Facebook
Home German Laws Page 27

German Laws

CIRCULAR OF THE NATIONAL BUREAU OF STATISTICS AND THE MINISTRY OF COMMERCE ON THE PARTICIPATION OF GOVERNMENTAL STATISTICS SYSTEM IN THE JOINT ANNUAL INSPECTION OF FOREIGN-INVESTED ENTERPRISES

Circular of the National Bureau of Statistics and the Ministry of Commerce on the Participation of Governmental Statistics System
in the Joint Annual Inspection of Foreign-invested Enterprises

Guo Tong Zi [2007] No. 32

Statistics bureaus and commerce departments of all provinces, autonomous regions, municipalities directly under the Central Government,
Xinjiang Production and Construction Corps, and cities specifically designated in the state plan:

In accordance with the reply of the State Council to the Request for Instructions on Relevant Issues Concerning Joint Annual Inspection
of Foreign-invested Enterprises from the Ministry of Commerce (Shang Zi Fa [2206] No. 654), the National Bureau of Statistics shall
be added and listed as a membership unit of Joint Annual Inspection as from 2007. Other membership units include the Ministry of
Commerce, the Ministry of Finance, the State Administration of Taxation, the State Administration of Industry and Commerce and the
State Administration of Foreign Exchange, among which the Ministry of Commerce is the initiating unit. The joint annual inspection
carried out on foreign-invested enterprises is an important measure taken for the purpose of strengthening the supervision and control
over foreign-invested enterprises, changing the administrative mode of the government and improving the investment environment. All
local statistics bureaus shall attach great importance to and take an active part in this task, and earnestly cooperate with other
departments so as to complete it. The working requirements of all local statistics bureaus participating in the joint annual inspection
are hereby notified as follows:

1.

Online Preliminary Examination.

All local statistics bureaus shall carry out a preliminary examination through the National Online Joint Annual Inspection of Foreign-invested
Enterprises System offered by the Ministry of Commerce (website: www.lhnj.gov.cn), and give examination suggestions such as “approved”,
“disapproved” and “return for revision”, etc.

2.

On-the-spot examination and inspection.

Enterprises that have passed the online preliminary examination shall voluntarily print an original Annual Inspection Report and,
after being sealed and signed by the legal representative, submit it to participating departments of joint annual inspection to handle
relevant formalities. The statistics bureau shall affix the Special Seal of Joint Annual Inspection of Foreign-invested Enterprises
by XXX Statistics Bureau (newly engraved) onto the Annual Inspection Report and keep one set for record. In principle, all local
statistics bureaus shall take part in the centralized office work. As regards any difficulty encountered through the process, the
local statistics bureau shall, jointly with the initiating unit settle them through consultation. National Bureau of Statistics Ministry
of Commerce

National Bureau of Statistics

Ministry of Commerce

March 14, 2007



 
National Bureau of Statistics, Ministry of Commerce
2007-03-14

 






CIRCULAR OF THE GENERAL OFFICE OF THE MINISTRY OF COMMERCE CONCERNING MATTERS ON REISSUING IMPORT AND EXPORT LICENSES FOR DUAL-USE ITEMS AND TECHNOLOGIES

Circular of the General Office of the Ministry of Commerce Concerning Matters on Reissuing Import and Export Licenses for Dual-use
Items and Technologies

Shang Ban Pei Han [2007] No.2

The commerce department of each province, autonomous region, municipality directly under the Central Government, city specifically
designated in the state plan and Xinjiang Production and Construction Corp.:

As it is stipulated in Article 26 of the Measures for Administrating Import and Export Licenses for Dual-Use Items and Technologies,
“Where an import and export license for dual-use items and technologies is to be used by crossing a year, March 31 in the next year
shall be the deadline within the valid period of the license, the license-issuing organ shall reissue a new license on the basis
of the valid period of the original license .” In accordance with such provision, we hereby inform the maters about the reissue of
import and export licenses for dual-use items and technologies as follows:

1.

The column of “reissue and print” shall be added to the function list of the import and export licenses issuing system for dual-use
items and technologies as from March 30, 2007. This function shall be applicable to the reissue of the import and export licenses
for dual-use items and technologies which have been obtained in 2006 but have not been declared to customs and whose deadline of
valid period is after March 31, 2007.

2.

A license-issuing organ shall, upon the strength of the following materials submitted by an operator, handle the formalities for reissue:

(1)

The original import and export license for dual-use items and technologies (original);

(2)

The Application Form of the People’s Republic of China for the Alteration of the Import and Export Licenses for Dual-Use Items and
Technologies, affixed with the operator’s official seal.

3.

The remark column of the new license shall record the original license number and the term “Reissued”. The valid period of the new
license shall be identical with that of the original one.

