REGULATION ON WORK SAFETY LICENSES

State Council

Decree of the State Council of the People’s Republic of China

No.397

The Regulation on Work Safety Licenses, which has been adopted at the 34th executive meeting of the State Council on January 7th 2004,
is hereby promulgated and shall come into force as of the day of promulgation.

Wen Jiabao, Premier of the State Council

January 13th, 2004

Regulation on Work Safety Licenses

Article 1

With a view to strictly regulating work safety conditions, further enhancing work safety supervision and administration, thus preventing
and reducing work accidents, this Regulation is hereby formulated in accordance with the Work Safety Law of the People’s Republic
of China.

Article 2

The State applies a work safety licensing system to enterprises engaged in mining, construction, and the production of dangerous chemicals,
fireworks and crackers, and blasting equipment for civil use (hereinafter referred to as enterprises).

No such enterprises may engage in production activities without work safety licenses.

Article 3

The department of work safety supervision and administration under the State Council shall be in charge of issuance and administration
of work safety licenses for enterprises subject to the central authority which are engaged in non-coal mining, and the production
of dangerous chemicals and fireworks and crackers.

The departments of work safety supervision and administration under the People’s Governments of the provinces, autonomous regions,
and municipalities directly under the Central Government, shall be in charge of the issuance and administration of work safety licenses
for enterprises outside the scope of the preceding paragraph which are engaged in non-coal mining, and the production of dangerous
chemicals and fireworks and crackers, and be subject to the guidance and supervision of the department of work safety supervision
and administration under the State Council.

The State authority over coal mine safety inspections shall be in charge of issuance and administration of work safety licenses for
coal mining enterprises which are subject to the management of the central authorities.

The authorities over coal mine safety inspections under the People’s Governments of the provinces, autonomous regions, and municipalities
directly under the Central Government, shall be in charge of the issuance and administration of work safety licenses for coal mining
enterprises outside the scope of the preceding paragraph, and be subject to the guidance and administration of the State authority
over coal mine safety inspections.

Article 4

The administrative department of construction under the State Council shall be in charge of issuance and administration of work safety
licenses for construction enterprises which are subject to the central authority.

The administrative departments of construction under the People’s Governments of provinces, autonomous regions, and municipalities
directly under the Central Government, shall be in charge of the issuance and administration of work safety licenses for construction
enterprises outside the scope of the preceding paragraph, and be subject to the guidance and supervision from the administrative
department of construction under the State Council.

Article 5

The administrative department of science, technology and industry for national defense under the State Council shall be in charge
of the issuance and administration of work safety licenses for enterprises engaged in the production of blasting equipment for civil
use.

Article 6

To obtain a work safety license, an enterprise shall satisfy the following work safety conditions:

(1)

Having established and improved the responsibility system for work safety, and formulated a whole set of work safety regulations and
operating rules;

(2)

Its investment in safety is up to work safety requirements;

(3)

Having set up administrative entities for work safety and installed full-time work safety administrative personnel;

(4)

The major person(s)-in-charge and work safety administrative personnel have passed the appraisal;

(5)

The special personnel have passed the appraisal conducted by the competent authority, and have obtained qualification certificates
for special operations;

(6)

The workers have gone through work safety education and training;

(7)

Having workers insured against work-related injuries in accordance with the law and having paid insurance premiums in this regard;

(8)

Its premises, worksites, safety facilities, equipment and technology are up to the requirements of the relevant work safety laws,
regulations, standards and rules;

(9)

Having preventive measures against occupation hazards and providing workers with labor protection articles which are up to the national
standards or standards of the industrial sector concerned;

(10)

Having conducted safety evaluation in accordance with the law;

(11)

Having measures for the testing, assessment and monitoring of sources of grave danger, as well as emergency plans thereabout;

(12)

Having emergency rescue plans for work accidents, and entities or personnel specialized in emergency rescue, and having necessary
emergency rescue materials and equipment; and

(13)

Satisfying other conditions as provided by laws and regulations.

Article 7

Before starting production, an enterprise shall apply for the work safety license to the department in charge of the issuance and
administration of work safety licenses according to the present Regulation, and provide the relevant documents and materials specified
in Article 6 of the present Regulation. The department in charge of the issuance and administration of work safety licenses shall
wrap up its review process within 45 days from the day of receipt of an application, and issue work safety licenses to those found
upon review to satisfy the work safety conditioned specified in the present Regulation. For those failing to satisfy the work safety
conditions as specified in the present Regulation, the said department shall deny their access to work safety licenses, and send
written notices to the applicants with reasons explained for such denial.

A coal mining enterprise shall, prior to its application for the coal production license, apply for the work safety license on a per
mine (pit) basis in accordance with the present Regulation.

Article 8

The work safety licenses shall be in uniform style as prescribed by the department of work safety supervision and administration under
the State Council.

Article 9

The valid period for a work safety license shall be three years. If a work safety license needs to be extended upon its expiration,
the enterprise shall go through the extension procedures three months prior to such expiration with the administrative department
from which the license is issued.

