The Standing Committee of the National People’s Congress
Status of Effect
Invalidated
Date of Promulgation
1992-12-28
Effective Date
1992-12-28
Date of Invalidation
1997-10-01
Decision of the Standing Committee of the National People’s Congress Regarding the Punishment of Criminals Engaged in Aircraft Hijacking
(Adopted at the 29th Meeting of the Standing Committee of the Seventh
National People’s Congress on December 28, 1992, promulgated by Order No. 67 of the President of the People’s Republic of China on December 28, 1992, and effective as of December 28, 1992)(Editor’s Note: This Decision has been invalidated by the Criminal Law of the People’s Republic of China revised at the Fifth Session of the Eighth National People’s Congress on March 14, 1997, and effective on October 1, 1997)
With a view to punishing aircraft hijacking criminals and safeguarding the safety of passengers and aircraft, it is hereby decided as follows:
Whoever hijacks any aircraft by means of violence, intimidation or in any other manner shall be sentenced to fixed-term imprisonment of no less than ten years or life imprisonment; any hijacker who causes serious bodily injury to or death of any other person, or serious damage to the aircraft, or if the circumstances are especially serious, shall be sentenced to death; and if the circumstances are relatively minor, the hijacker shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years.
Regulations of the PRC on Import and Export Duties
(Promulgated by the State Council on March 7, 1985, amended and promulgated by the State Council on September 12, 1987, amended and
promulgated for a second time on March 18, 1992 according to the Decision of the State Council on Amending the Regulations of the
People’s Republic of China on Import and Export Duties)
CHAPTER I GENERAL PROVISIONS
CHAPTER II APPLICATION OF TARIFF RATES
CHAPTER III VERIFICATION OF THE DUTY-PAYING VALUE
CHAPTER IV PAYMENT, REFUND AND RECOVERY OF CUSTOMS DUTIES
CHAPTER V REDUCTION OR EXEMPTION OF CUSTOMS DUTIES AND THE PROCEDURES
FOR EXAMINATION AND APPROVAL
CHAPTER VI PROCEDURES FOR APPEAL
CHAPTER VII PENALTIES CHAPTER VIII SUPPLEMENTARY PROVISIONS
Article 1 These Regulations are formulated in accordance with the relevant provisions of Customs Law of the People’s Republic of China with
a view to implementing the policy of opening to the outside world and promoting the development of foreign economic relations and
foreign trade and the national economy.
Article 2 All goods permitted to be imported into or exported out of the People’s Republic of China shall, unless otherwise provided for by
the State, be subject to the levy of Customs import or export duties according to the Customs Import and Export Tariff of the People’s
Republic of China (hereinafter referred to as Customs Import and Export Tariff).
If goods originating within Chinese territory are purchased from outside Chinese territory for import, Customs shall levy import duty
in accordance with the Customs Import and Export Tariff. Customs Import and Export Tariff is an integral part of these Regulations.
Article 3 The Tariff Commission established by the State Council is charged with the responsibility to formulate or amend the guideline, policies
and principles for Regulations on Import and Export Duties and Customs Import and Export Tariff, to examine the draft of amendments
of Tariff, to set temporary tariff rates and to examine and approve partial adjustment of tariff rates.
The composition of the State Council Customs Tariff Commission shall be prescribed by the State Council.
Article 4 Both the consignee of imports and the consignor of exports are persons obligated to pay Customs duties.
The agent entrusted to go through the related procedures shall abide by all the provisions of these Regulations pertaining to his
client.
Article 5 The measures on the levy of or exemption from import or export duties on incoming and outgoing passengers luggage and articles and
on personal postal matters shall be formulated by the State Council Customs Tariff Commission.
CHAPTER II APPLICATION OF TARIFF RATES
Article 6 Customs import duty shall be calculated in accordance with general tariff rates and preferential tariff rates. The general tariff
rate shall apply to an import originating in a country or region with which the People’s Republic of China has not yet signed an
agreement containing reciprocal preferential tariff clauses. The preferential tariff rate shall apply to an import originating in
a country or region with which the People’s Republic of China has signed an agreement containing reciprocal preferential tariff clauses.
Imports to which general tariff rates apply pursuant to the provisions of the previous paragraph may have duty levied in accordance
with preferential tariff rates subject to special approval from the State Council Customs Tariff Commission.
If imports originating in the People’s Republic of China are subject to discriminatory rates of duty or other types of discriminatory
treatment by any country or region, Customs may impose a special Customs duty on imports originating in the said country or region.
The State Council Customs Tariff Commission shall determine and promulgate for implementation details of the types of goods subject
to the special Customs duty, the duty rates and the time period when such levies commence and finish.
Article 7 Import and export commodities shall be classified under appropriate tax item numbers in accordance with the category provisions of
the Customs Import and Export Tariff and shall be subject to tax levies pursuant to relevant tax rates.
Article 8 Customs duties shall be levied on imports or exports at the tariff rates obtaining on the date of declaration for imports or exports
by the consignee or consignor or his agent.
Imports which are permitted by the Customs to be declared prior to their entry shall be subject to the levy of import duties at the
tariff rates obtaining on the date of entry of the means of transport involved.
Article 9 If an import or export is subject to a supplementary duty payment or refund of duty, the rate of duty on the date of the good’s original
import or export declaration shall apply. The specific measures shall be formulated by the Customs General Administration.
CHAPTER III VERIFICATION OF THE DUTY-PAYING VALUE
Article 10 The duty-paying value of the goods to be imported shall be assessed according to the CIF price based on the normal transaction price
verified by the Customs.
The CIF price shall cover the price of the goods, packing charges, freight, insurance premiums and other service charges incurred
prior to the unloading of the goods at the port of entry in the Customs territory of the People’s Republic of China.
Article 11 If unable through examination to determine the CIF price of an import, the Customs shall assess its duty-paying value based successively
on the following prices:
(1) the transaction price of an item equivalent or similar to and from the same country or region of origin as the said import;
(2) the transaction price on the international market of an item equivalent or similar to the said import;
(3) the wholesale price on the domestic market of an item equivalent or similar to the said import, minus import duty, other import-linked
taxes or duty and the post-import transport, storage and business costs and after-profit price;
(4) a price valued by the Customs using other reasonable methods.
Article 12 The duty-paying value of mechanic appliances, means of transport or any other goods, which were shipped out of the Customs territory
for the purpose of repairs with the declaration for exports made in advance and shipped back into the Customs territory within the
time limit set by the Customs shall be identical with the normal charges on the repairs and the cost of materials and spare parts
used for the repairs, both of which shall be subject to the examination and approval by the Customs.
Article 13 The duty-paying value of the goods which were shipped out of the Customs territory for processing with the declaration for exports
made to the Customs in advance and shipped back into the Customs territory within the time limit set by the Customs shall be identical
with the difference between the CIF price of the processed goods at the time of entry and the CIF price of the original goods shipped
out of the Customs territory or of the identical or similar goods at the time of entry.
The specific measures shall be formulated by the Customs General Administration governing the varieties of the aforesaid goods and
their control.
Article 14 The duty-paying value of the goods to be imported on lease (including those for rent) shall be assessed according to the rental for
the goods, which is subject to the examination and approval by the Customs.
Article 15 The duty-paying value of the goods to be imported shall include fees for patents, trademarks, copyright, proprietary technology,
computer software, information, etc., which are incurred in relation to the said imports and paid to foreign parties in order that
the goods may be manufactured, used, published or distributed domestically.
Article 16 The duty-paying value of the goods to be exported for sale shall be identical with the FOB price of the goods with the export duties
deducted. The above FOB price shall be subject to the examination and approval by the Customs. If unable to determine the FOB price
of an export, the Customs shall assess its duty-paying value.
Article 17 The consignee and consignor of imports or exports or their agents shall accurately declare the transaction price of the said imports
and exports. If the declared transaction price is significantly lower or higher than the transaction price of equivalent or similar
goods, the Customs shall determine the duty-paying value pursuant to the provisions of these Regulations.
Article 18 The consignee of imports or consignor of exports or their agents shall, at the time of submitting the declaration for imports or
exports, produce to the Customs the invoices indicating the real price, freight, insurance premiums and other expenses incurred for
the goods (with manufactures’ invoices, if any), packing lists and other relevant papers for the examination and approval by the
Customs. All the above invoices and papers shall be signed and stamped by the consignee or consignor or his agent to affirm their
authenticity.
Article 19 The consignee or consignor or his agent shall produce the invoices and other papers for the Customs to assess the duty-paying value
of the goods to be imported or exported. If necessary, the Customs may examine the relevant contracts, accounts, bills and other
papers of both the buyers and the sellers or make any further investigation. The Customs may also check the above documents and
papers even after the levy of Customs duties on, and the release of the goods in question.
Article 20 In case the consignee and consignor or his agent fail to produce the relevant documents and papers stipulated in Article 18 for examination
by the Customs at the time of submitting the declaration for imports or exports, Customs duties shall be levied according to the
duty-paying value assessed by the Customs. No adjustment shall be made of the Customs duties already collected even though the relevant
documents and papers are subsequently produced to the Customs.
Article 21 In case the CIF price of imports, the FOB price of exports, the rental for imported or exported goods, the charges on repairs or
the cost of materials and spare parts are computed in foreign currencies, they shall be converted into RMB at the price between the
buying and selling prices quoted by the State administrative organ in charge of exchange control in Schedule of Exchange Rates of
RMB Against Foreign Currencies on the date of issuance of the duty memorandum. In case the exchange rate of any foreign currency
is not available in the Schedule, the Customs may apply the exchange rate set by the above administrative organ.
CHAPTER IV PAYMENT, REFUND AND RECOVERY OF CUSTOMS DUTIES
Article 22 The consignee or consignor or his agent shall pay Customs duties at the designated bank within seven days (excluding Sundays and
national holidays) after the date of issuance of the duty memorandum by the Customs. In case of any payment in arrears, the Customs
may order the fulfilment of the payment according to law, and 0.1% of the total amount of the overdue Customs duties shall be charged
as a fee on delayed payment per day from the eight day to the date of fulfilment of the payment.
Article 23 The Customs shall levy Customs duties and charge fees on delayed payment of RMB unless otherwise provided for by the Customs General
Administration.
Article 24 The Customs shall issue receipts for any Customs duties collected or any fees on delayed payment charged. The form of the receipt
shall be prescribed by the Customs General Administration.
Article 25 Under any of the following circumstances, the consignee or the consignor or his agent may, within one year from the date of payment
of Customs duties, claim for a refund from the Customs by submitting to the Customs a written application specifying the reasons
therefor, and the receipt for the paid Customs duties attached failing which his claim shall not be entertained:
(1) any amount of Customs duties is overpaid as a result of the wrong assessment by the Customs;
(2) any duty paid on goods imported which are exempted from the examination by the Customs are discovered to be short-landed with
the verification by the Customs;
(3) any duty paid on goods to exported are not shipped for some reasons and declared to the Customs as shut-out cargo with the verification
by the Customs. Any delayed application for a refund shall not be accepted.
The Customs shall complete a written response and notify a duty refund applicant within 30 days of accepting a refund application.
Article 26 In case Customs duties are short-levied or not levied on imports or exports, the Customs may, within one year after the date of payment
of Customs duties or the date of release of the goods, recover the amount of Customs duties short-levied or not levied. If any imports
or exports are short-levied or not levied owing to an act in violation of the Customs regulations by the consignee or consignor or
his agent, the Customs may recover from him the Customs duties short-levied or not levied within three years.
CHAPTER V REDUCTION OR EXEMPTION OF CUSTOMS DUTIES AND THE PROCEDURES FOR EXAMINATION AND APPROVAL
Article 27 Goods falling in any following categories may be exempted from the levy of Customs duties upon verification by the Customs:
(1) goods of a consignment on which Customs duties are estimated to be below RMB ten yuan;
(2) advertising matters and samples, which are of no commercial value;
(3) goods and materials, which are rendered gratis by international organizations or foreign governments;
(4) fuels, stores, beverages and provisions for use en route loaded on any means of transport, which is in transit across the frontier.
In case any goods exported are shipped back into the Customs territory for some reason, the original consignor or his agent shall
submit a declaration for entry with the original documents and papers attached and verified by the Customs, import duties may be
exempted. However, the export duties already collected shall not be refunded.
Imports returned abroad for any reason shall be declared to the Customs at the place of exit by the original consignee or agent and
the original import documentation shall be presented. If the Customs examination verifies the details, export duties may be exempted,
but import duties already paid shall not be refunded.
Article 28 The Customs may, in consideration of any of the following circumstances, grant reduction or exemption of Customs duties on any goods
falling in any of the following categories:
(1) goods damaged, destroyed or lost en route to the Customs territory or at the time of unloading;
(2) goods damaged, destroyed or lost as a result force majeure after unloading but prior to release;
(3) goods discovered already leaky, damaged or rotten at the time of the examination by the Customs, provided the cause is proved
to be other than improper storage.
Article 29 Customs duties shall be reduced or exempted on goods and article in accordance with the relevant provisions of the international
treaties, to which the People’s Republic of China is a contracting or acceding party.
Article 30 The levy of Customs duties may be exempted temporarily on samples, exhibits, engineering equipment, vehicles and vessels for construction,
instruments and tools for installation, cinmatographic and television apparatus, containers of goods, and theatrical costumes and
paraphernalia, which are permitted by the Customs to be temporarily shipped into or out of the Customs territory and reshipped out
of or into the Customs territory within six months, provided a deposit of an amount equivalent to that of the Customs duties or a
guarantee is submitted to the Customs by the consignee or consignor.
The time limit of six months stipulated in the preceding paragraph may be extended at the discretion of the Customs.
If, subject to examination and approval by the Customs, an extension of the import period is granted for temporarily imported engineering
equipment, vehicles and vessels for construction, etc, the Customs shall, during the extension period, levy import duty pursuant
to the period of usage of the respective goods. The specific measures shall be separately formulated by the Customs General Administration.
Article 31 Raw materials, supplementary materials, parts, components, accessories and packing materials imported for processing and assembling
finished products for foreign business persons or for manufacturing products for export shall be exempt from import duties pursuant
to the actual amount of goods processed for export; or import duties may be levied up-front on import materials and parts and subsequently
refunded pursuant to the actual amount of goods processed for export.
Article 32 Measures on the levy or exemption of Customs duties on free replacement goods shall be separately formulated by the Customs General
Administration.