The General Office of the Ministry of Commerce

March 27, 2007



 
The General Office of the Ministry of Commerce
2007-03-27

 






CIRCULAR OF THE GENERAL OFFICE OF THE MINISTRY OF COMMERCE CONCERNING THE CERTIFYING AUTHORITIES’ CONSOLIDATE PRINTING OF THE INTERIM EXPORT CERTIFICATE OF TEXTILE PRODUCTS IN ENGLISH VERSION

Circular of the General Office of the Ministry of Commerce concerning the Certifying Authorities’ Consolidate Printing of the Interim
Export Certificate of Textile Products in English Version

Shang Ban Pei Han [2007] No. 1

The authorities mainly responsible for commerce in all provinces, autonomous regions, municipalities, cities specifically designated
in the state plan, Xinjiang Production and Construction Corp and such cities as Harbin, Changchun, Shenyang, Xi’an, Nanjing. Wuhan,
and Guangzhou:

In order to strengthen the certification and issuing of the interim export certificate of textile products and the administration
of the certification, guarantee of the normal export of enterprises, and save the government’s cost, the particulars relevant to
the certifying authorities’ consolidate printing of the interim certificate of textile products in English version is notified as
follows:

1.

The enterprise printing terminal in the application and withdrawal system of interim export certificate of textile products shall
be closed as of April 30, 2007 and the interim export license of all the products shall be uniformly printed and transferred by the
certificate issuing authority.

2.

All the certificate issuing authorities shall make the relevant preparation and take corresponding measures against the possible occasions
in a bid to substantially guarantee that the certification of interim export license of textile products can be carried out smoothly
and orderly.

3.

All the certifying authorities shall withdraw all the unused blank certificates independently printed by the enterprises.

4.

All the certifying authorities may connect with the Bureau of Quota License of the Ministry of Commerce.

Contact person: Jiang Sheng(deputy division chief) Li Wanhong(responsible person)

Tel.: 010-84095551-7620/7623

Fax: 010-84095015

The General Office of the Ministry of Commerce

April 11, 2007



 
General Office of the Ministry of Commerce
2007-04-11

 






MEASURES FOR THE ADMINISTRATION OF FOREIGN STOCK EXCHANGES’ REPRESENTATIVE OFFICES IN CHINA

Order No. 44 of China Securities Regulatory Commission

No. 44

The Measures for the Administration of Foreign Stock Exchanges’ Representative Offices in China have been deliberated and adopted
at the 203rd chairmen’s executive meeting of China Securities Regulatory Commission on April 3, 2007. They are hereby promulgated
and shall enter into force as of July 1, 2007.

Chairman of China Securities Regulatory Commission, Shang Fulin

May 20, 2007

Measures for the Administration of Foreign Stock Exchanges’ Representative Offices in China
Chapter I General Rules

Article 1

For the purpose of regulating the establishment of foreign stock exchanges’ representative offices in China and their business operations
these Measures are constituted under the Securities Law of the People’s Republic of China and the related regulations.

Article 2

The “foreign stock exchanges” as mentioned in these Measures means the stock exchanges, securities automated quotation or electronic
trading systems or markets established abroad. The “foreign stock exchanges’ representative offices in China” (hereinafter referred
to as representative offices) as mentioned in these Measures means the permanent representative offices established by foreign stock
exchanges inside the territory of China under the approval of engaging in liaison, market promotions, investigations and other similar
non-business activities. The person in-charge of a representative office is the chief representative.

Article 3

A representative office shall conform to the laws, regulations of China and the related provisions of China Securities Regulatory
Commission (hereinafter referred to as CSRC). The legitimate rights and interests of representative offices shall be protected by
Chinese law.

Article 4

The CSRC shall examine, approve and supervise the representative offices subject to the principle of prudent supervision.

Chapter II Application and Establishment

Article 5

A foreign stock exchange applying for establishment of a representative office (hereinafter referred to as the applicant) shall be
subject to the requirements as follows:

(1)

The country or region where the applicant is located has perfect laws and regulations on financial supervision;

(2)

The financial supervision authority in the country or region where the applicant is located has concluded a memorandum of understanding
on supervisory cooperation with CSRC, and keeps a good cooperation with CSRC;

(3)

The applicant is a financial institution established under the approval or ratification of the financial supervision authority of
the country or region where it is located;

(4)

The applicant has been established for more than 20 years, it has a stable operation and, standardization and its financial situation
is well; and

(5)

Other prudential conditions put forward by the CSRC.

