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CIRCULAR OF THE STATE ADMINISTRATION OF FOREIGN EXCHANGE ON ADJUSTING THE ADMINISTRATION ON SYNTHETIC POSITIONS IN THE SETTLEMENT AND SALE OF FOREIGN EXCHANGE OF BANKS

Circular of the State Administration of Foreign Exchange on Adjusting the Administration on Synthetic Positions in the Settlement
and Sale of Foreign Exchange of Banks

Hui Fa [2006] No. 26

The branches and foreign exchange management departments under the State Administration of Foreign Exchange (SAFE) in all provinces,
autonomous regions, and municipalities directly under the Central Government, the branches in the cities of Shenzhen, Dalian, Qingdao,
Xiamen and Ningbo; all the policy banks, state-owned commercial banks, and joint stock commercial banks,

For the purpose of meeting the demand for the development of foreign exchange market, promoting designated foreign exchange banks
to perfect exchange rate risk prevention mechanism, the SAFE determines to adjust the policies for the administration of synthetic
positions in the settlement and sale of foreign exchange of designated foreign exchange banks, and hereby makes the following notice
concerning the relevant issues:

I.

From July 1, 2006, SAFE shall manage the synthetic positions in the settlement and sale of foreign exchange of designated foreign
exchange banks (hereinafter referred to as the banks) on the accrual basis.

II.

The principle of position administration on the accrual basis as mentioned in this Circular shall mean that a bank provides the business
of settlement and sale of foreign exchange to its clients, business of settlement and sale of foreign exchange of its own, and the
inter-bank foreign exchange market transactions reckoned into the synthetic positions in the settlement and sale at the day when
the transaction is concluded.

The principle of position administration on cash-basis accounting shall mean that a bank provides the business of settlement and sale
of foreign exchange to its clients, business of settlement and sale of foreign exchange of its own, and the inter-bank foreign exchange
market transaction reckoned into the synthetic positions in settlement and sale at the day when the capital is actually received
and paid.

III.

After the implementation of the principle of position administration on the accrual basis, in light of the actual situations of the
business of settlement and sale of foreign exchange of the bank itself and the inter-bank foreign exchange market transactions, and
according to the requirements of the statements in the Form of Daily Report on Synthetic Positions in the Settlement and Sale of
Foreign Exchange (See Annex II), a bank shall accurately calculate the synthetic positions of the settlement and sale of foreign
exchange of the bank itself, and submit the new Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign
Exchange (See Annex I) to the SAFE or its branch administrations. The Form of Daily Report on Synthetic Positions in Settlement and
Sale of Foreign Exchange is annexed to the Notice of the State Administration of Foreign Exchange on Adjusting the Measures for the
Administration of Positions in the Settlement and Sale of Foreign Exchange of Banks (Hui Fa [2005] No.69, hereinafter referred to
as Hui Fa No.69) shall be abolished.

IV.

A bank shall submit the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange to SAFE and its
branch administrations according to the following requirements:

1.

The Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange of the policy banks, national commercial
banks, and the market makers of the inter-bank foreign exchange market shall be reported to SAFE respectively by fax and email before
10 o’clock in the morning of the second work day (The electronic documents shall be made in the form of EXCEL). Fax: 010￿￿68402303;Email:
yinhangchu@mail.safe.gov.cn.

2.

The specific time and ways for submission of the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign
Exchange by urban commercial banks, rural commercial banks, rural cooperative financial institutions, and foreign-funded banks shall
follow the requirements of the branches of the SAFE at their localities.

V.

Adjustment shall be made on the Form of Information on Synthetic Positions in the Settlement and Sale of Foreign Exchange of Designated
Foreign Exchange Banks, which is submitted to the SAFE by each branch of SAFE (including foreign exchange management department,
the same hereinafter). Each branch of SAFE shall fill in the form and make a report according to the new design of the statements
(See Annex III) from the day when this Circular is implemented, and the ways and time for submission shall remain unchanged.

VI.