Article 33 Customs duties shall be reduced or exempted in accordance with the provisions set out in the relevant regulations on goods imported
into or exported out of the designated areas, such as special economic zones or the designated enterprises, such as Chinese-foreign
equity joint ventures, Chinese-foreign contractual joint ventures and sole enterprises with foreign investment, and also on goods
falling in the category of preferential treatment by laws and regulations.
Article 34 In case the consignee or consignor or his agent applies for ad hoc reduction or exemption of Customs duties on imports or exports,
a written application specifying the reason therein and necessary documentary evidence shall be submitted to the Customs for examination
prior to the importation or exportation of the goods. The Customs shall transmit the application verified to the Customs General
Administration, which may, in accordance with the relevant regulations formulated by the State Council, examine and approve it with
or without consulting with the Ministry of Finance.
Article 35 If the Customs, in relation to imports granted preferential duty reductions or exemptions pursuant to the provisions of the State
laws or regulations, examines and approves, within the supervisory and control period, an application for the sale or assignment
of such goods or their use for other purposes, the value of the goods shall be reappraised in accordance with the period of usage
and supplementary payments of import duties made. The supervisory and control limit of years shall be formulated separately by the
Customs General Administration.
Article 36 If a person obliged to pay Customs duties disagrees with a decision by the Customs in relation to such matters as duty payment, duty
reduction, supplementary payment or the refund of duty paid on imports and exports, the party concerned shall first pay the amount
determined by the Customs, and then, within 30 days of the Customs issuing a receipt of payment, lodged with the Customs a written
application for reconsideration. The Customs shall not accept an appeal lodge after the expiry of the prescribed time limit.
Article 37 The Customs shall make its decision on the appeal within 15 days as of the date of receipt of the appeal.
Should the person obligated to pay Customs duties refuse to accept the decision, he may appeal to the Customs General Administration
for reconsideration within 15 days as of the date of receipt of the notice of decision.
Article 38 The Customs General Administration shall make its decision on the appeal within 30 days after the date of receipt of the appeal and
accordingly notify the person obligated to pay Customs duties of the decision.
Should the person obligated to pay Customs duties find the decision made by the Customs General Administration unacceptable, he may
bring the case to the people’s court within 15 days as of the date of receipt of the said decision.
Article 39 Any act in violation of these Regulations which constitutes the crime of smuggling, or of the regulations on the Customs supervision
and control shall be dealt with in accordance with the provisions of Customs Law of the People’s Republic of China, Regulations for
Imposing Administrative Penalties under the Customs Law of the People’s Republic of China and other relevant laws or regulations.
CHAPTER VIII SUPPLEMENTARY PROVISIONS
Article 40 The Customs shall, in accordance with relevant regulations, reward any individual or unit who provides any information or assistance
which leads to the uncovering of any evasion or avoidance of Customs duties in violation of these Regulations. The identity of the
individuals or units concerned shall be kept confidential.
Article 41 The Customs General Administration shall be responsible for the interpretation of these Regulations.
Article 42 These Regulations shall come into force as of April 1, 1992.
Beijing Bureau of Public Security Notice on Tightening Traffic Administration of Foreign Nationality Drivers and Their Motor Vehicles
(Effective Date:1992.02.01–Ineffective Date:)
In order to improve control of the motor vehicles of foreign, Hong Kong, Macao and Taiwanese representative organs stationed in Beijing
(not including embassies stationed in China) and foreign nationals, together with control of the drivers of such vehicles, as well
as to ensure traffic safety, provisions formulated pursuant to the aforesaid scope and in accordance with the Road Traffic Control
Rules of the People’s Republic of China and relevant provisions of the Ministry of Public Security for the annual inspection of motor
vehicles owned by foreign nationals (hereinafter referred to as an annual inspection), the annual examination of vehicles drivers
of foreign nationality (hereinafter referred to as an annual examination) and other related matters are hereby issued anew in this
Notice as follows:
1 Annual inspection of motor vehicles:
(1) In the case of motor vehicles issued with “Beijing 01” number licence plates with a black background and white lettering (ie,
aluminium natural colour lettering) (not including the motor vehicles of embassies stationed in China), the original vehicle inspections
conducted once every four years shall be altered to an annual inspection, commencing from 1992.
(2) Annual inspection period: In 1992, this shall be from 1 March to 31 May.
Commencing from 1993, the annual inspection period shall be the same as for local motor vehicles in Beijing Municipality, with the
annual inspection for all vehicles being conducted in the month corresponding to the last number on the respective vehicle’s licence
plate.
(3) Location of annual vehicle inspections: Cars shall be inspected at the Chaoyang Motor Vehicle Inspection Station (Address: Beijing,
Chaoyang District, Anding Menwai Xiaoguananyuan East Road No 18). Motorbikes and motor-scooters shall be inspected at the Foreign
Affairs Section of the Municipal Public Security Traffic Administration Bureau Vehicle Control Office (hereinafter referred to as
the Vehicle Control Office).
(4) When undertaking a motor vehicle annual inspection, the relevant party shall first obtain a Motor Vehicle Annual Inspection Form
from the Foreign Affairs Section of the Vehicle Control Office and fill in this Form. After a vehicle passes the annual inspection,
annual inspection procedures shall be completed at the Foreign Affairs Section of the Vehicle Control Office and a special purpose
seal of acceptance shall be affixed to the Form to verify the issue of the same type of annual inspection acceptance certificate
as used for local motor vehicles. (Annual inspection acceptance certificates shall not be issued for vehicles without a driver’s
cab.) The annual inspection acceptance certificate must be affixed to the upper right-hand corner of the glass of a vehicle’s front
windscreen to enable its inspection.
When carrying out annual inspection procedures in 1992, the Foreign Affairs Section of the Vehicle Control Office must collect all
original vehicle licences stamped with a seal for a four-yearly inspection and issue newly ratified vehicle licences.
(5) If a vehicle is damaged or other special circumstances prevent it from undergoing the annual inspection pursuant to the aforesaid
schedule, procedures for the granting of an extension of the inspection period must be carried out with the Foreign Affairs Section
of the Vehicle Control Office.
(6) Commencing from 1 June 1992, any vehicle which has not undergone an annual inspection pursuant to the aforesaid provisions or
which has failed the annual inspection shall not be permitted to be driven on the roads.
2 Annual examination for motor vehicle drivers:
(1) In the case of foreign nationals holding People’s Republic of China drivers’ licences (not including foreign nationals associated
with embassies stationed in China), the original licence examination conducted once every four years shall, commencing from 1992,
be altered to an annual examination in line with provisions for the annual examination of local drivers of motor vehicles in Beijing
Municipality.
(2) Annual examination period: In 1992, this period shall be from 1 June to 30 August. In subsequent years, the annual inspection
period shall be the same as for local drivers of motor vehicles in Beijing Municipality.
(3) When undergoing an annual examination for motor vehicle drivers, the relevant party shall first obtain a Motor Vehicle Driver
Annual Examination Form from the Foreign Affairs Section of the Vehicle Control Office and fill in this Form. After undergoing a
physical examination at a foreign visitors outpatient clinic and an examination at the Foreign Affairs Section of the Vehicle Control
Office pursuant to regulations, a party who qualifies shall complete annual examination procedures and a special purpose seal of
acceptance shall be affixed to his driver’s licence.
When carrying out annual examination procedures in 1992, the Foreign Affairs Section of the Vehicle Control Office must collect all
original drivers’ licences stamped with a seal for a four-yearly examination and issue newly ratified driver’s licences.
(4) If a motor vehicle driver returns home or other special circumstances prevent him from undergoing the annual examination pursuant
to the aforesaid schedule, procedures for the granting of an extension of the examination period must be carried out with the Foreign
Affairs Section of the Vehicle Control Office.
(5) Commencing from 1 September 1992, any motor vehicle driver who has not undergone an annual inspection pursuant to the aforesaid
provisions or who has failed the annual examination shall not be permitted to drive a motor vehicle.
3 If any changes occur to details in relation to the registration of a motor vehicle or the motor vehicle driver, registration amendment
procedures must be carried out with the Foreign Affairs Section of the Vehicle Control Office pursuant to regulations before the
vehicle’s annual inspection or the driver’s annual examination.
4 Any violation of the provisions of this Notice shall be handled as for traffic violations.
Reply of the General Office of the State Council Concerning the Period of Residence for Resident Representative Offices of Foreign-capital
Financial Institutions
March 12, 1992
The State Administration for Industry and Commerce:
The Report on the Valid Term of the Approval Document for the Resident Representative Offices Established in China by Foreign-capital
Financial Institutions, submitted by your Administration, has been received. With the approval of the leaders of the State Council,
a reply is hereby made by letter as follows:
1.
In accordance with the relevant provisions of the Interim Provisions of the State Council of the People’s Republic of China on the
Administration of Resident Representative Offices of Foreign Enterprises and the Measures for Administration of Registration of Resident
Representative Offices of Foreign Enterprises, the approval of “the period of residence ” shall be included when the People’s Bank
of China approves the resident representative offices of the foreign-capital financial institutions.
2.
In the light of the actual situations at present and the characteristics of finance administration, the period of residence for resident
representative offices of foreign-capital financial institutions may be extended properly, but should not be allowed to exceed six
years in one approval document.
The General Office of the State Council
1992-03-12
Reply of the General Office of the State Council Concerning the Period for Resident Representative Offices of Banking Institutions
With Foreign Capital Residing in China
(March 12, 1992)
The State Administration for Industry and Commerce:
The Report on the Valid Term of the Approval Document for the Resident Representative Offices Established by Banking Institutions with Foreign Capital in China, submitted by your Administration, has been received. With the approval of the leaders of the State Council, a reply is hereby made by letter as follows:
1. In accordance with the relevant provisions of the Interim Provisions of the State Council of the People’s Republic of China on the Administration of Resident Representative Offices of Foreign Enterprises and the Measures for Administration of Registration of Resident Representative Offices of Foreign Enterprises, the approval of “the period of residence ” shall be included when the China People’s Bank approves the resident representative offices of the banking institutions with foreign capital.
2. In the light of the actual situations at present and the characteristics of banking administration, the period of residence for resident representative offices of Banking institutions with foreign capital may be extended properly, but should not be allowed to exceed six years in one approval document.
(Adopted at the 27th Meeting of the Standing Committee of the Seventh
National People’s Congress on September 4, 1992, promulgated by Order No.60 of the President of the People’s Republic of China on September 4, 1992, and effective as of January 1, 1993) (Editor’s Note: For the revised text, see the Decision of the Standing Committee of the National People’s Congress Revising the Law of the People’s Republic of China on Administration of Tax Collection promulgated on and effective as of February 28, 1995) Contents
Chapter I General Provisions
Chapter II Tax Administration
Section 1 Tax Registration
Section 2 Administration of Accounting Books and Vouchers
Article 1 This Law is formulated with a view to strengthening the administration of tax collection, ensuring the tax revenue of the State and protecting the legitimate rights and interests of taxpayers.
Article 2 The administration of tax collection in respect of all taxes to be collected by the tax authorities in accordance with law shall be governed by this Law.
Article 3 The imposition of tax or the cessation thereof, tax reduction, tax exemption and refund of tax as well as payment of tax unpaid shall be governed by the provisions of relevant laws; where the State Council is authorized by law to formulate relevant regulations, the provisions of relevant administrative rules and regulations formulated by the State Council shall apply.
No units including governmental organs or individuals may, in violation of law or administrative rules and regulations, make decisions regarding the imposition of tax or the cessation thereof, tax reduction, tax exemption or refund of tax, or payment of tax unpaid.
Article 4 Units and individuals that are obligated to pay tax as prescribed by law or administrative rules and regulations are taxpayers.
Units and individuals that are obligated to withhold and remit tax or collect and remit tax as prescribed by law or administrative rules and regulations are withholding agents.
Taxpayers and withholding agents must pay tax or withhold and remit tax or collect and remit tax in accordance with the provisions of relevant laws or administrative rules and regulations.
Article 5 The competent department of taxation under the State Council shall be in charge of the administration of tax collection throughout the country.
The local people’s governments at various levels shall strengthen their leadership in the administration of tax collection within their respective administrative regions and support the tax authorities in carrying out their duties according to law and accomplishing their tasks of tax collection.
Departments and units concerned shall support and assist the tax authorities in carrying out their duties according to law.
No units or individuals shall obstruct the tax authorities from carrying out their duties according to law.
Article 6 Tax officials must implement the law impartially and devote themselves to their duties. They shall not extort or take bribes, practise favouritism and commit malpractice, neglect their duties, or fail to collect, or undercollect the amount of tax payable; nor shall they abuse their powers to overcollect tax or deliberately create difficulties for taxpayers or withholding agents.
Article 7 Every unit or individual shall have the right to report any acts contravening the law or the administrative rules or regulations relating to taxation. The tax authorities shall maintain confidentiality in respect of the informants and grant them rewards in accordance with relevant regulations.
Article 8 “The tax authorities” referred to in this Law means the tax bureaux at various levels and their sub-bureaux and tax stations. Chapter II Tax Administration
Section 1 Tax Registration
Article 9 Enterprises, branches and sites engaged in production or business operations established in other places by enterprises, individual businesses as well as institutions engaged in production or business operations (hereinafter collectively referred to as taxpayers engaged in production or business operations) shall, within 30 days from receipt of the business licence, apply to the tax authorities for tax registration on presentation of the relevant documents. Upon examination and verification of such documents, the tax authorities shall issue the tax registration certificate.
The scope and methods for tax registration for taxpayers other than those specified in the preceding paragraph shall be laid down by the State Council.
Article 10 Any taxpayer engaged in production or business operations shall, where any change occurs in the contents of tax registration, within 30 days from the date of completing the formalities for such change in the business registration with the administrative department of industry and commerce or prior to the submission of an application for cancellation of the business registration to the administrative department of industry and commerce, apply to the tax authorities for the change or cancellation of tax registration on presentation of the relevant documents.
Article 11 Use of tax registration certificates by taxpayers shall be governed by the relevant regulations formulated by the competent department of taxation under the State Council. The tax registration certificates shall not be lent, altered, damaged, traded or forged.
Section 2 Administration of Accounting Books and Vouchers
Article 12 Taxpayers engaged in production or business operations or withholding agents shall, in pursuance of the relevant regulations of the competent departments of finance and taxation under the State Council, establish accounting books, keep accounts based on legitimate and valid vouchers and conduct accounting. Individual businesses that are truly unable to keep accounting books may keep no accounting books upon examination and approval by the tax authorities.
Article 13 The financial and accounting systems or financial and accounting procedures of a taxpayer engaged in production or business operations shall be submitted to the tax authorities for the record.