Article 6

An applicant can only apply for establishing one representative office, and at the time of application, shall submit the materials
as follows to the CSRC:

(1)

an application letter as signed by the board chairman (director-general) or the general manager to the CSRC;

(2)

a written opinion or any other related document issued by the financial supervision authority of the country or region where the applicant
is located on approval of establishing such a representative office by the applicant;

(3)

a copy of the business license or of the attestation on lawfully opening business as issued upon verification by the related competent
authority of the country or region where the applicant is located, notarized and certified by a competent notary public or certification
institution in the country or region where the applicant is located, and certified by the Chinese embassy or consulate accredited
to that country;

(4)

articles of association and main business rules of the applicant;

(5)

a name list of board of directors (board of governors) and the management personnel;

(6)

the annual reports for the latest 3 years;

(7)

a scheme on establishing the representative office, including, but not limited to, the purposes, necessity of the establishment, working
plan, set-up of internal organs and personnel arrangement, management systems and office site, etc.;

(8)

a power of attorney as signed by the board chairman (governor-general) or general manager on appointing the chief representative;

(9)

a declaration that the applicant published, which the chief representative to-be has no record of penalty due to any serious violation
of law or regulation, and which shall be notarized by a notary public institution in the country or region where the applicant is
located;

(10)

the identity certificate, academic credentials and resume of the chief representative to-be; and

(11)

other documents required to be filed by the CSRC.

Article 7

The CSRC will accept and examine the application materials for establishment as filed by applicants. Where the CSRC decides to approve
an application, it shall produce an approval document.

Article 8

Within 90 days upon approval of the CSRC, a representative office shall handle the procedures for industrial and commercial registration
as well as taxation registration upon the approval document, move into a fixed office, and report the matters as follows to the CSRC
in written form:

(1)

certificates on industrial and commercial registration and taxation registration;

(2)

a certificate for the lawful right to use the office;

(3)

the telephone number, fax number and post address of the office; and

(4)

the mobile phone number and email address of the chief representative.

In case the representative office, within the time limit provided above, fails to file a written report with the CSRC, the original
approval document shall be automatically abated.

Article 9

The name of a representative office shall be composed of the following contents in an order as: “the name of the country or region
where the foreign stock exchange is located”, “the name of the foreign stock exchange”, “the name of the local city” and ” the representative
office”.

Article 10

Other main staff members of a representative office shall be referred to as “representatives” or “deputy representatives” except
for the chief representative.

Article 11

The qualification for the chief representative of a representative office to hold the post shall acquire the approval of the CSRC.
A chief representative shall satisfy the requirements as follows:

(1)

Being known well with the finance laws and regulations of China;

(2)

Having a bachelor’s degree or above, 10 years or more of experiences in finance or economy, and 3 years or more of experiences in
undertaking Chinese-related business in the latest 5 years; and

(3)

Having a good character and no record of criminal or administrative penalty.

Article 12

To appoint a representative or deputy representative, within 5 working days as of the date of appointment, a representative office
shall report the name list, identity certificates and resumes of that person to the CSRC for archival purpose.

Chapter III Alteration and Cancellation

Article 13

Where a representative office changes its name, it shall submit an application to the CSRC, and file an application letter signed
by the board chairman (governor-general) or general manager of its stock exchange as well as other documents as required by the CSRC.

Article 14

Where a representative office changes its chief representative, it shall submit an application to the CSRC, and file an application
letter signed by the board chairman (governor-general) or general manager of its stock exchange as well as the related materials
provided in Items (8) up to (11) of Article 6 of these Measures.

Article 15

The CSRC will accept and examine the application materials for changing the name or chief representative submitted by the applicants.
It shall reissue an approval document if the CSRC decides to approve an application.

Article 16

Where a representative office changes, adds or reduces a representative or deputy representative, it shall report the name, identity
certificate and resume of the person to the CSRC for archival purpose within 5 working days as of the alteration.

Article 17

A representative office can change its office only inside the city where it is located. Within 5 working days as of the alteration,
the representative office shall report the matters as follows to the CSRC in written form:

(1)

a certificate for the lawful right to use the new office; and

(2)

the telephone number, fax number and post address of the new office.

The “change of office” as mentioned in this Article means the relocation, enlargement or reduction of the former office.

Article 18

The cancellation of a representative office shall, ahead of 20 working days, be reported to the CSRC, and handle the formalities
for deregistration at the administrative organ for industry and commerce upon the pertinent confirmation document issued by the CSRC
on approval of the cancellation. The pertinent deregistration certificate shall, within 5 working days, be submitted to the CSRC
after a representative office is deregistered.

Article 19

The unsettled matters shall be responsible for by its stock exchange after a representative office is cancelled.

Chapter IV Supervision and Administration

Article 20

A representative office shall have an independent and fixed office of its own, employ a reasonable amount of staff members, of which,
the proportion of domestic residents shall not be lower than 50%. The foreign staff members of a representative office shall handle
the formalities for residence under the pertinent laws upon entry.

Article 21

Any chief representative may not concurrently hold a post in the head office or a regional head office, nor may he concurrently hold
a post in any other commercial institution inside the territory of China. A chief representative shall stay in the representative
office to take charge of the daily routine. Where a chief representative goes abroad for 30 consecutive days, he shall file a report
with the CSRC and designate a special person to carry out the duties on his behalf. Where a chief representative concurrently holds
a post in any other institution or goes abroad for more than 30 consecutive days without reporting, the CSRC may require the stock
exchange to replace the chief representative.

