PROVISIONS CONCERNING JURISDICTION AND PROCEDURES TO DEAL OUT PUNISHMENT FOR VIOLATIONS OF REGISTRATION ADMINISTRATIVE DECREES BY ENTERPRISES WITH FOREIGN INVESTMENT

The State Administration for Industry and Commerce

Provisions Concerning Jurisdiction and Procedures to Deal out Punishment for Violations of Registration Administrative Decrees by
Enterprises with Foreign Investment

the State Administration for Industry and Commerce

February 1, 1989

With a view to strengthening supervision and control over the Chinese-foreign equity joint ventures and Chinese-foreign contractual
joint ventures and foreign-capital enterprises (all referred to as enterprises with foreign investment hereinafter), protecting legal
management and dealing out punishment for violations of registration administrative decrees according to the law, the jurisdiction
and procedures for such punishment, in accordance with “Regulations of the People’s Republic of China on Administration of Registration
of Enterprise Legal Persons” and the “Detailed Rules” for its implementation, are defined as follows:

1.

The administrations for industry and commerce at the county (district) level or above all have the right to supervise and examine
the enterprises with foreign investment in the areas that come under their jurisdiction.

2.

The State Administration for Industry and Commerce and the local administrations that are empowered by the former to directly check
and approve the registration of enterprises with foreign investment (hereinafter referred to as empowered local administrations)
all have the right, in accordance with relevant regulations and limits of authority, to deal out punishment for violations of registration
administrative decrees by the enterprises with foreign investment.

Administration for industry and commerce at higher level have the right to rectify the improper decisions of punishment by administrations
for industry and commerce at lower level.

3.

The State Administration for Industry and Commerce examines and deals accordingly with the following enterprises with foreign investment
that violate the registration administrative decrees:

a.

The enterprises with foreign investment that are directly registered at the State Administration for Industry and Commerce;

b.

The enterprises with foreign investment that the State Administration for Industry and Commerce deems it necessary to exercise direct
examination and punishment.

4.

The empowered local administrations examine and deal accordingly with the enterprises with foreign investment that violate the registration
administrative decrees in the areas under their jurisdiction.

Provided that the empowered administrations for Industry and Commerce of the provinces, autonomous regions and municipalities directly
under the Central Government expropriate over Rmb200,000 of the illegal gains by the enterprises with foreign investment, or mete
out a fine of over Rmb20,000, or withdraw the business license, they have to report to the State Administration for Industry and
Commerce for examination and approval.

The limits of authority of the empowered city (prefecture) administrations for industry and commerce over punishment of enterprises
with foreign investment that violate the registration administrative decrees are defined by their respective empowered administrations
for Industry and Commerce of the provinces, autonomous regions and municipalities directly under the Central Government in the light
of specific conditions and in accordance with these regulations and should be reported to the State Administration for Industry and
Commerce for approval.

Provided that the empowered city (prefecture) administrations make decisions of punishment beyond the limits of their authority, they
have to report to their respective administrations for Industry and Commerce of the provinces, autonomous regions and municipalities
directly under the Central Government or the State Administration for Industry and Commerce for examination and approval.

5.

The empowered local administrations have to report their decisions of punishment of enterprises with foreign investment to the State
Administration for Industry and Commerce or relevant administrations for records.

6.

If empowered local administrations deal with violations of enterprises with foreign investment that are not approved and registered
in the locality under their jurisdiction, they have to inform in time the concerned administrations of their decisions.

7.

If county (district) administrations or above that are not empowered with the authority over such punishment detect violations of
registration administrative decrees by enterprises with foreign investment, they should carry out conscientious investigation, propose
a decision of prosecution and defer to administrations at higher level empowered with such authority. The latter must reply within
one month as of the date of receipt of the report. If the decision of punishment go beyond their competence, they should report to
the next superior administration.

8.

The enterprises with foreign investment must not reject the supervision, examination and prosecution by administrations for industry
and commerce according to the law and should implement the decisions of punishment within 15 days as of the date of receipt of the
notice. If they do not accept the decisions, they should appeal for re-examination to administrations at higher level empowered with
such authority within 15 days as of the date of the receipt of the notice. The latter should make its decision of re-examination
within 30 days as of the date of receipt of the appeal. Pending the decision of re-examination, the fines and confiscations should
be executed as has been originally decided upon.

9.

If the enterprises with foreign investment refuse to accept the decisions of re-examination by local administrations or decisions
of punishment or decisions of re-examination by the State Administration for Industry and Commerce, they may bring the suit to the
People’s Court within 30 days as of the date of receipt of the decision of reexamination or decision of punishment. If they do not
appeal nor pay the fine of the confiscated amount of money, the administrations for industry and commerce can, in accordance with
stipulated procedures, inform the banks where they open an account and ask them to transfer the amount.

10.

When the administrations for industry and commerce are examining and dealing with the enterprises with foreign investment that violate
the registration administrative decrees, they should appoint special persons to be in charge and establish relevant records. The
evidence provided by the litigants should be signed and sealed by the litigants. The persons from the administrations for industry
and commerce who are in charge should strictly observe relevant decrees and the disciplines guiding the handling of foreign affairs.
Investigation or examination of enterprises with foreign investment should be conducted by two persons or more who have to show their
“Special ID Cards of the PRC Administration for Industry and Commerce”.

11.

The supervision, administration, jurisdiction over punishment and its procedures concerning the Hongkong, Macao and Taiwan enterprises,
or equity joint or contractual joint ventures with overseas Chinese, Hongkong, Macao and Taiwan compatriots and enterprises with
their sole investment, the projects and businesses contracted by foreign (regional) enterprises and their cooperative development
of domestic natural resources, their permanent offices, branches of foreign (regional) banks and business branches established by
enterprises with foreign investment are executed in accordance with these regulations.

12.

These Provisions shall enter into force as of the date of promulgation.