Where the financial and accounting systems or financial and accounting procedures of a taxpayer engaged in production or business operations contravene the relevant tax rules of the State Council or the competent departments of finance and taxation under the State Council, the calculation and payment of tax shall be made in accordance with the relevant tax rules of the State Council or the competent departments of finance and taxation under the State Council.
Article 14 Invoices shall be printed by enterprises designated by the competent departments of taxation of the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government. No enterprises without designation by such departments shall print invoices.
Measures for the administration of invoices shall be worked out by the State Council.
Article 15 Taxpayers engaged in production or business operations and withholding agents must take care of accounting books, vouchers for the accounts, tax payment receipts and other relevant information in conformity with the period for such care prescribed by the competent departments of finance and taxation under the State Council.
Accounting books, vouchers for the accounts, tax payment receipts and other relevant information shall not be forged, altered or destroyed without due approval.
Section 3 Tax Declaration
Article 16 Taxpayers must, within the time limit for tax declaration as prescribed by law or administrative rules and regulations, or as determined by the tax authorities in accordance with law or administrative rules and regulations, complete formalities for tax declaration, submit tax returns, financial and accounting statements as well as other relevant information on tax payments required of taxpayers by the tax authorities in light of the actual needs.
Withholding agents must, within the time limit for tax declaration as prescribed by law or administrative rules and regulations, or as determined by the tax authorities in accordance with law or administrative rules and regulations, submit statements on taxes withheld and remitted or collected and remitted as well as other relevant information required of withholding agents by the tax authorities in light of the actual needs.
Article 17 Where a taxpayer or withholding agent is unable to complete formalities for tax declaration or to submit statements on the tax withheld and remitted or collected and remitted within the prescribed time limit, upon examination and approval by the tax authorities, the time limit may be extended. Chapter III Tax Collection
Article 18 The tax authorities shall collect tax in accordance with law or administrative rules and regulations. They shall not impose, cease to collect, overcollect or undercollect tax in violation of law or administrative rules and regulations.
Article 19 Withholding agents shall perform their obligations of withholding or collecting tax in accordance with law or administrative rules and regulations. With respect to units or individuals that are not obligated to withhold or collect tax as prescribed by law or administrative rules and regulations, the tax authorities shall not request them to perform any obligations of withholding or collecting tax.
When a withholding agent performs its obligations of withholding or collecting tax in accordance with law, the taxpayer shall have no right to refuse. Should a taxpayer refuse, the withholding agent shall promptly report the case to the tax authorities for disposition.
The tax authorities shall in accordance with the relevant regulations pay to withholding agents handling fees for withholding or collecting tax.
Article 20 A taxpayer or withholding agent shall pay or remit tax in compliance with the time limit as prescribed by law or administrative rules and regulations, or as determined by the tax authorities in accordance with law or administrative rules and regulations. Where a taxpayer is unable to pay tax within the prescribed period on account of special difficulties, it may, upon approval by a tax bureau (or sub-bureau) at or above the county level, defer the payment of tax for a maximum period of three months.
Where a taxpayer fails to pay tax within the time limit as prescribed in the preceding paragraph or a withholding agent fails to remit tax within the time limit as prescribed in the preceding paragraph, the tax authorities shall, in addition to ordering the taxpayer or withholding agent to pay or remit the tax within a fixed period of time, impose a surcharge on a daily basis at the rate of 0.2% of the amount of tax in arrears, commencing on the day the tax payment is in default.
Article 21 A taxpayer may submit to the tax authorities a written application for tax reduction or tax exemption in accordance with law or administrative rules and regulations.
Applications for tax reduction or tax exemption shall be subject to the examination and approval by the examination and approval authorities for tax reduction or tax exemption prescribed by law or administrative rules and regulations. Any decisions on tax reduction or tax exemption made in violation of law or administrative rules and regulations by the local people’s governments at various levels, the competent departments under the people’s governments at various levels, or by units or individuals shall be null and void.
Article 22 When the tax authorities collect tax and withholding agents withhold or collect tax, they must issue tax payment receipts to the taxpayers.
Article 23 If a taxpayer is under one of the following circumstances, the tax authorities shall have the power to assess the amount of tax payable by the taxpayer:
(1) Establishment of accounting books is not necessary under this Law;
(2) Accounting books are required to be established by this Law, but they are not established;
(3) Accounting books are established, but the accounts are not in order or the information on costs, receipt vouchers and expense vouchers are incomplete and difficult to check;
(4) Where an obligation to pay tax arises, the taxpayer fails to complete the formalities for tax declaration within the prescribed time limit, and, after having been ordered by the tax authorities to make tax declaration within a fixed period of time, still fails to do so upon expiration of the period.
Article 24 The payment or receipt of prices or charges in business transactions between an enterprise or an establishment or a site set up in China by a foreign enterprise engaged in production or business operations, and its associated enterprises, shall be made in the same manner as the payment or receipt of prices or charges in business transactions between independent enterprises. Where the payment or receipt of prices or charges is not made in the same manner as in business transactions between independent enterprises and results in a reduction of the taxable revenue or income, the tax authorities shall have the right to make reasonable adjustments.
Article 25 With respect to a unit or an individual engaged in business operations without a business licence, the case shall be dealt with by the administrative department of industry and commerce in accordance with law. In addition, the tax authorities shall assess the amount of tax payable by such unit or individual and order it or him to make the tax payment. Should such unit or individual fail to make the tax payment, the tax authorities may distrain the commodities or goods of a value corresponding to the amount of tax payable. If the amount of tax payable is paid after the distraint, the tax authorities must immediately remove the distraint and return the commodities or goods distrained. If the amount of tax payable is still not paid after the distraint, the commodities or goods which have been distrained shall, upon approval of the commissioner of a tax bureau (or sub-bureau) at or above the county level, be sold by auction and the proceeds therefrom shall be used to offset the amount of tax payable.
Article 26 Where the tax authorities have grounds to believe that a taxpayer engaged in production or business operations has committed any act of tax evasion, the tax authorities may order the taxpayer to pay the tax payable within a time limit prior to the prescribed date of tax payment. If within such time limit the tax authorities discover that there are obvious signs that the taxpayer has transferred or concealed its taxable commodities, goods or other property, or taxable income, the tax authorities may order the taxpayer to provide a guaranty for tax payment. If the taxpayer is unable to provide a guaranty for tax payment, the tax authorities may, upon approval of the commissioner of a tax bureau (or sub-bureau) at or above the county level, adopt the following tax preservative measures:
(1) To notify in writing the bank or any other financial institution with which the taxpayer has opened an account to stop payment on a temporary basis from the taxpayer’s deposits of an amount corresponding to the amount of tax payable;
(2) To distrain or seal up the taxpayer’s commodities, goods or other property of a value corresponding to the amount of tax payable.
In the event that the taxpayer makes the tax payment within the time limit prescribed in the preceding paragraph, the tax authorities must immediately lift the tax preservative measures. Should the taxpayer fail to make the tax payment on expiration of the time limit, the tax authorities may, upon approval of the commissioner of a tax bureau (or sub-bureau) at or above the county level, notify in writing the bank or any other financial institution with which the taxpayer has opened an account to withhold and remit the amount of tax payable from the taxpayer’s deposits from which payment has been stopped on a temporary basis, or sell by auction the commodities, goods or property which has been distrained or realed up and use the proceeds therefrom to offset the amount of tax payable.
Where the legitimate interests of a taxpayer are jeopardised due to the inappropriate adoption of tax preservative measures or the failure of the tax authorities to immediately lift such measures after the taxpayer has made the tax payment within the prescribed time limit, the tax authorities shall be liable for compensation.
Article 27 Where a taxpayer engaged in production or business operations or a withholding agent fails to pay or remit tax within the prescribed time limit, or a tax payment guarantor fails to pay the guaranteed amount of tax within the prescribed time limit, the tax authorities shall order the same to pay the tax within a fixed period of time. In case of failure to pay the tax within such period, the tax authorities may, upon approval of the commissioner of a tax bureau (or sub-bureau) at or above the county level, adopt the following compulsory enforcement measures:
(1) To notify in writing the bank or any other financial institution with which the taxpayer, withholding agent or tax payment guarantor has opened an account to withhold and remit the amount of tax from its deposits;
(2) To distrain, seal up or sell by auction the commodities, goods, or other property of the taxpayer, withholding agent or tax payment guarantor, of a value corresponding to the amount of tax payable, and to use the proceeds therefrom to offset the amount of tax payable.
The tax authorities shall, while adopting the compulsory enforcement measures, carry out compulsory enforcement with regard to the surcharge on tax in arrears which has not been paid by the above-mentioned taxpayer, withholding agent or tax payment guarantor.
Article 28 Should a taxpayer who has not paid or has underpaid the amount of tax payable need to leave China, it shall settle the amount of tax payable with, or provide a guaranty to, the tax authorities, before leaving the country. If the taxpayer neither settles the amount of tax payable nor provides a guaranty, the tax authorities may notify the exit administration authorities to prevent the taxpayer from leaving the country.
Article 29 The tax authorities must issue a receipt when distraining commodities, goods or other property, and issue a detailed list when sealing up commodities, goods or other property.
Article 30 After discovering that a taxpayer has paid an amount of tax in excess of the tax payable, the tax authorities must immediately refund the excess amount; where a taxpayer discovers its excess payment within three years from the date of the tax payment, it may claim a refund of the excess amount of tax from the tax authorities, which shall immediately refund it after examination and verification of the case.
Article 31 In case that a taxpayer or withholding agent fails to pay tax, or underpays tax, due to the responsibility of the tax authorities, the tax authorities may within three years require the taxpayer or withholding agent to pay the tax in arrears, without, however, the imposition of any surcharge thereon.
In case that a taxpayer or withholding agent fails to pay tax, or underpays tax, through its own faults, such as miscalculation, the tax authorities may within three years pursue the collection of the tax in arrears. Under special circumstances, the period for pursuing the collection of the tax in arrears may be extended to ten years. Chapter IV Tax Inspection
Article 32 The tax authorities shall have the power to conduct the following tax inspections:
(1) To inspect a taxpayer’s accounting books, vouchers for the accounts, statements and relevant information; to inspect a withholding agent’s accounting books, vouchers for the accounts and relevant information in respect of the amount of tax withheld and remitted or collected and remitted;
(2) To inspect a taxpayer’s taxable commodities, goods or other property at the taxpayer’s sites where production or business operations are conducted and places where goods are stored; to inspect a withholding agent’s operational conditions relating to the withholding and remittance of tax or the collection and remittance of tax;
(3) To order a taxpayer or withholding agent to furnish documents, evidentiary materials and information pertaining to the payment of tax or the amount of tax withheld and remitted or collected and remitted;
(4) To make inquiries of a taxpayer or withholding agent regarding issues and particulars relevant to the payment of tax or the amount of tax withheld and remitted or collected and remitted;
(5) To inspect, at railway stations, docks, airports, postal enterprises and their branches, supporting documents, vouchers and information pertaining to the taxable commodities, goods or other property which a taxpayer has delivered for carriage or sent by post;
(6) Upon approval of the commissioner of a tax bureau (or sub-bureau) at or above the county level, to examine and verify the deposit accounts that a taxpayer engaged in production or business operations or a withholding agent has opened with a bank or any other financial institution, on the strength of a permit, which is of a nationally unified form, for the inspection of deposit accounts. The examination and verification of the savings deposits of a taxpayer engaged in production or business operations shall be subject to the review by a county sub-branch or a municipal (at the county level) sub-branch of a bank or a district office of a municipal branch of a bank, which shall designate a subordinate savings office to provide the relevant information.
Article 33 A taxpayer or withholding agent must subject itself to tax inspections conducted by the tax authorities in accordance with law, report the particulars truthfully and provide relevant information, and shall not refuse to be inspected or conceal any facts.
Article 34 When the tax authorities conduct tax inspections in accordance with law, the departments and units concerned shall give support and assistance, truthfully report the particulars of taxpayers, withholding agents and other parties concerned in respect of the payment of tax and the amount of tax withheld and remitted or collected and remitted, and furnish the relevant information and evidentiary materials to the tax authorities.
Article 35 The tax authorities may, when investigating a case concerning violation of any tax laws or regulations, make notes, tape-recordings, video-recordings, photographings and duplications of the relevant particulars and information pertaining to the case.
Article 36 When conducting tax inspections, the officials sent by the tax authorities shall produce tax inspection certificates and shall have the duty to keep confidentiality for the persons under inspection. Chapter V Legal Responsibilities
Article 37 Where a taxpayer has committed any of the following acts, the tax authorities shall order it to rectify within a fixed period of time. Those failing to rectify upon expiration of the period may be punished by the tax authorities with a fine of not more than 2,000 yuan, if the circumstances are serious, with a fine of not less than 2,000 yuan but not more than 10,000 yuan.
(1) Failure to apply for tax registration, change or cancellation of tax registration within the prescribed time limit;
(2) Failure to establish and take care of the accounting books, or to take care of the vouchers for the accounts and the relevant information in accordance with relevant regulations;
(3) Failure to furnish reports on the financial and accounting systems or the financial and accounting procedures to the tax authorities for record in accordance with relevant regulations.
Article 38 Where a withholding agent has failed to establish and take care of the accounting books for the tax withheld and remitted or collected and remitted, or to take care of the vouchers for the accounts and the relevant information regarding the tax withheld and remitted or collected and remitted, in accordance with relevant regulations, the tax authorities shall order it to rectify within a fixed period of time. Those failing to rectify upon expiration of the period may be punished by the tax authorities with a fine of not more than 2,000 yuan, if the circumstances are serious, with a fine of not less than 2,000 yuan but not more than 5,000 yuan.
Article 39 Where a taxpayer has failed to go through formalities for tax declaration within a prescribed time limit or a withholding agent has failed to furnish statements on the tax withheld and remitted or collected and remitted to the tax authorities within a prescribed time limit, the tax authorities shall order the taxpayer or withholding agent to rectify within a fixed period of time and may impose a fine of not more than 2,000 yuan. Those failing to rectify upon expiration of the period may be punished with a fine of not less than 2,000 yuan but not more than 10,000 yuan.