Article 22

Any representative office and any of its staff members may not conduct any commercial activities or do so in a disguised form, it
or he may not conclude an agreement or contract with any legal person or natural person that may bring about incomes to the representative
office or the stock exchange.

Article 23

Any representative office and any of its staff members may not conduct publicity in any form, it or he may not hold any market promotion
activity oriented to individuals in any form.

Article 24

Where a representative office and its staff members organize and hold a large-scale market promotion activity oriented to enterprises,
they shall report a related scheme to the CSRC in advance, and if the CSRC does not present any objection within 10 working days,
it can hold such promotion activity.

Article 25

Any representative office and any of its staff members may not hold any false market promotion activity in any form, and it or he
may not conduct unfair competition in any form or seek for interests for any other institution in any form.

Article 26

A representative office shall submit a work report of the previous year to the CSRC within two months upon conclusion of each year.

Article 27

A representative office shall file the information about Chinese companies whose stocks are listed and traded in its stock exchange
in the previous year as well as the information about Chinese-funded members within two months upon conclusion of each year.

Article 28

A representative office shall file the annual report on its stock exchange for the previous year within four months upon conclusion
of each accounting year of its stock exchange.

Article 29

Where a foreign stock exchange gives any major punishment to any Chinese company whose stocks are listed and traded in it or any
Chinese-funded member thereof, the representative office shall timely render a notice to the CSRC, and submit a written report to
the CSRC within 10 working days as of the date of punishment.

Article 30

If a foreign stock exchange is under any of the following circumstances, the representative office shall, within 10 days after the
event occurs, file a written report with the CSRC:

(1)

Its articles of association, registered capital or registered address alters;

(2)

The stock exchange is split up, consolidated or implements any other major merger;

(3)

Its board chairman (governor-general) or general manger changes;

(4)

It is operating at a heavy loss or with serious financial difficulties;

(5)

The competent supervisory authority of the country or region where the stoke exchange is located takes major supervisory measures
against the stock exchange; or

(6)

Other events that severely affect the foreign stock exchange’s business.

Article 31

The CSRC will implement regular or irregular on-site or off-site inspections of a representative office from, but not limited to,
the aspects as follows:

(1)

Whether the representative office conducts commercial activities or does so in a disguised form;

(2)

Whether the representative office engages in publicity or holds any market promotion activity oriented to individuals;

(3)

Whether the representative office organizes and holds any large-scale market promotion activity oriented to enterprises without reporting
in advance;

(4)

Whether the application materials filed by the representative office are truthful or accurate;

(5)

Whether the representative office goes through complete formalities for any alteration thereof;

(6)

Whether the representative office goes through complete formalities for employment or alteration of any of its staff member; or

(7)

Other matters to be inspected by the CSRC.

Article 32

The CSRC may take such regulatory measure as ordering its chief representative or any other person in-charge to make correction,
arranging a supervisory interview and issuing a letter of warning where a representative office violates these Measures. In case
of serious circumstances, the CSRC may take the measure of prohibiting its chief representative or any other person in-charge from
entry into the securities market.

Chapter V Legal Liabilities

Article 33

Where a foreign stock exchange, without approval, illegally establishes a representative office or conduct activities in the name
of any representative office or in any other form, the CSRC shall ban such representative office or activities under law. Where the
foreign stock exchange violates the criminal law, it shall assume criminal liabilities.

Article 34

Where a representative office conducts commercial activities or does so in a disguised form, the CSRC shall give it a warning, confiscate
its illegal gains, or even revoke it, etc.

Article 35

Where a representative office implements publicity or holds any market promotion activity oriented to individuals, the CSRC shall
give it a warning, or even revoke it, etc.

Article 36

Where a representative office organizes and holds a large-scale market promotion activity oriented to enterprises without reporting
in advance, the CSRC shall impose upon it a warning, or a fine, or even revoke it, etc.

Article 37

Where a representative office implements false publicity or unfair competition, the CSRC shall give it a warning, a fine, or even
revoke it, etc.

Chapter VI Supplementary Rules

Article 38

The establishment of a representative office within the territory of China by a stock exchange of Hong Kong Special Administrative
Region, Macao Special Administrative Region or Taiwan Area shall be implemented by reference to these Measures.

Article 39

The documents as required to be submitted by an applicant under these Measures shall be in Chinese. For the articles of association,
main business rules or annual reports of a foreign stock exchange, Chinese abstracts thereof may be provided together with the original
texts.

Article 40

These Measures shall enter into force as of July 1, 2007.



 
China Securities Regulatory Commission
2007-05-20

 






CIRCULAR OF THE GENERAL ADMINISTRATION OF TAXATION ON REVISING THE DECLARATION FORM OF EXPORT REBATES (EXEMPTION) FOR EXPORTED GOODS

The General Administration of Taxation

Circular of the General Administration of Taxation on Revising the Declaration Form of Export Rebates (Exemption) for Exported Goods

Guo Shui Fa No.2 [2006]

Bureaus of State Taxes in all provinces, autonomous regions, municipalities under direct control of the Central Government, and cities
specially designated in the state plan:

In accordance with the Detailed Implementation Rules of the Tax Collection and Administration Law of the People’s Republic of China
and with relevant provisions of the General Administration of Taxation, the General Administration of Taxation, after studies, decides
to revise relevant contents of the existing Declaration Form of Export Rebates (Exemption) for Exported Goods, and to start to use
the new edition. And this circular is hereby released on relevant issues:

I.