If an enterprise strictly abides by the relevant laws and regulations on work safety and is free of any deadly accident during the
valid period of its work safety license, such license will enjoy a review-free three-year extension upon its expiration, with the
consent of the administrative department from which the license is issued.

Article 10

The departments in charge of the issuance and administration of work safety licenses shall establish and improve the archiving administration
system for such licenses, and make regular release of information to the general public concerning the issuance of licenses to enterprises.

Article 11

The departments in charge of the issuance and administration of work safety licenses for coal mining enterprises, the departments
in charge of the issuance and administration of work safety licenses for construction enterprises, and the departments in charge
of the issuance and administration of work safety licenses for enterprises engaged in the production of blasting equipment for civil
use, shall make annual briefings to the same-level departments of work safety supervision and administration on information concerning
the issuance and administration of work safety licenses.

Article 12

The department of work safety supervision and administration under the State Council and the departments of work safety supervision
and administration under the peoples’ governments of provinces, autonomous regions, and municipalities directly under the Central
Government, shall conduct supervision over the issuance of work safety licenses to enterprises engaged in construction, the production
of blasting equipment for civil use, and coal mining.

Article 13

No enterprises may transfer, use under an assumed name, or use forged, work safety licenses.

Article 14

After obtaining a work safety license, an enterprise may not lower its work safety conditions, and shall improve its routine work
safety management and be subject to the supervision and inspection of the administrative department from which the license is issued.

The departments in charge of the issuance and administration of work safety licenses shall enhance its supervision over and inspection
of license receiving enterprises, and withdraw on a temporary basis or revoke the license upon finding of any failure to satisfy
the work safety conditions specified in the present Regulation.

Article 15

No personnel of the departments in charge of the issuance and administration of work safety licenses may extort or accept any property
from enterprises or seek any other illicit gains, during the issuance, administration, supervision or inspections of such licenses.

Article 16

The supervisory departments shall, according to the Administrative Supervision Law of the People’s Republic of China, conduct supervision
over the departments in charge of the issuance and administration of work safety licenses as well the personnel thereof, on their
performance of duties and responsibilities in accordance with the present Regulation.

Article 17

Every organization or individual is enpost_titled to report the acts in violation of the present Regulation to the relevant authorities
such as the departments in charge of the issuance and administration of work safety licenses or the supervisory departments.

Article 18

Any personnel of the departments in charge of the issuance and administration of work safety licenses who are involved in any of the
following acts may be given administrative sanction of demotion or removal from office; if a criminal offense is constituted, he
or she shall be subject to criminal liabilities.

(1)

Issuing work safety license(s) to enterprises failing to satisfy the work safety conditions specified in the present Regulation;

(2)

Making no statutory handling upon finding that any enterprise is engaged in production activities without work safety licenses;

(3)

Making no statutory handing upon finding that any license receiving enterprise fails to satisfy the work safety conditions specified
in the present Regulation;

(4)

Making no timely handling upon receipt of report on acts in violation of the present Regulation;

(5)

Extorting or accepting property from enterprises or seeking any other illicit gains during the issuance, administration, supervision
or inspections of work safety licenses.

Article 19

Those which, in violation of the present Regulation, are arbitrarily engaged in production without work safety licenses shall be ordered
to suspend production, and be subject to the confiscation of the illicit gains and a fine of 100,000 up to 500,000 RMB. If a criminal
offense is constituted in the wake of a serious accident or any other serious consequences, the offender shall be subject to criminal
liabilities.

Article 20

Those who, in violation of the present Regulation, continue production without going through the extension procedures upon expiration
of work safety licenses shall be ordered to suspend production and go through the remedial procedures within a limited period, and
be subject to the confiscation of the illicit gains and a fine of 50,000 up to 100,000 RMB. And those who continue production without
going through the remedial procedures within the limited period shall be subject to punishment in accordance with Article 10 of
the present Regulation.

Article 21

Those who, in violation of the present Regulation, transfer their work safety licenses shall be subject to confiscation of the illicit
gains, a fine of 100,000 up to 500,000 RMB and the revocation of such licenses; if a criminal offense is constituted, the offender
shall be subject to criminal liabilities; and the transfer recipient(s) shall be subject to punishment in accordance with Article
19 of the present Regulation.

Those who use, under an assumed name, or use forged work safety licenses shall be subject to punishment in accordance with Article
19 of the present Regulation.

Article 22

Enterprises which have already been engaged in production prior the implementation of the present Regulation shall, according to the
provisions of the present Regulation, apply for work safety licenses to the departments in charge of issuance and administration
of such licenses within one year from the day of the Regulation’s implementation. Those which fail to go through the application
for work safety licenses or to satisfy upon review the work safety conditions specified in the present Regulation, but nevertheless
continue production without such licenses, shall be subject to punishment in accordance with Article 19 of the present Regulation.

Article 23

The administrative punishment specified in the present Regulation shall be subject to the determination of the departments in charge
of the issuance and administration of work safety licenses.

Article 24

The present Regulation shall come into force as of the day of promulgation.