Article 40 “Tax evasion” means that a taxpayer fails to pay, or underpays the amount of tax payable by means of forging, altering, concealing or destroying without authorization accounting books or vouchers for the accounts, or overstating expenses or omitting or understating incomes in accounting books, or filing false tax returns. Where the amount of tax evaded accounts for more than ten percent of the amount of tax payable and is over 10.000 yuan, or where the taxpayer commits tax evasion again after having been twice subjected to administrative sanctions by the tax authorities for tax evasion, the tax authorities shall, in addition to pursuing the payment of tax which has been evaded by the taxpayer, impose a punishment on the taxpayer in accordance with the provisions in Article 1 of the Supplementary Provisions Regarding the Imposition of Punishment in Respect of Offences of Tax Evasion
Provisional Rules of Shenzhen Municipality for Registration of Special Renminbi-Denominated Shares
(Effective Date:1992.01.31–Ineffective Date:)
CONTENTS
CHAPTER 1. GENERAL PROVISIONS CHAPTER 2. FORM OF REGISTRATION CHAPTER 3. SHAREHOLDER INFORMATION CHAPTER 4. PROCEDURES FOR REGISTRATION
OF TRANSFER CHAPTER 5. CHECKING OF ACCOUNTS CHAPTER 6. DISTRIBUTION OF BONUSES AND PAYMENT OF DIVIDENDS CHAPTER 7. FEES CHAPTER 8.
SUPPLEMENTARY PROVISIONS
CHAPTER 1. GENERAL PROVISIONS
Article 1. These Rules are formulated in accordance with the relevant provisions of the Provisional Measures of Shenzhen Municipality for Administration
of Special Renminbi-Denominated Shares and the Detailed Implementing Rules issued thereunder (the “Detailed Implementing Rules”),
in order to safeguard the lawful rights and interests of investors.
Article 2. Shenzhen Securities Registrars Co. Ltd. (“Registrars Co.”) shall be the official institution for registration of special Renminbi-denominated
shares (“B Shares”) in Shenzhen Municipality. In accordance with the actual circumstances of B Share activity, Registrars Co. may
appoint a bank which fulfills the condition set forth in Article 20, Chapter 5 of the Detailed Implementing Rules (the “Registration
Bank”) as its agent for B Share registration.
CHAPTER 2. FORM OF REGISTRATION
Article 3. B Shares shall be traded or delivered without scrip. Registration and transfer of B Shares shall be accomplished by means of a computer
bookkeeping system. Following completion of registration or transfer of B Shares, the Registration Bank must issue a statement of
account, to serve as evidence of the shareholder’s holdings.
Article 4. A statement of account issued by the Registration Bank shall contain the following minimum particulars:
Share account number, name, name of shares, previous share balance, number of shares purchased or sold on the present occasion, present
share balance, date of registration, bank seal, etc.
Article 5. Statements of account may not be circulated or charged.
Article 6. The information registered by the Registration Bank on holders of B Shares must be registered to the beneficial shareholders that
are represented by authorized securities brokers (“Authorized Brokers”), or by banks providing B Share custody service (“Custodian
Banks”), inside or outside the People’s Republic of China.
Article 7. Registrars Co. shall under no circumstances issue scrip to B Share investors.
CHAPTER 3. SHAREHOLDER INFORMATION
Article 8. Authorized Brokers and Custodian Banks may open direct accounts with the Registration Bank. All B Share investors shall open subsidiary
accounts with the Registration Bank through Authorized Brokers or Custodian Banks.
The term “direct accounts” refers to share accounts that are opened by Authorized Brokers or Custodian Banks with the Registration
Bank and are used to reflect the total shares being kept by such Brokers or Banks on behalf of their clients.
The term “subsidiary accounts” refers to branch accounts that are opened by B Share investors under the direct accounts of Authorized
Brokers or Custodian Banks and are used to reflect the shareholdings of such investors.
Article 9. When carrying out account-opening procedures, an investor shall provide the Authorized Broker or Custodian Bank with such detailed
information as its name, amount of shareholdings, identification document number (or commercial registration certificate number),
nationality (or place of registration), correspondence address, contact telephone number, etc. The Authorized Broker or Custodian
Bank must transmit such account-opening information promptly to the Registration Bank.
Article 10. Investors’ account-opening information shall be in Chinese or English. When the identification document an investor uses to open
an account gives a name in Chinese, such investor’s account-opening information shall be in Chinese. When the identification document
an investor uses to open an account gives a name in a language other than Chinese, such investor’s account-opening information shall
be translated into Chinese or English.
Article 11. The Registration Bank must establish share accounts for investors and accurately provide Registrars Co. with detailed registration
information on investors, and must strictly maintain the confidentiality of such investors’ information in accordance with Article
23, Chapter 5 of the Detailed Implementing Rules.
CHAPTER 4. PROCEDURES FOR REGISTRATION OF TRANSFER
Article 12. Procedures for registration at issue:
(1) within 15 days following the close of an issue of B Shares, the issuing company must submit the confirmed register information
on shareholders to Registrars Co. The contents of such register shall conform to the provisions of Article 9, Chapter 3 hereof; ?2)
after checking the register information on shareholders for errors, Registrars Co. shall carry out registration in accordance with
the requirements of these Rules and the relevant regulations;
(3) within five days following receipt of the register information on shareholders submitted by the issuing company, Registrars Co.
shall provide the same to the Registration Bank.
Article 13. Procedures for registration of transfer:
(1) following the conclusion of a B Share transaction on the Shenzhen Securities Exchange, an Authorized Broker shall, by noon on
T+1, report the investors’ share account numbers, names, name of shares, share numbers and number of shares sold and purchased to
the Registration Bank. In the case of a new investor on the market, the Broker shall also report such information as the investor’s
nationality (or place of registration), identification document number (or commercial registration certificate number), correspondence
address, contact telephone number, etc.;
(2) after checking the information reported by the Authorized Brokers against the investors’ account information and finding the same
to be accurate, the Registration Bank shall complete registration of transfer by T+3;
(3) the Registration Bank shall, by 11 a.m. on T+4, report the complete shareholders’ register information to Registrars Co.
Article 14. When inheritance, bestowal, etc. causes a change in share ownership and necessitates transfer, the Registration Bank must rely on
the relevant legal documents and submit (photocopies of) such legal documents to Registrars Co. for reference.
Article 15. The Registration Bank shall report register information to Registrars Co. according to the requirements set forth below:
(1) in the case of investors who have already opened an account with the Registration Bank, their share account number, name, name
of shares, share numbers and number of shares purchased or sold shall be reported;
(2) in the case of investors who are opening an account for the first time with the Registration Bank, their share account number,
name, names of shares, share numbers, number of shares purchased, nationality (or place of registration), identification document
number (or commercial registration certificate number), correspondence address and contact telephone number shall be reported.
Article 16. The Registration Bank must preserve all documentation and records of B Share registration for at least seven years.
CHAPTER 5. CHECKING OF ACCOUNTS
Article 17. Registrars Co. and the Registration Bank shall cross-check accounts for all registered Shares, and sign the cross-checked accounts,
on a daily basis.
Article 18. Specific measures for the cross-checking of accounts shall be decided separately through consultation.
CHAPTER 6. DISTRIBUTION OF BONUSES AND PAYMENT OF DIVIDENDS
Article 19. Any company that has B Shares listed in Shenzhen Municipality shall publish an announcement of bonus distribution or dividend payment
in a designated newspaper or periodical 15 days before the event. Registrars Co. shall, within 48 hours following the appearance
of such announcement, notify the Registration Bank thereof. The Registration Bank shall, within 48 hours following receipt of such
notice, notify Authorized Brokers and Custodian Banks outside the People’s Republic of China of the contents of the announcement.
Article 20. The Shareholders’ registers provided by the Registration Bank and confirmed by Registrars Co. for the record date shall serve as
the basis for making calculations in respect of rights issues, distribution of bonuses and payment of dividends.
Article 21. Rights issues, bonus shares and dividends (after taxes) shall be distributed to shareholders by the Registration Bank in accordance
with the shareholders’ registers confirmed by Registrars Co., either directly or through Authorized Brokers or Custodian Banks.
CHAPTER 7. FEES
Article 22. Transfer registration fees for B Shares shall be collected from the purchaser at the rate of 0.3 percent of the total face value
of the shares being transferred.
Article 23. Transfer registration fees shall be calculated in Renminbi and paid in Hong Kong Dollars. The closing price for Hong Kong Dollars
for the preceding business day of the Shenzhen Foreign Exchange Adjustment Center shall be used for conversion.
Article 24. Transfer registration fees shall be collected by the Registration Bank on behalf of Registrars Co. at the time of clearance and transfer.
CHAPTER 8. SUPPLEMENTARY PROVISIONS
Article 25. B Shares may be charged. Registration of charges shall be handled by the Registration Bank.
Article 26. These Rules, and any amendments hereto, shall become effective following their approval by the Shenzhen Special Economic Zone branch
of the People’s Bank of China.
Article 27. Shenzhen Securities Registrars Co., Ltd. shall be responsible for the interpretation of these Rules.
Article 28. These Rules are promulgated in Chinese. If ambiguities arise in their interpretation due to translation into other languages, the
Chinese version shall prevail.
Article 1 In accordance with “The Accounting Law of the People’s Republic of China,” these Criteria are formulated to meet the needs of developing a socialist rnarket economy in our country, to unify the accounting standards and to ensure the quality of accounting information.
Article 2 These Criteria shall be applicable to all enterprises established within the territory of the People’s Republic of China. Chinese invested enterprises eslablished outside the territory of the People’s Republic of China (hereinafier referred to as enterprises abroad) shall be required to prepare and disclose their financial reports to the relevant domestic departments in accordance with these Criteria.
Article 3 Accounting systems of enterprises shall be formulated in compliance with these Criteria.
Article 4 An enterprise shall accurately account for all its business transactions actually taken place, and record in reliable reports all the business activities of the enterprises itself.
Article 5 Accounting and financial reports shall be based on the presumption that the enterprise shall carry on its operation in a continuous and regular manner into the foreseeable future.
Article 6 An enterprise shall account for its business activities and prepare its financial statements in distinct accounting periods. Accounting periods may be a fiscal year, a quarter, or a month, commencing on the first days thereof according to the Gregorian calendar.
Article 7 The Renminbi shall be the bookkeeping base currency. A foreign currency may be adopted as the bookkeeping base currency for enterprises which conduct business transactions mainly in foreign currency. However, in preparing financial statements, business transactions in foreign currency are to be converted into Renminbi. Enterprises abroad shall convert their foreign currency business transactions into Renminbi in preparing financial statements to the relevant domestic departments.
Article 8 The debit and credit double entry bookkeeping technique is to be adopted for recording all accounting transactions.
Article 9 Accounting records and financial reports shall be formulated in the Chinese language. Minority languages may be used concurrently with the Chinese language by enterprises in autonomous areas of minority nationalities. And a foreign language may also be used concurrently by enterprises with foreign investment or foreign enterprises. Chapter II General Principles
Article 10 The accounting records and financial reports shall be based on business transactions actually taken place, and truthfully reflect the financial position and operating results of an enterprise.
Article 11 Accounting information shall be designed to meet the requirements of national macro-economic control, to satisfy the needs of all concerned external users to understand an enterprise’s financial position and operating results, as well as the needs of enterprises to strengthen internal management and administration.
Article 12 Accounting records and financial reports shall be prepared according to stipulated accounting methods, and accounting data shall be comparable and convenient to be analyzed.
Article 13 Accounting methods used shall be consistent from one period to the other and shall not be arbitrarily changed. Where changes are absolutely necessary. the changes and reasons therefor and their impact on an enterprise’s financial position and operating results, shall be indicated in the financial statements.
Article 14 Accounting records and financial reports shall be prepared in a timely manner.
Article 15 Accounting records and financial statements shall be prepared in a clear, concise manner to facilitate understanding, examination and use.
Article 16 The accrual basis of accounting shall be adopted in accounting records and financial reports.
Article 17 Revenue shall be matched with related costs and expenses in accounting.
Article 18 Principle of prudence shall be followed, and possible loss and expense shall be reasonably determined.
Article 19 The values of all assets are to be recorded at historical costs at the time of acquisition. The amount recorded in books of account shall not be adjusted even though a fluctuation in their value may occur, except otherwise stipulated by the State.
Article 20 A clear distinction shall be reasonably drawn between revenue expenditures and capital expenditures. Expenditure shall be regarded as revenue expenditure where the benefit to the enterprise is only related to the current fiscal year; and as capital expenditure where the benefils to the enterprise last for several fiscal years.
Article 21 Financial statements shall reflect comprehensively the financial position and operating results of an enterprise. Transactions relating to major economic activities are to be identified and separately reported in financial statements. Chapter III Assets
Article 22 Assets are economic resources, which are measurable by money value, and which are owned or controlled by an enterprise, including all property, claims, and other rights.
Article 23 Assets shall normally be divided into current assets, long-term investments, fixed assets, intangible assets, deferred assets and other assets.
Arliele 24 Current assets refer to those assets which will be realized or consumed within one year or within an operating cycle longer than a year, including cash, cash deposits, short-term investments, receivables, prepayments, and inventories, etc.
Article 25 Cash and all kinds of deposits shall he accounted for according to the actual amount of receipt and payment.
Article 26 Short-term investments refer to various marketable securities, which can be realized at any time and will be held less than a year, as well as other investment with a life of no longer than a year.
Marketable securities shall be accounted for according to historical cost as obtained.
Income reeeived or receivable from marketable securities in currenl period and the difference between the receipt obtained from securities sold and book cost shall be all accounted for as current profit or loss.
Short-term investments shall be itemized and shown in book balance in financial statement.
Article 27 Receivables and prepayments shall include: notes receivable, accounts receivable, other receivables, accounts prepaid and prepaid expenses, etc.
Receivables and prepayments shall be accounted for according to actual amount.
Provision for bad debts may be set up on accounts receivable. The provision for bad debts shall be itemized and shown as a deduction item of accounts receivable in the financial statement.
All receivables and prepayments shall be cleared and collected in time, and shall be checked with relaled parties periodically. Any accounts receivable, proved and confirmed to be definitely uncollectible, shall be recognized as bed debts and written off against provision for bad debts or charged to current profit or loss as bad debts loss, if such provision is not set up.
Prepaid expenses shall be amortized according to period benefiting, and the balance shall be itemized and shown separately in financial statement.
Article 28 Inventories refer to merchandise, finished goods, semifinished goods, goods in process, and all kinds of materials, fuels, containers, low-value and perishable articles and so on that stocked for the purpose of sale or production and consumption during the production operational process.
All inventories shall be accounted for at historical cost as obtained. Those enterprises keep books at planned cost or norm cost in daily accounting shall account the cost variances and adjust planned cost or norm cost into historical cost periodically.