As of the date of January 1, 2006, the new edition of Declaration Form of Export Rebates (Exemption) for Exported Goods shall start
to be used in all places at the same time. Compared with the old edition, the avow of the applicant is added to the new edition of
Declaration Form of Export Rebates (Exemption) for Exported Goods, i.e. the declarant shall avow in the form of new edition these
sentences as follows: “the contents filled in all columns of this form is true and lawful, in line with the situation of actually
exported goods, and the export business declared this time is not such business as ‘Four Selfs and Three Nos (the Four Selfs are
the investor or intermediary’s bringing clients itself, bringing supply of goods itself, bringing the bill of exchange itself and
declaring at the customs itself, and the Three Nos are the export enterprise’s having no export goods, no suppliers of goods and
no foreign businessmen)’ and other which is against the normal export business procedures. Otherwise, the enterprise hereof is ready
to assume the relevant liabilities because of this”.

II.

The Declaration Form of Export Rebates (Exemption) for Export Goods revised this time includes these two kinds as follows:

1.

The Summarizing Declaration Form of Export Rebates for Foreign-trade Enterprises (Annex I)

2.

The Summarizing Form of Declaring Credit Exemption and Export Rebates for Manufacturing Enterprises (Annex II)

III.

This circular shall enter into force as the date of January 1, 2006. And the concrete implementation date shall refer to the export
date specified in the Declaration Form for Export Goods (exclusively used for export rebates).

Annexes:

1.

The Summarizing Declaration Form of Export Rebates for Export Goods for Foreign-trade Enterprises (omitted)

2.

The Summarizing Form of Declaring Credit Exemption and Export Rebates for Export Goods for Manufacturing Enterprises (omitted)

The General Administration of Taxation

January 4, 2006



 
The General Administration of Taxation
2006-01-04

 






REPLY OF THE STATE ADMINISTRATION OF TAXATION CONCERNING THE ISSUE OF TAX COLLECTION AND EXEMPTION ON THE INCOME OBTAINED BY THE WORLD TOURISM ORGANIZATION IN CHINA

State Administration of Taxation

Reply of the State Administration of Taxation concerning the Issue of Tax Collection and Exemption on the Income Obtained by the World
Tourism Organization in China

Guo Shui Han [2006] No. 35

The state administration of taxation of Jiangsu Province,

Your Request for Instructions concerning the Issue of Tax Collection and Exemption on the Income Obtained by the World Tourism Organization
for Providing Design Labor Services (Su Guo Shui Fa [2005] No.244 ) has been received; we hereby make reply as follows:

In accordance with Item (10), paragraph 2 of Section One of Article 1 , and item (1) of Section Nine of Article 3 of the United Nations
Convention on the Privileges and Immunities of the Specialized Agencies that China have signed, the direct tax shall be exempted
on the income, which is obtained by the World Tourism Organization in China. Therefore, the income tax shall be exempted from the
income, which is obtained by the Organization that it provides design labor service to the people’s government of Wujin District
of Changzhou City.

State Administration of Taxation

January 12, 2006



 
State Administration of Taxation
2006-01-12

 






CIRCULAR CONCERNING TRANSMITTING CIRCULAR ON ADJUSTING THE TAX-REFUND RATE FOR THE EXPORTS OF COAL TAR AND OTHER PRODUCTS AND CIRCULAR ON CONTINUOUSLY SUSPENDING THE TAX-REFUND FOR THE EXPORT OF SOME FERTILIZERS

General Office of the Ministry of Commerce

Circular concerning Transmitting Circular on Adjusting the Tax-refund Rate for the Exports of Coal Tar and Other Products and Circular
on Continuously Suspending the Tax-refund for the Export of some Fertilizers

The competent department of commerce in all provinces, autonomous region, municipality directly under the Central Government, cities
specifically designated in the state plan:

Circular of the General Office of the Ministry of Commerce concerning Transmitting Circular of the Ministry of Finance, the State
Administration of the Taxation of the People’s Republic of China, on Adjusting the Tax-refund Rate for the Exports of Coal Tar and
Other Products (Cai Shui [2005] No.184) and Circular of the Ministry of Finance, the State Administration of Taxation, the National
Development and Reform Commission of the People’s Republic of China, on Continuously Suspending the Tax-refund for the Export of
some Fertilizers (Cai Shui [2005] No.192) is hereby transmitted to you for informing the enterprises’ implementation. Once problems
arise in the process of its implementation, please reflect them to the Ministry (Department of Planning and Finance).