The limit of synthetic positions in the settlement and sale of foreign exchange of a bank, which is verified by SAFE or its branches
before the implementation of this Circular, shall continue to be effective. All banks shall do a good job for the administration
of the limit of synthetic positions in the settlement and sale of foreign exchange of their own banks according to the provisions
of the Document No.69 of SAFE. Except for the relevant matters subject to the adjustment of administration on synthetic positions
in the settlement and sale of foreign exchange, for other matters the Document No.69 of SAFE and the Notice of the Comprehensive
Department of State Administration of Foreign Exchange on Relevant Matters concerning Verification of the Limit of Synthetic Positions
in the Settlement and Sale of Foreign Exchange of Banks (Hui Zong Fa [2005] No.118) shall continue to be followed.

VII.

After receiving this Circular, each branch of SAFE shall forward it at once to the urban commercial banks, rural commercial banks,
rural cooperative financial institutions, and foreign-funded banks within its own jurisdiction.

If any problem is encountered in the implementation, please contact with the Department of International Balance of SAFE.

Contact Telephone: 010-68402385, 68402447.￿￿

Annex I: (_____Bank) the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange (omitted)

Annex II: the Explanation of the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange (omitted)

Annex III: the Form of Information on Synthetic Positions in the Settlement and Sale of Foreign Exchange of Designated Foreign Exchange
Banks (omitted)

State Administration of Foreign Exchange

June 2, 2006



 
State Administration of Foreign Exchange
2006-06-02

 






MEASURES FOR THE ADMINISTRATION OF THE SECURITIES SETTLEMENT RISK FUND

Circular of the China Securities Regulatory Commission concerning Promulgating the Measures for the Administration of the Securities
Settlement Risk Fund

Zheng Jian Fa [2006] No. 65

Shanghai Stock Exchange and Shenzhen Stock Exchange, China Securities Depository & Clearing Corporation Limited and all clearing
participants:

In accordance with the provisions of the Securities Law of the People’s Republic of China, China Securities Regulatory Commission,
in conjunction with the Ministry of Finance, jointly formulated the Measures for the Administration of the Securities Settlement
Risk Fund and hereby issued for your implementation.

China Securities Regulatory Commission

June 16, 2006

Measures for the Administration of the Securities Settlement Risk Fund

Article 1

In order to prevent and solve the risks of the securities market, safeguard a sound operation of the securities depository &
clearing system as well as manage and use the securities settlement risk fund in a proper manner, these Measures are formulated under
the relevant provisions of the Securities Law of the People’s Republic of China.

Article 2

Securities settlement risk fund (hereinafter referred to as this Fund) herein referred to in these Measures is a special fund that
is established to be used in advance payment or cover of the losses of the securities depository & clearing institution as incurred
from delivery under breach of contract, technical malfunction, wrong operations or force majeure.

Article 3

Sources of this Fund are:

(1)

Separate withdrawal with respect to 20% of the incomes and benefits of the securities depository & clearing institution;

(2)

Payment of the clearing participants with respect to 0.03￿￿f the business volume of Renminbi common stocks and funds, 0.01￿￿f
the business volume of treasury bond spot, 0.0005￿￿f the business volume of 1-day treasury bond repurchase, 0.001￿￿f the business
volume of 2-day treasury bond repurchase, 0.0015￿￿f the business volume of 3-day treasury bond repurchase, 0.002￿￿f the business
volume of 4-day treasury bond repurchase, 0.005￿￿f the business volume of 7-day treasury bond repurchase, 0.01_￿￿f the business
volume of 14-day treasury bond repurchase, 0.02￿￿f the business volume of 28-day treasury bond repurchase, 0.06￿￿f the business
volume of 91-day treasury bond repurchase, 0.12￿￿f the business volume of 182-day treasure bond repurchase on a daily basis.

Article 4

When the net asset of this Fund reaches or exceeds 3 billion yuan at the end of each fiscal year, the relevant fund shall not be
drawn pursuant to the provisions of Subparagraph (1), Article 3 of the present Measures in the following year, the clearing participants
may not make payment pursuant to the provisions of Subparagraph (2), Article 3 of these Measures, yet the term of the payment as
made by each clearing participant pursuant to Subparagraph (2), Article 3 of these Measures after joining the settlement system
shall be no less than 1 year.