When delivering inventories, enterprises nay account for their actual cost under the following methods: first-in first-out, weighted average, moving average, specific identification, last-in first-out, etc.
All inventories shall be taken stock periodically. Any overage, shortage or out-of-date, deterioration and damage thai need to be scrapped shall be disposed within the year and accounted into current profit or loss.
All the inventories shall be disclosed at historical cost financial statement.
Article 29 Long-term investment refers to the investment not intended to be realized within a year, including shares investment, bonds investment and other investments.
Shares investment and other investments shall be accounted for by cost method or equity method respectively, in accordance with different situation.
Bonds investment shall be accounted for according to actual amount paid. The interest accrued contained in the actually paid amount shall be accounted for separately.
Where bonds are acquired at a premium or discount, the difference between the cost and the face value of the bonds shall be amortized over the periods prior to maturity of the bonds.
Interest accrued during the period of bonds investment and the difference between the amount of principal and interest received on bonds sold and their book cost and interest accrued but not yet received shall be accounted for as current profit and loss.
Long-term investment shall be itemized and shown separately in financial statements.
Long-term investment matured within a year shall be itemized in the financial statements separately under the caption of current assets.
Article 30 Fixed assets refer to the assets whose service life is over one year, unit value is above the prescribed standards and where original physical form remains during the process of utilization, including buildings and structures, machinery and equipment, transportation equipment, tools and implements, etc.
Fixed assets shall be accounted for at historical cost as obtained. Interest of loan and other related expenses for acquiring fixed assets, and the exchange difference from conversion of foreign currency loan, if incurred before the assets having been put into operation or after been put into operation but before the final account for completed project is made, shall be accounted as fixed assets value; if incurred after that, shall be accounted into current profit or loss.
Fixed assets received as donations shall be accounted through evaluation with reference to the market price of similar assets or with relevant evidences. Expenses incurred on receiving those donated fixed assets, shall be accounted for as the fixed assets value.
Fixed assets financed by leasing shall be accounted mutatis mutandis to selfowned fixed assets and shall be indicated in notes to the financial statements.
Depreciation on the fixed assets shall be accounted on the basis of the original cost, estimated residual value, estimated useful life and working capacity, according to the straight line method or the working capacity (or output) method. If conforming to relevant regulations, accelerated depreciation method may be adopted.
The original value, accumulated depreciation and net value of fixed assets shall be itemized and shown separately in financial statement.
The actual expenditures incurred for the purpose of acquiring or updating and conducting technical reforming on the fixed assets, shall be itemized and shown separately in financial statement.
The fixed assets shall be taken inventory periodically. The net profit or loss incurred in discard and disposal, and also overage, shortage of fixed assets shall be accounted into current profit and loss.
Article 31 Intangible assets refer to assets that are used by an enterprise for a long term without material state, including patents, non-patented technology, trademark, copyrights, right to use land sites, and goodwill, etc.
Intangible assets purchased shall be accounted for at actual cost. Intangible assets received from investors shall be accounted for at the assessed value recognized or the amount specified in the contract. Self-developed intangible assets shall be accounted at actual cost in the development process.
All intangible assets shall be averagely amortized over the periods benefited from such expenditures and the unamortized balance shall be itemized and shown in financial statements.
Article 32 Deferred assets refer to all the expenses that cannot be accounted into current profit or loss totally but should be periodically amortized in future years, including starting expenses, expenditures incurred in major repair and improvement of the rented fixed assets, etc.
The expenses incurred to an enterprise during its preparation period shall be accounted for as starting expenses except those that shall be accounted into related property or material value. The starting expenses shall be averagely amortized in a certain period of years after the operation starts.
Expenditures incurred on major repair and improvement of the rented fixed assets shall be averagely amortized during the period of leasing.
All deferred assets shall be shown separately in accounting statements by its balance not yet amortized.
Article 33 Other assets refer to the assets except all items mentioned above. Chapter IV Liabilities
Article 34 Liabilities are debts borne by an enterprise, measurable by money value, which is to be paid to a creditor in assets, or services.
Article 35 Liabilities are generally classified into current liabilities and long-term liabilities.
Article 36 Current liabilities refer to the debts which will be paid off within one year or an operating cycle longer than a year, including short-term loans payable, notes payable, accounts payable, advances from customers, accrued payroll, taxes payable, profits payable, other payables, provision for expenses, etc.
All current liabilities shall be accounted for at actual amount incurred. Liabilities incurred but the amount to be estimated shall be accounted for dt a reasonable estimate, and then adjusted after the actual amount is given.
Balance of current liabilities shall be itemized and shown in financial statements.
Article 37 Long-term liabilities refer to the debts which will be redeemed after one year or an operating cycle longer than a year, including long-term loans payable, bonds payable, long-term accounts payable, etc.
Long-term loans payable include the loans borrowed from financial institutions and other units. They shall be accounted independently according to the different characters of the loans and at the amount actually incurred.
Bonds shall be accounted for at par value. When bonds are issued in premium or discount, the difference between the amount actually obtained and the par value shall be accounted independently, and be written off periodically or increasing the interest expenses of every period prior to the maturity of bonds.
Long-term accounts payable include accounts payable for importing equipments, accounts payable for fixed assets financed by leasing. Long-term accounts payable shall be accounted at actual amounts.
Long term liabilities shall be itemized and shown as long-term loans, bonds payable, long-term accounts payable in financial statements.
Long-term liabilities to be matured and payable within one year shall be shown as a separate item under the caption of current liabilities. Chapter V Owners’ Equity
Article 38 Owners’ equity refers to the ownership of the investors with respect to the net assets of an enterprise, including capital invested in by investors, capital reserve, surplus reserve, and undistributed profit, etc.
Article 39 Invested capital is the capital fund actually invested in the enterprise by its investors, whether it be in form of cash, physical goods or other assets for the operation of the enterprise.
Invested capital shall be accounted for at the amount actually invested.
Amount of shares issued by a share-holding enterprise shall be accounted for as equity at the face value of the shares issued.
Special appropriation allocated by the government to an enterprise shall be accounted for as government investment unless otherwise stipulated.
Article 40 Capital reserve includes premium on capital stock, legal increment of property value through revaluation and value of donated assets accepted, etc.
Article 41 Surplus reserve refers to the reserve fund set up from profit according to relevant State regulations.
Surplus reserve shall be accounted for at the amount actually set up.
Article 42 Undistributed profit refers to the profit reserved for future distribution or to be distributed.
Article 43 Invested capital, capital reserve, surplus reserve and undistributed profit shall be itemized and shown in financial statements. Deficit not yet made up, if any, shall be shown as a deduction item of owners’ equity. Chapter VI Revenue
Article 44 Revenue refers to the financial inflows to an enterprise as a result of the sale of goods and services, and other business activities of the enterprise, including basic operating revenue and other operating revenue.
Article 45 Enterprises shall rationally recognize revenue and account for the revenue on time.
Enterprises shall recognize revenue when merchandise shipped, service provided as well as money collected or rights to collect money obtained.
Revenue of long-term project contract (including labour service) shall be reasonably recognized, in general, according to the completed progress method or the completed contract method.
Article 46 Return of sales, sales allowances and sales discount shall be accounted for as deduction item of operating revenue. Chapter VII Expenses
Article 47 Expenses refer to the outlays incurred by an enterprise in the course of production and operation.
Article 48 Expenses directly incurred by an enterprise in production and provision of service, including direct labour, direct materials, purchase price of commodities and other direct expenses shall be charged directly into the cost of production or operation; indirect expenses incurred in production and provision of service by an enterprise is to be allocated into the cost of production and operation, according to certain standards of allocation.
Article 49 Administrative and financial expenses incurred by enterprise’s administrative sectors for organizing and managing production and operation, purchase expenses on commodities purchased, and sales expenses for selling commodities and providing service, shall be directly accounted as periodic expense in the current profit and loss.
Article 50 The expenses paid in current period but attributable to the current and future periods shall be distributed and accounted into current and future periods. The expenses attributable to the current period but not yet paid in current period shall be recognized as accrued expenses of the current period.
Article 51 Enterprises shall generally calculate products cost each month.
Costing methods may be decided by the enterprise itself according to the characteristics of its production and operation, type of production management and requirements of cost management. Once it is decided, no change shall be made arbitrarily.
Article 52 Enterprises shall calculate expenses and costs at the actual amounts incurred.
Those adopting the norm cost method, or planned cost method in accounting for daily calculation shall reasonably calculate the cost variances, and adjust them into historical cost at the end of the month while preparing financial statements.
Article 53 Enterprises shall convert the cost of commodities sold and service provided into operating cost accurately and timely, then account current profit and loss together with periodic expenses. Chapter VIII Profit
Article 54 Profit is the operating results of an enterprise in an accounting period, including operating profit, net investment profit and net non-operating income.
Operating profit is the balance of operating revenue after deducting operating cost, periodic expenses and all turnover taxes, surtax and fees.
Net investment profit is the balance of income on external investment after deducting investment loss.
Net non-operating income is the balance of non-operating income which have no direct relevance with the production and operation of an enterprise after deducting non-operating expenses.
Article 55 Loss incurred by an enterprise shall be made up according to the stipulated procedure.
Article 56 Items that constitute the profits and the distribution of profits shall be itemized and shown separately in the financial statements. A distribution of profit plan which is not yet approved is to be identified in notes to the financial statements. Chapter IX Financial Reports
Article 57 Financial reports are the written documents summarizing and reflecting the financial position and operating results of an enterprise, including a balance sheet, an income statement, a statement of changes in financial position (or a cash flow statement) together with supporting schedules, notes to the financial statements, and explanatory statements on financial condition.
Article 58 A balance sheet is an accounting statement that reflects the financial position of an enterprise at a specific date.
Items of the balance sheet should be arranged according to the categories of assets, liabilities and owners’ equity, and shall be shown item by item.
Article 59 An income statement is an accounting statement that reflects the operating results of an enterprise within an accounting period, as well as their distribution.
Items of the income statement should be arranged according to the formation and distribution of profit, and shall be shown item by item.
Items of the profit distribution part of the income statement may be shown separately in a statement of profit distribution.
Article 60 A statement of changes in financial position is an accounting statement that reflects comprehensively the sources and application of working capital and its changes during an accounting period.
Items of the statement of changes in financial position are divided into sources of working capital and application of working capital. The difference between the total sources and total applications is the net increase (or decrease) of the working capital. Sources of working capital are subdivided into profit sources and other sources; applications of working capital are also subdivided into profit distribution and other applications, all shall be shown item by item.
An enterprise may also prepare a cash flow statement to reflect the changes in its financial position.
A cash flow statement is an accounting statement that reflects the condition of cash receipts and cash disbursements of an enterprise during a cerlain accounting period.
Article 61 Financial statements may, if necessary, be arranged in a way that the previous accounting period can be compared to the subsequent periods.
When so arranged, if the classification and contents of statement items of the previous accounting period are different from that of the current period, such items shall be adjusted in conformity with that of the current period.
Article 62 Financial statements shall be prepared from the records of account books, completely recorded and correctly checked and other relevant information. It is required that they must be true and correct in figures, complete in contents and issue in time.
Article 63 Consolidated financial statements shall be prepared by the enterprise, where it owns 50% or more of the total capital of the enterprise it has invested or otherwise owns the right of control over the invested enterprise. Financial statements of an invested enterprise engaged in special line of business not suitable for consolidation, may not be consolidated, but they shall be submitted together.
Article 64 Notes to the financial statements are explanatory to related items in the financial statement of the enterprise concerned so as to facilitate understanding of the contents of the statements, the contents of which shall mainly include: major accounting methods adopted; changes in accounting methods, the reasons for the changes, and their impact on the financial position and operating results of the enterprise; description of unusual items; detailed information relating to major items listed in the financial statements; and any other explanations necessary to provide users with a clear view and understanding of the financial statements. Chapter X Supplementary Provisions
Article 65 The Ministry of Finance shall be responsible for the interpretation of these Criteria.
Article 66 These Criteria shall be effective as of July 1, 1993.
Provisional Regulations of Shenzhen Municipality Concerning Joint Stock Limited Companies
(Effective Date:1992.02.19–Ineffective Date:)
CONTENTS
CHAPTER 1. GENERAL PROVISIONS CHAPTER 2. ESTABLISHMENT PROCEDURE CHAPTER 3. TYPES OF COMPANIES CHAPTER 4. RESTRUCTURING OF STATE-OWNED
ENTERPRISES AS JOINT STOCK LIMITED COMPANIES CHAPTER 5. CHINESE-FOREIGN JOINT STOCK LIMITED COMPANIES CHAPTER 6. SHARES CHAPTER 7.
COMPANY DEBTS CHAPTER 8. SHAREHOLDERS AND SHAREHOLDERS’ MEETINGS CHAPTER 9. BOARD OF DIRECTORS AND MANAGER CHAPTER 10. SUPERVISORY
BOARD CHAPTER 11. FINANCIAL AFFAIRS AND ACCOUNTING CHAPTER 12. MERGER AND DIVISION CHAPTER 13. AMENDMENTS TO ARTICLES OF ASSOCIATION
CHAPTER 14. TERMINATION AND LIQUIDATION CHAPTER 15. PENAL PROVISIONS CHAPTER 16. SUPPLEMENTARY PROVISIONS
CHAPTER 1. GENERAL PROVISIONS
Article 1. These Regulations are formulated in order to establish the legal position of joint stock limited companies, to standardize their
code of conduct, to protect the lawful rights and interests of joint stock limited companies and their shareholders and creditors,
to ensure the leading position of the system of public ownership, to safeguard the socialist economic order and to promote economic
development.
Article 2. These Regulations shall be applicable to joint stock limited companies established in Shenzhen Municipality. Joint stock limited
companies from outside Shenzhen Municipality that are listed on the Shenzhen Securities Exchange shall also comply with these Regulations.
Article 3. The term “joint stock limited company” (a “Company”) refers to an enterprise with the status of a legal person that is established
in accordance with these Regulations, raises capital through the issue of shares and divides all of its registered capital into equal
shares, and whose shareholders are liable toward it to the extent of the shares subscribed for by them, and that is liable for its
debts to the extent of all of its assets.
Article 4. Companies shall adhere to the principles of voluntary capital injection, equal share rights, joint enjoyment of gains and joint bearing
of risks.
Article 5. The production and business activities of Companies must comply with the laws and regulations of the state and safeguard the interests
of the state and the public interest, and shall be subject to supervision by the relevant departments of the state.