Appendix:

1.

Circular of the Ministry of Finance, the State Administration of the Taxation of the People’s Republic of China, on Adjusting the
Tax-refund Rate for the Exports of Coal Tar and Other Products (omitted)

2.

Circular of the Ministry of Finance, the State Administration of Taxation, the National Development and Reform Commission of the People’s
Republic of China, on Continuously Suspending the Tax-refund for the Export of some Fertilizers (omitted)

General Office of the Ministry of Commerce

January 23, 2006



 
General Office of the Ministry of Commerce
2006-01-23

 






PROVISIONS GOVERNING THE ADMINISTRATIVE PUNISHMENT PROCEDURES OF ENTRY/EXIT INSPECTION AND QUARANTINE






General Administration of Quality Supervision, Inspection and Quarantine

Order of the General Administration of Quality Supervision, Inspection and Quarantine

No.85

The Provisions Governing the Administrative Punishment Procedures of Entry/Exit Inspection and Quarantine, which were adopted through
discussion at the executive meeting of the General Administration of Quality Supervision, Inspection and Quarantine on December 31,
2005, are hereby promulgated, and shall come into force as of April 1st, 2006.

Director General of General Administration of Quality Supervision, Inspection and Quarantine, Li Changjiang

January 28, 2006

Provisions Governing the Administrative Punishment Procedures of Entry/Exit Inspection and Quarantine

Chapter I General Provisions

Article 1

For the purpose of regulating the actions of administrative punishment on entry/exit inspection and quarantine, the present Provisions
are formulated in accordance with the Administrative Punishment Law of the People’s Republic of China and the relevant laws and administrative
regulations on entry/exit inspection and quarantine.

Article 2

Where any citizen, legal person, or other organization violates any of the provisions of relevant laws, administrative regulations,
or rules on entry-exit inspection and quarantine, and shall be subject to administrative punishment, he/it shall be given administrative
punishment according to the provisions of the present Procedures.

Article 3

The following basic principles shall be followed in the work of administrative punishment on entry/exit inspection and quarantine:

1.

Taking facts as the basis and law as the yardstick. ;

2.

Justness and openness;

3.

Combining punishment with education; and

4.

Protecting the lawful rights and interests of citizens, legal persons, and other organizations.

Article 4

The General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ) shall be responsible for the administration
work of administrative punishment on entry/exit inspection and quarantine nationwide and the supervision and inspection thereof.

Each entry/exit inspection and quarantine bureau directly under the GAQSIQ shall, according to its own functions, be responsible for
the administrative punishment work of its own organ, and shall conduct supervision and inspection on the administrative punishment
work of the branches subordinated to it.

Each entry/exit inspection and quarantine branch or sub-branch bureau shall be responsible for the administrative punishment work
of its own organ.

Article 5

For those who violate any law or administrative regulation on entry/exit inspection and quarantine and thus a crime is constituted
according to the provisions of the Criminal Law, each entry/exit inspection and quarantine bureau (hereinafter referred to as the
entry/exit inspection and quarantine organ) , shall transfer them to the judicial department in accordance with the Provisions on
the Transfer of Cases of Suspected Crimes by Administrative Law Enforcement Departments in a timely manner, and shall not substitute
administrative punishment for criminal punishment. An entry/exit inspection and quarantine organ shall not substitute such measures
as demanding the payment of inspection and quarantine fees, and etc. for administrative punishment.

Article 6

An entry/exit inspection and quarantine organ shall not impose an administrative punishment of fine two or more times to any party
on a same illicit action..

Article 7

An entry/exit inspection and quarantine organ shall improve its administrative punishment supervision system, and determine the subjective
qualification of the law enforcement according to law, clarify the law enforcement functions, and regulate the law enforcement acts,
impose punishments upon illegal law enforcement activities, as well as strictly implement the administrative law enforcement responsibility
system.

Chapter II Jurisdiction

Article 8

For the case of administrative punishment on entry/exit inspection and quarantine, the entry/exit inspection and quarantine organ
at the place where a law-breaking act is committed shall have jurisdiction. .

A grave case shall be put under the jurisdiction of the entry/exit inspection and quarantine organ directly under the GAQSIQ at the
place where the law-breaking act is committed; and the cases having a grave influence nationwide shall be put under the jurisdiction
of GAQSIQ.

Article 9

In case an entry/exit inspection and quarantine organ discovers that a case is not under its jurisdiction, it shall transfer it to
the entry/exit inspection and quarantine organ that has jurisdiction over it in a timely manner .

The entry/exit inspection and quarantine organ to which the case has been transferred shall not retransfer it to any other organ on
its own initiative; if it believes that the transfer is not proper, it shall report to the common superior organ in dispute for designated
jurisdiction.

Article 10

When two or more entry/exit inspection and quarantine organs have jurisdiction over an administrative punishment case, the entry/exit
inspection and quarantine organ which is the first to file up the case shall have jurisdiction over it, and the entry/exit inspection
and quarantine organ relating to the case shall offer assistance in the investigation of the case and the punishment thereof.