Article 5

Where the net asset of this Fund is less than 3 billion yuan at the end of each fiscal year, this Fund shall be further drawn pursuant
to the provisions of Subparagraph (1), Article 3 of these Measures and the relevant clearing participants shall continually make
their payment pursuant to the provisions of Subparagraph (2), Article 3 of these Measures.

Article 6

The China Securities Regulatory Commission may, in conjunction with the Ministry of Finance may, adjust the scale, the method and
proportion of withdrawal and payment of this Fund in light of the market risks

Article 7

The securities deposit & clearing institution shall appoint an organ to be responsible for the daily administration and use of
this Fund.

Article 8

This Fund shall be entirely deposited into a special account of a state commercial bank and all of the deposit interests shall be
transferred into the special fund account.

Article 9

The assets of this Fund and those of the securities deposit & clearing institution shall be separated into different accounts.
Ledger accounts shall be established for this Fund so as to respectively record the assets, interest incomes of this Fund and the
use of the principals as well as the interests of the corresponding assets as generated under the Subparagraphs of Article 3 of
the present Measures.

Article 10

The minimum payment of this Fund is 20 million yuan. Where any securities deposit & clearing institution uses this Fund, it shall
apply to the China Securities Regulatory Commission as well as the Ministry of Finance for approval.

Article 11

Where the breach of contract by the clearing participant causes any of the circumstances as prescribed in Article 2 , this Fund shall
be employed in the sequence as follows:

(1)

Capital as paid by the delinquent clearing participant in accordance with Subparagraph (2), Article 3 of these Measures;

(2)

Capital as paid by any other clearing participant in accordance with Subparagraph (2), Article 3 of these Measures; and

(3)

Capital as drawn in accordance with Subparagraph (1), Article 3 of these Measures.

Article 12

The securities deposit & clearing institution shall, subject to the provisions of relevant laws and administrative regulations,
establish and improve the operating rules, internal management system as well as clearing participant supervision system so as to
avoid any risk or accident to the largest extent.

Article 13

After this Fund is employed, the securities deposit & clearing institution shall make a compensation claim from the relevant
responsible parties and the recovered funds shall be transferred into this Fund. Meanwhile, the relevant operating rules, internal
management system as well as clearing participant supervision system shall be timely revised and improved.

Article 14

Where this Fund is modified or settled accordingly, the China Securities Regulatory Commission shall, in conjunction with the Ministry
of Finance, separately decide the proportion and amount of the remaining assets of this Fund that shall be refunded to relevant clearing
participants.

Article 15

The Measures for the financial settlement and administration of this Fund shall be formulated by the Ministry of Finance.

Article 16

These Measures shall be subject to the interpretation of the China Securities Regulatory Commission in conjunction with the Ministry
of Finance.

Article 17

These Measures shall come into force as of July 1, 2006. Upon approval of the State Council, the Interim Measures for the Administration
of the Securities Settlement Risk Fund (approved by the State Council on January 31, 2000, and promulgated on April 4, 2000 by the
China Securities Regulatory Commission and the Ministry of Finance) shall be repealed simultaneously.



 
China Securities Regulatory Commission
2006-06-16

 






MEASURES FOR THE ADMINISTRATION ON THE NEWS AND INFORMATION RELEASE WITHIN THE TERRITORY OF CHINA BY FOREIGN NEWS AGENCIES

Measures for the Administration on the News and Information Release within the Territory of China by Foreign News Agencies

September 10, 2006

(issued by Xinhua News Agency on September 10, 2006)

Article 1

With a view to regulating the release of press information within China by foreign news agencies and the subscription of such press
information by users within China and promoting the dissemination of press information in a sound and orderly manner, The present
Measures are formulated in accordance with laws, administrative regulations of the state and the relevant regulations of the State
Council.

Article 2

The present Measures shall apply to the release of press information in text, photo, graphics and other forms within China by foreign
news agencies.

The foreign news agencies as mentioned in the present Measures shall include other foreign entities of the nature of a news agency
that release press information.

Article 3

Xinhua News Agency exercises unified administration over the release of press information within China by foreign news agencies.