Article 6. The production and business activities and lawful rights and interests of Companies shall be protected by law and may not be infringed
upon or unlawfully interfered with by any organization or individual.
Article 7. Companies may not become shareholders with unlimited liability of other profit-seeking organizations.
Where a Company other than an investment Company approved by the state is a shareholder with limited liability of another profit-seeking
organization, its shareholding in such other organization may not exceed 50 percent of the Company’s registered capital.
Article 8. The names of Companies shall comply with the laws and regulations concerning administration of the registration of names of enterprises
with the status of a legal person, and shall contain the words “joint stock limited”. The names of Companies that have not been established
in accordance with these Regulations may not contain the words “joint stock limited” or “stock”.
Article 9. A company’s domicile shall be the place where its main administrative establishment is located.
Article 10. The scope of industries in which enterprises may restructure themselves as Companies or establish Companies is set forth below:
Production enterprises, high-technology enterprises, and enterprises generating foreign exchange through export, that comply with
the industrial policies of the state and Shenzhen Municipality and that let the market regulate the production, sale and pricing
of their main products may restructure themselves as Companies or establish Companies on a priority basis.
Enterprises that are run by the state on a monopoly basis and are extremely profitable, such as duty free companies, enterprises selling
liquor and tobacco on a monopoly basis, gold and jewelry processing enterprises, etc., as well as enterprises engaged in industries
in which the government has prohibited the establishment of Companies may not restructure themselves as Companies or establish Companies.
CHAPTER 2. ESTABLISHMENT PROCEDURE Article 11. Companies may be established by means of sponsorship or by means of share offer.
The term “establishment by means of sponsorship” refers to the form of establishment where all the issued shares of the Company are
subscribed for by five or more sponsors themselves, and where no shares are offered to the Company’s internal staff and workers or
to the public. The term “establishment by means of share offer” refers to the form of establishment where the sponsors shall subscribe
for more than 35 percent of the issued shares of the Company and where he balance is offered to the internal staff and workers of
the Company, to other legal persons or to the public.
Article 12. The sponsors of a Company must be legal persons, or departments that have been authorized by the state to make investments.
Article 13. A Company’s paid-up capital shall be its registered capital. The minimum registered capital of a Company shall be RMB 5 million yuan.
Article 14. To establish a Company, its sponsors shall draft the following documents and submit the same to the Shenzhen Municipal Commission
on the Restructuring of the Economic System (the “Municipal Restructuring Commission”), which shall review them in conjunction with
the relevant departments and submit them to the Shenzhen Municipal People’s Government (the “Municipal Government”) for approval:
(1) an application for the establishment of a Company;
(2) a feasibility study;
(3) the articles of association of the Company;
(4) the share prospectus and share offer plan;
(5) the sponsors’ documents certifying that they have the status of a legal person (the documents approving their establishment and
the legal person business licenses), and their resident’s identification documents or passports;
(6) the sponsors’ certificates of creditworthiness; and
(7) the contract among the sponsors.
An existing enterprise that applies for permission to restructure itself as a Company shall also submit an asset valuation report
and an investment verification report issued by an accounting firm qualified to perform asset valuation or by an asset valuation
institution.
Article 15. Where an existing enterprise wishes to restructure itself as a Company, the responsible persons of the enterprise and representatives
of the owners of the property rights in the enterprise shall jointly form a Committee for the Preparation of a Joint Stock Limited
Company, which shall be responsible for the following matters:
(1) to apply to the Municipal Government for approval to restructure the enterprise as a Company and to submit to the Municipal Government
the relevant documents specified in Article 14 hereof;
(2) to thoroughly examine the claims and debts of the enterprise, and to entrust an accounting firm qualified to perform asset valuation
or an asset valuation institution with performing asset valuation and verification, to determine what portion of shares will cover
the enterprise’s remaining net assets, to draw up a plan for the share rights and types of shares to be created, to work out the
number of shares to be issued, etc.; where the said activities involve state assets, matters shall be handled in accordance with
the relevant regulations of the state;
(3) to be in charge of the drafting of necessary documents such as the restructuring plan, the Company’s articles of association,
the prospectus, etc.;
(4) to offer the shares; and
(5) to convene the inaugural meeting of the Company.
Article 16. The Preparation Committee shall be automatically dissolved on the date of establishment of the Company’s board of directors.
Article 17. An application for approval to establish a Company shall specify the following:
(1) the names and domiciles of the sponsors (in the case of an existing enterprise intending to restructure itself as a Company, the
name and domicile of the existing enterprise shall be specified as well);
(2) the grounds for establishment of the Company;
(3) the name of the Company to be established;
(4) the share rights intended to be created; and
(5) the basic applications of the capital to be raised by the Company.
Article 18. The feasibility study shall specify the following:
(1) the names and domiciles of the sponsors (in the case of an existing enterprise intending to restructure itself as a Company, the
name and domicile of the existing enterprise shall be specified as well);
(2) an outline of the production and business activities of the sponsors, their creditworthiness, their investment abilities, etc.;
(3) the state of affairs and distribution of the assets, liabilities, net assets and profit of the enterprise to be restructured during
the past three years;
(4) the scope and scale of business, including the names of the products, the domestic and foreign demand for the products, production
details, the scale of production, the regions where the products are sold, the sales channels and the ratio of domestic sales to
exports;
(5) the estimated investment, i.e. the sum of the fixed assets and the working capital to be invested in the project;
(6) the source of funds, i.e. the amount of shares that the sponsors intend to subscribe for (including the method of subscription)
and the amount of shares intended to be offered, the proportion of such shares to the total amount of shares of the Company, the
amount of funds to be borrowed, and the proportion of net assets to the total value of assets; and
(7) the profit forecast, profit rate on funds, profit rate on share capital and surplus per share.
Article 19. The articles of association of a Company shall be drafted by its sponsors or by legal counsel instructed by its sponsors. After the
articles of association have been unanimously agreed upon by all sponsors, they shall be submitted to the Municipal Restructuring
Commission for approval and be made public by an appropriate method, in accordance with the type of Company. The articles of association
of a Company must specify the following:
(1) the name and domicile of the Company;
(2) the purpose and scope of business of the Company;
(3) the method of establishment and type of the Company;
(4) the names and domiciles of the sponsors and the names and positions of their legal representatives;
(5) the total amount of the Company’s registered capital, the types of shares to be issued, the rights attaching to and the total
amount of each type of share, and the amount of each share;
(6) the methods and amount of capital injection by each type of shareholder, and the proportion of each type of shareholder’s shareholding
to the total amount of shares;
(7) the method of transfer of shares in the Company;
(8) the types of convertible securities of the Company and the method of conversion;
(9) the establishment, official powers and rules of procedure of the Company’s shareholders’ meeting and board of directors, and the
appointment and official powers of the Company’s manager;
(10) the Company’s legal representative, the procedure for his appointment and his official powers;
(11) the financial and accounting systems of the Company;
(12) the distribution of the Company’s after tax profit;
(13) the termination and liquidation of the Company;
(14) the method by which the Company is to make public announcements;
(15) the procedure for amendment of the Company’s articles of association;
(16) the date of formulation of the articles of association and the signatures of the sponsors; and
(17) other matters that the sponsors deem necessary to be specified.
The contents of the articles of association of a Company may not be in conflict with these Regulations.
The articles of association of a Company shall be valid only when the Special Seal of Shenzhen Municipality for Approval of the Articles
of Association of Joint Stock Limited Companies is affixed thereto.
Article 20. Within 30 days after the approval by the Municipal Government of an application for approval to establish a Company, the sponsors
shall apply to the Shenzhen Municipal Administration for Industry and Commerce (the “AIC”) for registration of preparation and construction.
Article 21. Where a Company is established by means of issuing shares to its internal staff and workers and other legal persons or by means of
offering shares to the public, its sponsors shall submit a share offer application to the Shenzhen Special Economic Zone branch of
the People’s Bank of China (the “PBOC”). Shares may be issued only after such application has been approved in accordance with the
relevant regulations of the People’s Bank of China.
Where a Company is to be established by means of sponsorship, its sponsors shall apply to the PBOC for the handling of matters concerning
the issue of shares. The procedures for the printing of share certificates may be carried out only after such application has been
approved.
Article 22. Sponsors shall publicly issue a prospectus by an appropriate method, in accordance with the type of Company. A prospectus shall specify
the following:
(1) the name and domicile of the Company;
(2) the scope of business;
(3) basic information on the sponsors;
(4) the grounds for the issue of shares;
(5) the total amount of shares to be issued, the class(es) and number of shares to be issued, and the face value, book value and selling
price of each share to be issued;
(6) the target (s) of the share issue;
(7) the opening and closing dates of the share issue;
(8) conditions attached to the issue of shares;
(9) relevant information on the Company’s business: the state of affairs of the main business operations, profit forecast and forecast
of dividends and bonuses;
(10) the number of shares subscribed for by the sponsors and the verification certificates for such subscriptions;
(11) the name(s) and domicile(s) of the securities distributors(s), the amount of shares to be distributed and the method of distribution;
and
(12) the method of share subscription.
In the case of a Company creating new shares to increase its capital or an existing enterprise being restructured as a Company, basic
information on the Company’s directors and manager shall be added under item (3) hereof, the book value of each existing share shall
be added under item (5) hereof, and information on the profitability and equity-debt situation shall be specified under item (9)
hereof.
In the case of an existing enterprise being restructured as a Company, an evaluation of and a verification report on the enterprise’s
remaining assets shall be included.
Article 23. The sponsors of a Company shall prepare subscription forms to be filled out by subscribers. Such subscription forms shall set forth
the relevant items of the prospectus and the number and date of the PBOC’s approval document for the share offer.
Article 24. Subscribers shall pay their subscription moneys in accordance with the amount of shares entered on the subscription form and the
time limit for payment. If a subscriber fails to pay his subscription moneys within the time limit therefor, he shall automatically
be deemed to have relinquished the shares subscribed for, which shall then be offered to others. If such failure to pay causes damage
to the Company, the subscriber shall be liable for compensation therefor.
Article 25. A Company may not sell shares beyond the time limit for sale or beyond the maximum amount of shares to be issued.
Article 26. The sponsors of a Company shall convene the inaugural meeting within 40 days after the subscription moneys have been paid in full.
An inaugural meeting shall be attended by more than two-thirds of the subscribers for the Company’s shares. Resolutions voted on at
such meeting shall be passed by a two-thirds majority of the affirmative votes of the subscribers present.
Article 27. The following official powers may be exercised at an inaugural meeting:
(1) to hear the sponsors’ report concerning the preparation and construction of the Company;
(2) to adopt or amend the Company’s articles of association;
(3) to elect the members of the board of directors and of the supervisory board; and
(4) to decide other matters concerning the establishment of the Company.
Article 28. Within 30 days after its establishment, a board of directors shall apply to the AIC for registration and submit to it the following
documents:
(1) an application for registration;
(2) the document from the Municipal Government approving the establishment of the Company;
(3) the document from the PBOC approving the share offer;
(4) the Company’s articles of association;
(5) the register of shareholders;
(6) the minutes of the inaugural meeting;
(7) the share capital verification certificates of the shareholders; and
(8) other documents required by the AIC.
A Company shall be established and obtain the status of a legal person upon verification and approval of registration and issue of
a Business License of an Enterprise with the Status of a Legal Person by the AIC.
Article 29. The sponsors of a Company shall assume the following responsibilities:
(1) to be jointly and severally liable for subscription for any issued shares of the Company that are not taken up;
(2) if the Company cannot be established, to be jointly and severally liable for the expenses and debts arising from the establishment
activities; and
(3) if the Company publicly issued shares but cannot be established, to be jointly and severally liable for repayment of the subscription
moneys already paid up by the subscribers, together with the statutory interest thereon.
CHAPTER 3. TYPES OF COMPANIES
Article 30. Companies can be divided into the following two major categories, depending on the scope and method of the share offer, subscription
and transfer:
(1) Internal Companies, being Companies whose shares are subscribed for by its sponsors alone or simultaneously issued to the Company’s
internal staff and workers and other legal persons. Internal Companies are divided into the following two kinds:
(a) Companies that are established by means of sponsorship and whose shares are subscribed for by their sponsors, are not issued to
any persons other than their sponsors and are transferred between legal persons;
(b) Companies that are established by means of share offer and (i) whose shares are subscribed for by their sponsors and internal
staff and workers or other legal persons, (ii) the shareholding of whose internal staff and workers may not exceed 30 percent of
their total amount of shares and (iii) whose shares are transferred between their internal staff and workers and legal persons and
are strictly forbidden to be issued and transferred to any persons other than their staff and workers.
The term “internal staff and workers of a Company” refers to a Company’s directors, manager, staff and workers, and such persons as
aforesaid of subsidiaries in which such Company owns more than 50 percent of the total shares.
(2) Public Companies, being Companies whose shares are publicly issued to the public. Public Companies are divided into the following
two kinds:
(a) Companies whose shares are issued to the public and, upon approval by the PBOC, are traded over the counters of securities dealers;
(b) Companies whose shares are issued to the public and, upon approval by the PBOC, are listed and traded on the Securities Exchange.
Article 31. A Company that issues its shares to the public shall meet each of the following conditions:
(1) its business conforms to the industrial policies of the state and Shenzhen Municipality;
(2) the total amount of shares of a newly organized Company, or the net assets of an existing enterprise prior to being restructured
as a Company, are not less than RMB 10 million yuan;
(3) the proportion of its net tangible assets to its tangible assets for the year preceding its being restructured as a Company is
not lower than 25 percent;
(4) the sponsor’s share subscriptions are not less than 35 percent of the Company’s total amount of shares;
(5) the shares taken up by the public constitute not less than 25 percent of the Company’s total amount of shares;
(6) the portion of shares subscribed for by the Company’s staff and workers does not exceed 10 percent of the portion of shares issued
by the Company to the public or, in the case of an internal Company being changed to a public Company that exceeds this limit, no
shares are placed with its internal staff and workers;
(7) the number of shareholders is not less than 800;
(8) the financial affairs are public; and
(9) the political and professional quality of the main responsible persons of the enterprise is comparatively good, they observe discipline
and abide by the law, and they have no record of bad business operations.
Article 32. In order for shares to be listed, the Company requesting their listing shall submit an application to the Securities Exchange, which
shall review the same and subsequently submit it to the PBOC for approval.