If a dispute arises over jurisdiction between two or more entry/exit inspection and quarantine organs, it shall be reported to the
common superior organ for the designated jurisdiction.

For any administrative punishment case involving two or more entry/exit inspection and quarantine bureaus directly under the GAQSIQ,
or for any administrative punishment case that is grave and complicated, the jurisdiction shall be designated by GAQSIQ.

Article 11

A superior entry/exit inspection and quarantine organ may execute jurisdiction over an administrative punishment case under the jurisdiction
of an entry/exit inspection and quarantine organ at a lower level if it believes necessary. Where an entry/exit inspection and quarantine
organ at a lower level believes that an administrative punishment case is grave and complicated, and need to be put under the jurisdiction
of a superior entry/exit inspection and quarantine organ, it may report to the superior entry/exit inspection and quarantine organ
for jurisdiction. A superior entry/exit inspection and quarantine organ may also transfer the case under its jurisdiction to an entry/exit
inspection and quarantine organ at a lower level for jurisdiction if it believes it is necessary.

Article 12

If a case is not under the jurisdiction of an entry/exit inspection and quarantine organ, it shall be transferred to the relevant
competent department for handling.

Chapter III Case Filing and Investigation

Article 13

In case any entry/exit inspection and quarantine organ discovers that any citizen, legal person, or other organization has any act
suspected of violating any law, administrative regulation, or rule on entry/exit inspection and quarantine, and believes it necessary
to give him/it a punishment, it shall file up the case within 10 days from the day of discovery.

Article 14

The department that discovers any suspected violation of law shall fill in a Form of Examination and Approval for Case filing of Administrative
Punishment when applying for filing up a case, and shall have it examined by the department of legal affairs, and report to the person-in-charge
of the organ to decide whether the case shall be filed.

Article 15

If an entry/exit inspection and quarantine organ determines to establish a case and make investigation into it, it shall designate
case investigators within 3 days from the day when it determines to establish the case.

In case any investigator has any direct relationship of interests with the party concerned, it shall withdraw.

Article 16

The investigators shall make overall, objective, and just investigations into the facts of a case, and collect evidence according
to law.

In the course of making an investigation and gathering evidence, the investigators shall be no less than two persons, and shall show
their law enforcement certificate to the parties or the relevant personnel.

The investigators may send an Investigation Notice to the parties or the relevant personnel if they believe it necessary.

The parties or the relevant personnel shall answer the inquiries according to the facts and assist in and cooperate with the investigation,
inspection or on-site survey, and shall not stand in the way.

Article 17

When making an investigation and inquiry to any party or relevant personnel, an Written Records of Investigation shall be made with
the signatures or seals of the investigators, the parties, or the relevant personnel.

Article 18

In the event of on-site survey, a Written Records of On-site Survey shall be made with the signatures or seals of the investigators,
the parties or the relevant personnel. In case there is any witness, the witness on the spot may affix his signature or seal.

Article 19

The investigators may consult, record, or copy the contracts, documentations, invoices, account book, documents, and other materials
relating to the case, or collect evidence by way of sampling, recording, taking photos, videotaping, and other methods.

Under the circumstance where any evidence may be lost or hard to obtain later, and upon the approval of the person-in-charge of the
entry/exit inspection and quarantine organ, it may be registered and preserved in advance. The evidential materials collected shall
be the original copies or the original things. In case it is really difficult to obtain the original copies or the original things,
the entity or individual that submits the evidence may affix its/his signature or seal to the reproduced products, the photocopies
or photos, and mark them with “same as original copies (things)” or text explanation..

Any e-mail, electronic data interchange, and other transmission documents of electronic evidence that is under any of the following
circumstances shall be regarded as having the same effectiveness as the original copy:

1.

Having legal means of electronic certification, which can ensure its truthfulness;

2.

Having been notarized by the public notary organs; or

3.

The parties and the interested parties recognize its objectiveness and truthfulness, and it has been confirmed as valid evidence according
to law.

Article 20

In case such measure as registration on preservation, seizure, detention, or sealing up is taken, a Letter of Determination on Registration
of Articles under Preservation (Seizure) (Detention) (Sealing Up) shall be issued, and a List of Registration on Articles under Preservation
(Seizure) (Detention) (Sealing Up) shall be filled in, which shall bear the signatures or seals of the investigators, parties, and
keepers, and be affixed with a sealing strip or mark. If there is any witness on site, the witness may be asked to affix his signature
or seal.

When making a registration on preservation, seizure, detention, or sealing up, if the party is not present at the scene, a witness
shall be invited to be present, telling him of the situation, and have him affix his signature or seal on the List of Registration
on Articles under Preservation (Seizure) (Detention) (Sealing Up) attached in the Letter of Determination on Registration of Articles
under Preservation (Seizure) (Detention) (Sealing Up), and a public notice shall be posted at the original address of the relevant
articles.