Article 4

In accordance with the Decision of the State Council on the Establishment of Administrative Licenses for Items Subject to Administrative
Examination and Approval and That Need to Be Retained, the release of press information within China by foreign news agencies shall
be subject to the approval of Xinhua News Agency, and there shall be entities designated by Xinhua News Agency to act as their agents
(hereinafter referred to as designated entities). Foreign news agencies may not directly solicit subscription of their press information
services in China.

Except the designated entities, no unit or individual may distribute press information of foreign news agencies or act as their agent.

Article 5

To apply for releasing press information within the territory of China, a foreign news agency shall satisfy the following requirements:

(1)

being of corresponding and legal qualification at its home country or region;

(2)

enjoying good credit in the field of press information release;

(3)

having explicit scope of business;

(4)

being of technological and transmitting means commensurate with its business; and

(5)

other requirements as prescribed by laws and administrative regulations of China.

Article 6

For releasing press information within the territory of China, a foreign news agency shall submit a written application and the following
materials to Xinhua News Agency:

(1)

legal qualification certificates issued by the competent authorities of its home country or region;

(2)

the good credit certificate issued by the relevant organization of its home country or region;

(3)

a detailed list, explanation and samples of the press information to be released;

(4)

an illustration on its transmitting means; and

(5)

other materials as specified by Xinhua News Agency.

Article 7

An entity to be designated as an agent of a foreign news agency for releasing the press information within the territory of China
shall satisfy the following requirements and submit a written application to Xinhua News Agency:

(1)

being legally qualified;

(2)

enjoying good credit in the field of press information distribution as an agent ;

(3)

being of the service network and technological and transmitting means commensurate with its business; and

(4)

other requirements as prescribed by laws and administrative regulations and rules of government departments.

Article 8

Xinhua News Agency shall, within 20 days as of the receipt of the application materials of a foreign news agency or to- be -designated
entity, make a decision on whether or not to grant the application. If it decides to grant the application, it shall issue a document
of approval; otherwise, it shall notify the applicant of the decision in writing and explain the reasons.

Article 9

Before releasing press information within the territory of China in light of the scope of business approved in the approval document,
a foreign news agency shall sign an agency agreement with the designated entity, and within 15 days as of the day when the agreement
is signed, submit the agreement to Xinhua News Agency for archiving.

Article 10

Where a foreign news agency alters its scope of business, transmitting means and etc., it shall apply to Xinhua News Agency for a
new approval document.

Article 11

The press information released within the territory of China by foreign news agencies may not contain any of the following contents:

(1)

violating the basic principles as prescribed in the Constitution of the People’s Republic of China;

(2)

undermining the national unity, sovereignty and territorial integrity of China;

(3)

endangering the national security, reputation and interests of China;

(4)

advocating cult and superstition in violation of the religious policies of China;

(5)

inciting hatred and discrimination among ethnic groups, destroying their unity, infringing upon their customs and habits, or hurting
their feelings;

(6)

disseminating false information, disrupting the economic and social order of China, or undermining the social stability of China;

(7)

propagating obscenity and violence, or abetting crimes;

(8)

humiliating or slandering another person, or infringing upon the legitimate rights and interests of another person;

(9)

undermining social ethics or the fine cultural traditions of the Chinese nation; or

(10)

other contents banned by Chinese laws and administrative regulations.

Article 12

Xinhua News Agency shall have the right to select the press information released by foreign news agencies in China, and shall delete
any material as described in Article 11 of the present Measures.

Article 13

To subscribe to press information services of foreign news agencies, a user in China shall sign a subscription agreement with the
designated entity, and may not, by any means, directly subscribe to, translate, edit or publish the press information released by
a foreign news agency.

When using press information from a foreign news agency, the user in China shall clearly indicate the sources and may not transfer
in any form.

Article 14

Foreign news agencies and designated entities shall, within the prescribed time limit, submit reports to Xinhua News Agency each
year respectively on their work in releasing press information and in acting as agents.

Xinhua News Agency may conduct examination and inspection on the reports. Only those agencies and entities that have passed the examination
and inspection are permitted to continue their press information release and agency business.

Article 15

Where any unit or individual finds any act in violation of the present Measures, it (he) shall have the right to report it to Xinhua
News Agency, which shall investigate and deal with the violation according to law.

