCLOSURE OF AFFILIATED PARTIES

Accounting Standards for Enterprises No. 36 – Disclosure of Affiliated Parties

Cai Kuai [2006] No. 3
February 15, 2006
Chapter I General Provisions

Article 1

With a view to regulating the disclosure of information about affiliated parties and transactions among them, these Standards are
formulated in accordance with Accounting Standards for Enterprises – Basic Standards.

Article 2

An enterprise shall, in its financial statements, disclose the related information about all affiliated party relationships and the
transactions among them. If it offers consolidated financial statements to outsiders, it is not required to disclose the transactions
among the enterprises that have been included in the scope consolidation, but it shall disclose the affiliated party relationships
and transactions beyond the scope of consolidation.

Chapter II Affiliated Parties

Article 3

When a party controls, jointly controls or exercises significant influence over another party, or when two or more parties are under
the control, joint control or significant influence of the same party, the affiliated party relationships are constituted.

The term “control” means having the power to decide an enterprise’s financial and operating policy and obtains benefits from its business
activities.

The term “joint control” means control over an economic activity as specified by contract, which exists only when the investing parties
that need to share the power of control in important financial and operating decision-making agree unanimously.

The term “significant influence” means having the power to participate in the formulation of financial and operating policies of an
enterprise, but not the power to control or jointly control the formulation of these policies together with other parties.

Article 4

The following parties constitute the affiliated parties of an enterprise:

(1)

The parent company thereof;

(2)

The subsidiaries thereof;

(3)

Other enterprises under the control of the same parent company thereof;

(4)

The investors having joint control over the enterprise;

(5)

The investors having significant influence thereon;

(6)

The joint ventures thereof;

(7)

The associated enterprises thereof;

(8)

The main individual investors and the close family members thereof. A main individual investor refers to an individual investor who
can control or jointly control an enterprise, or has significant influence thereon; and

(9)

Key managerial personnel of the enterprise or of its parent company and the close family members thereof. Key managerial personnel
refer to those who have the power of and responsibility for planning, directing and controlling the activities of the enterprise.
The close family members of a main individual investor or of a key managerial person refer to the family members who may influence
or be influenced by that individual in handling transactions with the enterprise.

(10)

Other enterprises the main individual investors, key managerial personnel, or close family members of such individuals control, jointly
control or have significant influence over .

Article 5

Where one party has the following relationship with one enterprise, it is not an affiliated party thereof.

(1)

The capital providers, public utility units, government departments and organs which have normal dealings therewith;

(2)

A single customer, supplier, franchiser, distributor or agent with whom an enterprise transacts a significant volume of business
by virtue only of the resulting economic dependence; and

(3)

The joint venture operators which jointly control a joint venture therewith.

Article 6

Enterprises shall not be regarded as affiliated parties simply because they are all under the control of the state.

Chapter III Affiliated Party Transaction

Article 7

The term “affiliated party transaction” refers to an event whereby a transfer of resources, labor services or obligations takes place
between affiliated parties, irrespective of whether money is charged.

Article 8

The types of affiliated party transaction usually include as follows:

(1)

Purchases or sales of goods;

(2)

Purchasing or selling assets other than goods;

(3)

Rendering or receiving labor services;

(4)

Guarantying;

(5)

Providing capital (including loans or equity contributions);

(6)

Leasing;

(7)

Agency;

(8)

Transfer of research and development projects;

(9)

License agreements;

(10)

Settling debts on behalf of an enterprise or by this enterprise that represents another party; and; and

(11)

The emoluments for key managerial personnel.

Chapter IV Disclosure

Article 9

An enterprise shall, in the annotations to the financial statements, disclose the following information about the parent company
and subsidiaries thereof, irrespective of whether there have been transactions between them:

(1)

The names of the parent company and subsidiaries thereof

Where the parent company is not the ultimate controlling party of the enterprise, it shall disclose the name of the ultimate controlling
party.

Where neither the parent company nor the ultimate controlling party provides the financial statements to outsiders, it shall disclose
the name of the parent company which is its closest superior parent company providing financial statements to outsiders.

(2)

The nature of business, name, place of registration, and registered capital (or actually paid-in capital, stock capital) and changes
therein of the parent company and its subsidiaries; and

(3)

The proportion of shares or voting rights held by the parent company in this enterprise or by this enterprise in its subsidiaries.

Article 10

Where there have been transactions between an enterprise and its affiliated parties, it shall disclose the nature of the affiliated
party relationships, the types of transactions and the elements of transaction in the annotations. The elements of transaction shall
at least include:

(1)

the amount of transactions,

(2)

the amounts, terms and conditions of outstanding items, and the information about the guaranties granted to others or obtained,

(3)

the amounts of provisions for non-performing debts under outstanding items, and

(4)

price policies.

Article 11

Affiliated party transactions shall be disclosed on the basis of the affiliated parties and the types of the transactions involved.

The affiliated party transactions of similar types may be disclosed in aggregate in case that it does not affect readers’ correct
understanding of the financial statements.

Article 12

No enterprise may disclose an affiliated party transaction as a fair transaction unless it provides exact proofs.



 
Ministry of Finance
2006-05-15

 






1...192021...25Page 20 of 25

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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