Article 33. A listed Company shall meet each of the following conditions:
(1) the Company’s business conforms to the industrial policies of the state and Shenzhen Municipality;
(2) the Company has a record of profitability for more than three consecutive years and has provided financial information covering
the past three years;
(3) the proportion of its net tangible assets to its tangible asset is not lower than 38 percent; however, in the case of a public
company that has been in existence for more than one year, such requirement shall have been satisfied one year prior to the application
for listing;
(4) the Company’s profit rate for the past two years is higher than the average profit rate of the same industry;
(5) the Company’s net assets prior to listing and issue are not less than RMB 15 million yuan;
(6) it meets the other conditions for public Companies; and
(7) other conditions imposed by the Securities Exchange.
Article 34. A Company established by means of sponsorship that requests approval for being changed to an internal Company whose shares are held
by its own staff and workers, and an internal Company that requests approval for being changed to a public Company, shall submit
an application to the Municipal Restructuring Commission, which shall review the same and subsequently submit it to the Municipal
Government for approval. Upon Approval by the Municipal Government of such application, an application for approval of share offer
and listed trading shall be submitted to the PBOC. The Company may be changed only after the PBOC has approved the application in
accordance with the relevant regulations of the People’s Bank of China.
CHAPTER 4. RESTRUCTURING OF STATE-OWNED ENTERPRISES AS JOINT STOCK LIMITED COMPANIES
Article 35. The term “restructuring of a state-owned enterprise as a joint stock limited company” means the restructuring of an existing state-owned
enterprise as a Company by dividing the enterprise’s net assets (assets less liabilities) into state-owned shares and subsequently
(i) selling a portion of such shares to other legal persons and individuals or (ii) issuing a portion of new shares to departments
authorized by the state to make investments, other legal persons and individuals.
The rights, interests and debts of the original enterprise shall be vested in and borne by the Company formed through the restructuring.
Collective enterprises, and enterprises established jointly by investors from both inside and outside special zones, may be restructured
as Companies by reference to this Chapter.
Article 36. The following shares may be created in the course of restructuring state-owned enterprises as joint stock limited companies:
(1) state-owned shares, being shares that are held directly, or that others have been authorized to hold, by government departments
for state asset administration;
(2) legal person shares, being shares formed by legal persons in the People’s Republic of China through investments in legally disposable
assets;
(3) individual shares, being (i) individual shares of staff and workers of the enterprise, that is, internally issued shares held
by the staff and workers of the issuing Company or (ii) public individual shares, that is, publicly issued shares of a Company that
are purchased by members of the public with their lawful individual property;
(4) foreign capital shares, being shares formed by foreign legal persons and individuals and by legal persons and individuals from
Hong Kong, Macao and Taiwan through foreign currency investments.
Article 37. Proportion of state-owned shares:
(1) in Companies of key importance for the national economy and the people’s livelihood, the controlling interest of state-owned shares
shall be maintained;
(2) in other Companies, there shall be no limitations on the proportion of state-owned shares.
The assignment of state-owned shares in a Company of key importance for the national economy and the people’s livelihood by a Company
that has been authorized to hold such shares shall be examined by the department for state asset administration, which shall submit
the assignment to the Municipal Government for approval. The assignment of state-owned shares by an enterprise under the Municipal
Government that has been authorized to hold such shares shall be reported to the municipal department for state asset administration
for approval. The assignment of state-owned shares by a second-or third-tier enterprise that is subordinate to an enterprise under
the Municipal Government and that has been authorized to hold such shares shall be reported to the enterprise in charge of it for
approval.
Article 38. Where a state-owned enterprise wishes to restructure it self as a Company, a preparation committee shall be formed by representatives
of all sides, such as the representative of the owner of the state assets, the department in charge of the enterprise, the responsible
persons of the enterprise, etc.. Such preparation committee shall be responsible for the restructuring of the enterprise as a Company,
etc..
The state asset representatives of group companies (head offices of companies) and of enterprises under the Municipal Government shall
be appointed by the government department for state asset administration. The state asset representatives of second-tier enterprises
shall be appointed by the enterprises in charge that have direct post_title to the assets.
Article 39. The examination and approval procedure for the restructuring of enterprises as Companies shall be as set forth below:
(1) the restructuring of a group company, the head office of a company of an enterprise under the Municipal Government as a Company
shall be reported to the Municipal Government for approval;
(2) the restructuring of an enterprise subordinate to a group company, to a head office of a company or to an enterprise under the
Municipal Government as a Company shall be agreed to by the Company in charge and subsequently be reported to the Municipal Government
for approval;
(3) where an enterprise established by investors from both inside and outside special zones wishes to apply for approval to be restructured
as a Company, the investors in such enterprise shall adopt a resolution in favor of such restructuring and subsequently submit an
application to the Municipal Government for approval; Where a Chinese enterprise outside the People’s Republic of China wishes to
apply for approval to be restructured as a Company, such restructuring shall be agreed to by the unit in charge and subsequently
be reported to the Municipal Government for approval;
(4) the restructuring of an enterprise under a district or county as a Company shall be agreed to by the district or county government
and subsequently be reported to the Municipal Government for approval.
Article 40. The term “Chinese-foreign joint stock limited companies” means Companies established pursuant to these Regulations by Chinese and
foreign investors. With respect to Chinese-foreign joint stock limited companies, relevant laws and regulations concerning foreign
investment enterprises shall be referred to in addition to implementing these Regulations.
Article 41. The establishment of Chinese-foreign joint stock limited companies shall comply with the state’s policies concerning industries invested
in by foreign business entities.
Newly organized Chinese-foreign joint stock limited companies shall generally be established by means of sponsorship.
The minimum registered capital of Chinese-foreign joint stock limited companies shall be RMB 30 million yuan.
To invest abroad or in Hong Kong, Macao or Taiwan, Chinese-foreign joint stock limited companies shall apply to the municipal examination
and approval authority for foreign investment in accordance with the examination and approval procedure, and may only carry out procedures
for the outward remittance of funds, etc. after approval by the municipal examination and approval authority for foreign investment
or the Ministry of Foreign Economic Relations and Trade.
Article 42. To establish a Chinese-foreign joint stock limited company, an existing enterprise may be restructured as a Chinese-foreign joint
stock limited company, or a Chinese-foreign joint stock limited company may be newly organized.
Where a foreign investment enterprise wishes to apply for approval to restructure itself as a Chinese-foreign joint stock limited
company, the original investors shall adopt a resolution in favor of such restructuring and submit an application to the Municipal
Restructuring Commission, in conjunction with the municipal examination and approval authority for foreign investment, shall review
such application in accordance with the relevant regulations, making reference to the current procedure and limits of authority for
the examination and approval of Chinese-foreign equity joint ventures, and subsequently submit the same to the M
Provisional Measures of Shenzhen Municipality for Supervision and Control of Listed Companies
(Effective Date:1992.04.04–Ineffective Date:)
CONTENTS
CHAPTER 1. GENERAL PROVISIONS CHAPTER 2. PUBLIC STATEMENTS CHAPTER 3. REPORTS OF FINANCES AND RESULTS CHAPTER 4. IMPORTANT TRANSACTIONS
CHAPTER 5. TAKE-OVER AND MERGER CHAPTER 6. MATERIAL CHANGES CHAPTER 7. INTERNAL CONTROL CHAPTER 8. SHARE MATTERS CHAPTER 9. PENALTIES
CHAPTER 10. SUPPLEMENTARY PROVISIONS
CHAPTER 1. GENERAL PROVISIONS
Article 1. These Measures are formulated on the basis of the Provisional Regulations of Shenzhen Municipality Concerning Joint Stock Limited
Companies and the Provisional Measures of Shenzhen Municipality for Administration of the Issue and Trading of Shares (the “Provisional
Measures”), in order to protect the lawful rights and interests of investors, to maintain the order of the securities market and
to strengthen the supervision and control of listed companies.
Article 2. All publication of information, and all important transactions and changes that affect share price fluctuations, on the part of companies
publicly issuing shares in Shenzhen or whose shares are listed in Shenzhen must be carried out in compliance with these Measures.
Article 3. The Shenzhen Special Economic Zone branch of the People’s Bank of China (the “Authority in Charge”), under the direction of the People’s
Bank of China and the Shenzhen Municipal People’s Government, shall be responsible for the supervision and control of listed companies
in Shenzhen.
Article 4. The Authority in Charge shall be responsible for the confirmation of the public statements mentioned in Chapter 2 and for supervision
and control of the very substantial transactions, major transactions and share transactions mentioned in Chapter 4, the take-overs
and mergers mentioned in Chapter 5, the material changes mentioned in Chapter 6, the internal control mentioned in Chapter 7 and
part of the share matters mentioned in Chapter 8 hereof.
Article 5. The Authority in Charge shall authorize the Shenzhen Securities Exchange (the “Exchange”) to carry out routine supervision and control
of listed companies in Shenzhen and to be responsible for examination of the listing announcements mentioned in these Measures and
the reports of finances and results mentioned in Chapter 3 and for the supervision and control of the disclosable transactions and
the transactions with connected persons mentioned in Chapter 4 and part of the share matters mentioned in Chapter 8 hereof.
CHAPTER 2. PUBLIC STATEMENTS
Article 6. The term “public statements” refers to the special documents that joint stock companies disclose to the public when making public
issues of shares, when listing and trading shares and when carrying out other very substantial matters. The term includes prospectuses
for the issue of shares toward the public, listing announcements for the listing of shares, bonus prospectuses for the issue of bonus
shares to existing shareholders, public statements concerning important matters and the relevant attached statements.
Article 7. The standard for preparing public statements shall be that the company applying for issue or listing (the “Applicant Company”) must
make a publication sufficient to allow investors to gain a clear and comprehensive understanding and evaluation of such company’s
business development, financial situation, management situation, future prospects and the rights and interests associated with the
shares involved. The contents must be, stated accurately, clearly, truthfully and comprehensively and there may not be any ambiguities,
falsehoods or omissions therein, still less misleading or deceptive elements.
Article 8. The contents of a prospectus shall, in addition to meeting the requirements of Article 18 of the Provisional Measures, also state
in detail the company’s process of capital formation, types of products, production process, sales situation, business results, property
and equipment, rights and interested, main interested persons, the plan for application of the proceeds from share issue, analysis
of benefits, and risk factors.
Article 9. Simultaneously with the disclosure of the prospectus, an asset valuation report and written confirmation from an institution with
professional qualifications, a financial report with its explanatory notes, major contracts and matters of litigation shall be published
in newspapers and periodicals.
Article 10. A listing announcement shall, in addition to meeting the requirements for share prospectuses, also clearly state the following particulars:
(1) the date of the company’s listing and the number of the approval document granting the listing;
(2) details of the share issue and the composition of share rights;
(3) the main points of the resolution of the inaugural meeting or shareholders’ general meeting concerning listing;
(4) resumes of the directors, supervisors and senior management personnel and details of their shareholding; (5) the equity of shareholders
with holdings of more than 1 percent;
(6) details of application of funds and financial position following the share offer, financial situation and the forecast for the
coming year;
(7) the contact person and contact address, telephone and facsimile numbers for members of the public wishing to inquire about company
information at any time; and
(8) other items of importance.
If the time between public issue and listing is less than six mouths, the listing announcement need not publish the contents of the
prospectus.
Article 11. A bonus share prospectus shall be prepared by reference to the share prospectus. A public statement concerning an important matter
shall be prepared in accordance with the appropriate provisions of Chapters 4 and 5 hereof.
Article 12. A public statement must be confirmed by the Authority in Charge and may be published in designated newspapers and periodicals only
after the Authority in Charge requires no further amendments. No major amendments may be made to the final version of a public statement
without the permission of the Authority in Charge. When a public statement is published, it shall carry this important note: “The
Authority in Charge does not guarantee the accuracy or completeness of the contents of this public statement and bears no responsibility
for any losses caused thereby.”
Article 13. The sponsors and members of the board of directors of an Applicant Company must bear joint and several liability for the accuracy
and completeness of the contents of public statements.
Article 14. The distributor for a share issue must investigate the contents of the share prospectus during the distribution period and shall
bear major responsibility for the accuracy and completeness of such contents.
Article 15. Notarial institutions such as accounting firms and other parties that provide certifications for the issue of shares must handle
matters in accordance with laws and regulations, perform their duties and bear joint and several liability for the contents of public
statements.
Article 16. All publicity materials of an Applicant Company during the period between its receiving approval for issue and the listing of its
shares must be reviewed by the Authority in Charge. The contents thereof must comply with the relevant regulations and may not promote
or advertise the products or business of such company.
Article 17. Prospectuses, bonus share prospectuses and public statements concerning important matters must be submitted to the Authority in Charge
for review and finalization. The Authority in Charge shall make a reply within three weeks after receiving the official draft; otherwise
approval shall be deemed to have been given. Listing announcements must be submitted to the Exchange for review; final approval shall
be given by the Authority in Charge. Finalized versions of public statements must be delivered in four copies each to the Authority
in Charge and the Exchange for the record three days prior to their publication. Prospectuses and bonus share prospectuses shall
be delivered in two copies each to the Administration for Industry and Commerce for the record.
Article 18. Prior to the formal publication of a public statement, insiders of the Applicant Company and their advisers must maintain the confidentiality
of the relevant materials. If it is discovered that contents of the relevant materials have been divulged, the Authority in Charge
may refuse to consider the application.
Article 19. A public statement shall be effective as from the date of its publication. A listed company must abide by the provisions and regulations
thereof and perform its duties and may not alter such statement at will. If alteration is necessary, it must show cause therefor
to the public. Major alterations must be approved at a shareholders’ general meeting or by the relevant department in charge; otherwise,
the company’s parties concerned shall bear all liability arising from such alterations.
CHAPTER 3. REPORTS OF FINANCES AND RESULTS
Article 20. A listed company must establish a system whereby its financial situation and business results are disclosed to the public at regular
intervals. Such information shall be published twice in each fiscal year, namely in an interim report and an annual report. The interim
report shall be published within 60 days following the end of the first six months of each fiscal year; the annual report shall be
published within 90 days following the end of each fiscal year.
Article 21. Ten days prior to publication, a listed company shall submit the materials to be published to the Exchange and shall publish them
in designated newspapers and periodicals on the strength of a signed opinion from the Exchange. The Exchange shall make a reply within
10 days. The Exchange shall formulate the corresponding detailed rules on the basis of the Enterprise Accounting Principles of the
Shenzhen Special Economic Zone (for Trial Implementation) and these Measures.