Article 16

Where a foreign news agency violates the present Measures by one of the following means, Xinhua News Agency shall, in light of the
ponderance of the case, give it a warning, order it to make corrections within a prescribed time limit, suspend its release of specified
contents, suspend or cancel its qualification as a foreign news agency for releasing press information in China:

(1)

releasing press information beyond the scope of business as approved in the approval document;

(2)

directly soliciting subscription of press information services, or doing so in disguised form; or

(3)

distributing press information which contains the contents described in Article 11 of the present Measures.

Article 17

Where a user in China violates the provisions of the present Measures and is under any of the following circumstances, Xinhua News
Agency shall, in light of the ponderance of the case, give it a warning, order it to make corrections within a prescribed time limit
or order the designated entities to suspend or rescind the subscription agreement:

(1)

using the press information from a foreign news agency beyond the scope as prescribed by the subscription agreement;

(2)

transferring to another party the press information from a foreign news agency that it has subscribed to; or

(3)

failing to clearly indicate the sources when using press information from a foreign news agency.

Article 18

Where a unit or individual violates the provisions of the present Measures and is under any of the following circumstances, Xinhua
News Agency shall submit a proposal to the relevant departments of the State Council to impose an administrative penalty upon it
(him) according to law:

(1)

releasing press information without the approval of Xinhua News Agency or subscribing to press information of a foreign news agency
beyond the entity designated by Xinhua News Agency;

(2)

distributing press information of a foreign news agency or acting as its agent without approval; or

(3)

directly translating, editing or publishing press information of a foreign news agency without approval.

Article 19

Where a designated entity, in violation of the provisions of the present Measures, acts as an agent for distribution of the press
information of a foreign news agency that has not obtained the approval of Xinhua News Agency, Xinhua News Agency shall order it
to make corrections, and disciplinary penalties shall be imposed upon the persons directly in charge and other directly responsible
persons.

Article 20

Where a staff member of Xinhua News Agency commits one of the following acts, Xinhua News Agency shall impose upon him a disciplinary
penalty:

(1)

issuing the approval document to an applicant that does not satisfy the requirements as specified in the present Measures;

(2)

failing to fulfill his duties of supervision and administration according to law;

(3)

failing to investigate and deal with the violations of law upon receiving reports thereon; or

(4)

abusing his powers, neglecting his duties, or engaging in malpractices for personal gains and etc.

Article 21

The present Measures shall be referred to for the release of press information within the mainland by news agencies and other press
information releasing entities of the nature of a news agency in Hong Kong Special Administrative Region, Macao Special Administrative
Region and Taiwan Region.

Article 22

The present Measures shall come into force as of the day of its promulgation. The Measures for the Administration over Economic Information
Publication in China by Foreign News Agencies and Their Information Subsidiaries, promulgated by Xinhua News Agency on April 15,
1996, is abolished simultaneously.



 
Xinhua News Agency
2006-09-10

 






REPLY TO PROBLEM OF TAXATION ON INDIVIDUAL LIQUIDATED DAMAGES OBTAINED FROM TRANSFER OF INDIVIDUAL SHAREHOLDING

Reply to Problem of Taxation on Individual Liquidated Damages Obtained from Transfer of Individual Shareholding

Guo Shui Han [2006]No.866

Sichuan Local Administration of Taxation:

We have received the “Request for Problem of Taxation on Individual Liquidated Damages Obtained from Transfer of Individual Shareholding”
(Chuan Di Shui Fa [2006] No. 48) submitted by your administration. After study, we give the reply as follows:

According to related regulations in the Law of the People’s Republic of China on Individual Income Tax , after successfully transferring
shareholding, liquidated damages the transfer party obtains from the accept party because the failure of payment on time, are regarded
as income obtained from possession transfer. The liquidated damages of transfer party shall merge into possession transfer income,
and the taxation is calculated according to the item of “income from possession transfer”. The transfer party, who obtains the liquidated
damages, shall make the declaration and pay the tax to the taxation organ in charge.

The State Administration of Taxation

September 19, 2006



 
State Administration of Taxation
2006-09-19

 






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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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