Article 22. Company financial reports shall include balance sheets, profit and loss statements, statements of changes in shareholders’ equity
and statements of changes in financial position and their explanatory notes. An accounting firm shall be engaged to check over interim
reports and to audit final reports. Accounting firms shall bear joint and several liability for the methods of examination of reports
certified by them and for the truthfulness, reliability and completeness of their contents.
Article 23. A financial report shall provide detailed statements of the following matters:
(1) where accounting treatments differ from fair and equitable accounting principles, the details thereof and the discrepancies produced
by the different treatments shall be stated;
(2) where a choice exists between several fair and equitable accounting methods, the method chosen shall be indicated;
(3) where accounting treatments are changed for a special reason and such change affects the comparison of information from the periods
preceding and following such change, the reason for the change and its specific effects on the contents of the report shall be stated;
and
(4) details of the consolidation of statements of affiliated companies.
Article 24. An interim report shall contain at least the following contents: (1) financial situation:
(a) balance sheet;
(b) profit and loss statement, which must state:
(i) turnover, sales of main products;
(ii) profits (or losses) before taxes from ordinary items;
(iii) revenue and expenditure relating to extraordinary items (major items shall be noted); and
(iv) tax base and profit after taxes;
(c) changes in shareholders’ equity;
(d) comparisons of the figures for all items with those for the same period during the preceding year; and
(e) obligatory comments from an accounting firm;
(2) business review, providing a concise summary of the progress and profitability all the business activities of the company, mainly
consisting of an analysis by region and by industry;
(3) statements of important matters, and publication of abstracts of the contents of major contracts;
(4) forecast of prospects (comments from an accounting firm);
(5) details of the securities holdings in the company and changes in the equity of directors, supervisors, the manager and large shareholders
with holdings of more than 1 percent; and
(6) relevant resolutions of the board of directors.
Article 25. An annual report shall include at least the following items:
(1) a basic overview of the company: capital structure, organizational system (major business departments and branches and administrative
structure), the rights and interests appertaining to it (subsidiaries, types and quantities of securities holdings, real property
owned), working personnel (number, educational composition, average age, average length of service);
(2) business situation: details of production and sales of main products, development of new products and details of important matters;
(3) financial information: balance sheet, profit and loss statement, statement of changes in shareholders’ equity, statement of changes
in financial position and profit distribution statement, certified by an accounting firm; comparisons of the figures for all items
with those for the same period during the preceding year;
(4) statement of the company’s indebtedness: details of bank loans, guarantees and itemizations of company debts, and the relevant
parties, main contents and initial and final dates, etc. thereof;
(5) business outlook: reasonable expectations of long-term and short-term developments in all types of company business and investment
targets, and reliable forecasts of foreseeable major factors affecting company prospects;
(6) details of bonus and dividend distribution;
(7) an audit report from an accounting firm; if there are reservations attached to such report, the factors contributing thereto must
be stated; and
(8) the intention to extend or terminate the appointment of the accounting firm.
Article 26. Interim reports must be approved by the board of directors of the company and signed by the supervisory board in acknowledgment of
perusal Annual reports must be approved at a shareholders’ general meeting. Both types of report shall be submitted in four copies
each to the Authority in Charge and the Exchange for reference three days prior to their publication.
Article 27. All reports involving the business situation or financial data of a listed company must be reviewed by the Exchange and simultaneously
submitted to the Authority in Charge for reference prior to publication; otherwise, they shall be deemed to have been published with
the intent to manipulate the prices of the shares concerned.
Article 28. A listed company may not disclose or supply at will information that will affect prices. The disclosure of important information
that will affect prices must be reported to the Exchange and the Authority in Charge 48 hours beforehand, and the authorization of
the Exchange thereto must be obtained. If the Exchange has made no reply within 24 hours, it shall be deemed to have given its authorization.
These time limits shall be extended accordingly in the case of official holidays or legal holidays.
CHAPTER 4. IMPORTANT TRANSACTIONS Article 29. The following shall be important transactions:
(1) very substantial transactions;
(2) major transactions;
(3) disclosable transactions;
(4) share transactions; and
(5) transactions with connected persons.
Article 30. “The term very substantial transaction” refers to an act whereby a listed company or a subsidiary thereof takes over another enterprise,
acquires assets or realizes its own assets so as to reach any of the proportions set forth below:
(1) an acquisition or realization of assets in an amount of more than 50 percent of the company’s total assets;
(2) an acquisition or realization of assets from which the forecast net profit will constitute more than 50 percent of the company’s
net profit for that category;
(3) an acquisition in consideration of which shares constituting more than 50 percent of the total share capital will be issued;
(4) relevant acquisitions capable of causing changes in share controllership.
The relevant acts of acquisition or asset realization in each of the above items shall include the entry into or early termination
of financing, operation or lease agreements which will affect the assets, liabilities and profits of the company.
Article 31. Very substantial acquisitions must be authorized by the Authority in Charge and approved at a shareholders’ general meeting.
Article 32. Shareholders having a major interest in a very substantial transaction shall not have the right to vote at such shareholders’ general
meeting.
Article 33. Trading of the shares of a company must be suspended as from the date on which formal negotiations concerning a very substantial
transaction commence and may not be resumed until the publication of an agreement. Resumption of quotation shall be regarded as a
new application for listing and shall be handled in accordance with the procedures for new listings.
Article 34. Within three days following the reaching of an agreement over the provisions of a very substantial transaction, the issuer shall
deliver the agreement to the Authority in Charge and shall publish the same in newspapers and periodicals following review by the
Authority in Charge.
Article 35. The term “major transactions” refers to the transactions set forth in each item of Article 30 where the corresponding figure is more
than 25 percent.
Article 36. Major transactions shall be handled in accordance with the procedure for very substantial transactions, with the exception that resumption
of quotation shall not be treated as a new listing.
Article 37. The term “disclosable transactions” refers to the transactions set forth in items (1), (2) and (4) of Article 30, where the corresponding
figure is more than 10 percent.
Article 38. Within three days following the reaching of an agreement over the provisions of a disclosable transaction, the issuer shall deliver
such agreement to the Exchange for review and simultaneously to the Authority in Charge for the record, and shall publish the same
in newspapers and periodicals following its review by the Exchange.
Article 39. Within 15 days following the publication of a written agreement concerning any important transaction, the issuer must prepare and
publish a public statement concerning such transaction, which shall include at least the following contents:
(1) the purpose of the transaction;
(2) the date of the transaction and an overview of the parties to the transaction;
(3) the general nature of the transaction; (4) the asset situation and business circumstances relating to the transaction;
(5) the amount of the transaction and the method of payment;
(6) the transaction price and the method by which the amount was determined;
(7) the benefits to be obtained through the transaction. If it is a take-over or acquisition, a forecast of the profits derivable
from the transaction must be attached; if it is a realization of assets, the earnings from their sale and the application thereof
must be stated; and
(8) other information publication of which is required by the Authority in Charge or the Exchange.
Article 40. The term “share transaction” refers to the act whereby assets are acquired by means of share issue.
Article 41. Share transactions shall be handled in accordance with the procedures for major transactions.
Article 42. The public statement for a share transaction must include, in addition to each of the items set forth in Article 39, the following
contents:
(1) the number of shares to be issued;
(2) the document number and main points of the document by which the Authority in Charge granted approval for share issue;
(3) changes in the shareholdings of major shareholders (those with holdings of more than 1 percent of the total); and
(4) other information required by the Authority in Charge.
Article 43. The term “transactions with connected persons” refers to transactions concluded between the issuer and its subsidiaries on the one
hand and the directors, supervisors and senior executive personne l of the company and their relatives on the other hand (including
transactions with companies whose shares are controlled by the above-mentioned persons).
Article 44. Transactions with connected persons must be handled in accordance with the procedures for disclosable transactions.
Article 45. The following transactions with connected persons need not be handled in accordance with the procedure prescribed above:
(1) the acquisition or selling off of consumer goods or service facilities by a company from or to connected persons in the course
of routine business and in accordance with general commercial principles;
(2) transactions between an issuer and its wholly-owned subsidiary;
(3) transactions between an issuer and a non-wholly-owned subsidiary, provided that the connected persons do not control the shares
(hold more than 25 percent of the shares) of such subsidiary; and
(4) transactions in the amount of less than 100,000 yuan.
Article 46. All persons involved in a transaction with connected persons that must be passed at a shareholders’ general meeting and persons with
a material interest in such transaction must relinquish their voting rights at such shareholders’ general meeting.
CHAPTER 5. TAKE-OVER AND MERGER
Article 47. The term “take-over and merger” refers to the act whereby a legal or natural person or his or its agent acquires a controlling interest
in a listed company (or public company) by means of acquisition of the shares of such company.
The term “controlling interest” means the ownership of more than 25 percent of the shares or voting rights in a listed company.
Article 48. All parties to a take-over and merger shall observe the following general principles:
(1) when changes occur in the controlling interests in a company, any shareholder acquiring a controlling interest shall promptly
notify all the shareholders; (2) a shareholder acquiring a controlling interest in a company must undertake to present a take-over
proposal to the holders of the same type of shares on the same conditions, and carry out such proposal;
(3) the board of directors of each of the parties to a take-over and merger must take the interests of the mass of medium-sized and
small shareholders as a prerequisite and must ultimately ensure the overall interests of its own party’s shareholders;
(4) the directors and senior executive personnel of the company to be taken-over may not take any action that would affect the implementation
of the take-over prior to adoption of a pertinent resolution at a shareholders’ general meeting of the company that is taking over;
and
(5) all parties involved in a take-over and merger shall make best efforts to prevent the occurrence of a false market.
Article 49. Any act whereby a cumulative total of more than 25 percent of the shares or voting rights in a listed company is acquired shall be
an act of take-over and merger.
Article 50. Take-over shall include partial take-over and total takeover:
(1) the term “partial take-over” refers to the act whereby a cumulative total of more than 25 percent but less than 100 percent of
the shares or voting rights in a listed company is acquired;
(2) partial take-over is divided into three grades of control, namely a cumulative controlling interest of more than 25 percent, more
than 50 percent and more than 75 percent. The reaching or surpassing of each of these ratios must be handled as an act of take-over
and merger;
(3) the term “total take-over” refers to the act whereby 100 percent of the shares or voting rights in a listed company are acquired.
Article 51. All take-over agreements must be delivered to the Authority in Charge three days prior to their official publication and published
in newspapers and periodicals following review. Such agreements shall become effective following their approval at shareholders’
general meetings of all parties. The same provisions shall apply to amendments to such agreements.
Article 52. Following the finalization of the intention of a company to carry out a take-over and merger, it must be presented to the board of
directors of the company taking over. The directors of the company to be taken over shall have the right to require the company taking
over to provide a guarantee, in order to ensure the full performance of such agreement.
All parties to an agreement and all insiders shall maintain strict confidentiality prior to the official publication of such agreement.
Article 53. From the date of the conclusion of a take-over and merger agreement through the date of its performance in full, the company being
taken over may not issue any securities or sign any contracts relating to matters outside the normal scope of business of such company.
Article 54. A partial take-over must comply with the following provisions:
(1) the company taking over may not purchase shares in the company to be taken-over during the period between the signing of the agreement
and its entry into effect;
(2) where the number of shares that the shareholders of the company to be taken over are willing be acquired is greater than the number
to be acquired, the company taking over must make acquisitions on a pro-rata basis; and
(3) the take-over agreement shall be effective only after its adoption by more than 50 percent of the shareholders with independent
voting rights.
The term “shareholder with independent voting rights” means a shareholder unrelated to the relevant take-over.
Article 55. A take-over and merger of a holding company or subsidiary of a listed company that involves a substantial transfer of shares or voting
rights as set forth in Article 49 shall be a chain take-over. Chain take-overs shall be handled in accordance with the provisions
concerning take-over and merger contained in these Measures.
Article 56. A company taking over another company shall prepare and publish a public statement within 20 days following the publication of the
agreement. The contents of such public statement shall include:
(1) the name, place of registration and take-over agent of the company;
(2) the number of shares in the company taking over and in the company to be taken over held by holding companies, subsidiaries and
directors and senior executive personnel;
(3) the take-over price and method of payment, and explanations thereof;
(4) schedule arrangement;
(5) the obligations of the company taking over and the rights of shareholders in the company to be acquired;
(6) the equity-debt, profit-loss and shareholding situations for the preceding three years;
(7) details of the liabilities of the company and its subsidiaries, such as loans taken out and loans granted, mortgages, debt guarantees,
etc.; (8) major contracts and explanations thereof;
(9) the company’s articles of association and relevant internal rules;
(10) plans for continued operation of the company to be taken over;
(11) plans for reorganization of the assets of the company to be taken over;
(12) plans for disposition of the staff of the company to be taken over;
(13) a revaluation of assets and explanation thereof; and
(14) other information required by the Authority in Charge.
Article 57. A company to be taken over shall prepare and publish a public statement within 20 days following the publication of the agreement.
The contents of such public statement shall include:
(1) the state of affairs of the company;
(2) comments from the company’s board of directors on the takeover;
(3) detailed statements of the shares in the company taking over held by the directors and senior executive personnel of the company;
(4) the state of affairs of holding companies and their subsidiaries;
(5) the equity-debt and profit-loss situations of the company for the preceding three years;
(6) detail of loans taken out and loans granted, mortgages, debt guarantees and details of other debts of the company and its subsidiaries;
(7) material contracts and explanations thereof;
(8) detailed statements shall be made concerning directors and senior executive personnel who have a material interest in the acquiring
company; and
(9) other information required by the Authority in Charge.
Article 58. No amendments may be made to an agreement after the twentieth day following its signing, with the exception of amendments permitted
by the Authority in Charge. An agreement shall automatically become void if not approved at a shareholders’ general meeting within
45 days.
Article 59. All persons participating in the negotiation of an agreement and all relevant insiders must maintain an agreement and all relevant
insiders maintain confidentiality throughout the process of negotiation of or consultation concerning the entry into such agreement,
up through the date of publication of such agreement. Such individuals may not purchase shares in the company taking over during
the same period.
Article 60. Relevant persons as described in the preceding Article who, following the publication of the agreement provided for in the preceding
Article, participate in the sale or purchase of shares of a party to the agreement must report the details of such transactions to
the Authority in Charge for reference.
Article 61. If there is no proposal of total take-over in the provisions of an initial agreement, such agreement must be reported to the Authority
in Charge for approval of exemption.
Article 62. In the case of take-over by means of the issue of new shares, the Authority in Charge may consider exempting the company taking over
from proposing a total take-over, provided that the following conditions are met:
(1) the independent shareholders have voted to approve it;