For articles preserved through registration, a decision shall be made on its disposition within 7 days.

Where there is necessity to cancel such measures as registration on preservation, seizure, detention, or sealing up, the Letter of
Determination on Canceling Registration of Articles under Preservation (Seizure) (Detention) (Sealing Up) shall be showed to the
parties, and the List of Cancellation of Registration on Articles under Preservation (Seizure) (Detention) (Sealing Up) shall be
filled in, with the signatures or seals of investigators, parties, and keepers for confirmation, and then the measures for the registration
on preservation, seizure, detention, and sealing up, and etc. shall be cancelled. If there is any witness present, the witness may
be asked for affixing his signature or seal.

The adoption of the aforesaid measures shall be subject to the approval of the leaders in-charge of the entry/exit inspection and
quarantine organ, but under emergency circumstances, the relevant measures may be taken in advance, and then the formalities for
examination and approval shall be made up at a later time.

Article 21

In case any party refuses to affix his signature or seal onto the relevant materials when accepting investigation, the investigators
shall indicate it. Where any witness is present, the witness may be asked to affix his signature or seal.

Article 22

The case investigation shall be terminated within 60 days from the day when the case is established.

Where there is necessity to make an inspection, quarantine, and authentication, the time required shall not be computed in the time
limit as prescribed in the preceding paragraph.

The time limit for investigation on a grave and difficult case may be extended properly upon the approval of the person-in-charge
of the department of legal affairs, but the extension shall not exceed 30 days. If the investigation of the case cannot be completed
within the extended time limit, it shall be reported to the person-in-charge of the entry/exit inspection and quarantine organ to
decide whether the investigation should continue.

Article 23

After the investigation of a case is terminated, the investigators shall submit an Investigation Report on Administrative Punishment
Case, and bring forward their opinions on how to deal with the law-breaking act, and send them to the department of legal affairs
for examination.

Chapter IV Punishment Decision

Article 24

The department of legal affairs shall make an overall examination on the Investigation Report on Administrative Punishment Case and
other materials of a case, and give its examination opinions according to the different circumstances:

1.

If the fact is clear, the evidence is solid, the application of laws, administrative regulations or rules is correct, and the procedures
are lawful, a punishment proposal shall be made;

2.

If there is any error in the application of laws, administrative regulations, or rules, it shall be corrected;

3.

If the fact is not clear, or there is no sufficient evidence, or the procedures are illegal, an investigation shall be made once again;

4.

If the facts of violation could not be established or it has exceeded the time limit for prosecuting against offenders, the case shall
be revoked;

5.

If the law-breaking act is not serious and has been corrected in a timely manner, and does not result in negative effect, no administrative
punishment may be given; or

6.

If the law-breaking act is suspected of constituting a crime, it shall be transferred to the judicial department.

Article 25

Before making a decision on administrative punishment, the department of legal affairs shall make a Notice on Administrative Punishment
and serve it to the parties, and notify the parties of the facts, reasons, and basis for the administrative punishment decision to
be made, and the contents of the administrative punishment, and notify the parties of their rights to make statements and defenses
within three days from the day when they receive the Notice on Administrative Punishment, if they comply with the conditions for
hearing, they shall have the right to request a hearing.

Article 26

Before making a decision on administrative punishment, an entry/exit inspection and quarantine organ shall fully hear the opinions
of the party concerned, and review the facts, reasons, and evidence it puts forward. If the facts, reasons, or evidence provided
by the party can be established, they shall be adopted.

The entry/exit inspection and quarantine organ shall not give a heavier punishment on the party because it/he has made statements,
defenses or applied for a hearing.

In case the entry/exit inspection and quarantine organ plans to make a punishment decision different from the one that has been notified
to the parties formerly, it shall send the Notice on Administrative Punishment once again.

Article 27

In case any party is under any of the following circumstances, it shall be given a lighter punishment:

1.

He/it eliminates or reduces the negative effect of the illegal act on his/its own initiative;

2.

He/it cooperates with the investigation of the illegal acts and has performed any meritorious service;

3.

He/it commits the illegal act under the duress of others; or

4.

Other circumstances under which he/it shall be given a lighter punishment.

Article 28

In case any party is under any of the following circumstances, he/it shall be given a heavier punishment:

1.

He/it commits illegal acts for several times;

2.

The illegal act has resulted in serious consequences; or

3.

He/it obstructs the case investigation, purposely transfers, conceals, or destroys any evidence or provides any false evidence, and
disguises any illegal facts.

Article 29

In case any illegal act of a party violates two or more laws, administrative regulations or rules on inspection and quarantine at
the same time, if the provisions of the said laws, administrative regulations or rules on the legal liabilities coincide with each
other, the party shall be subject to legal liabilities by conjoining different penalties.

Article 30

In case one is subject to any legal liability by conjoining different penalties, and if the illegal act is serious, all the penalties
shall be conjoined; if the illegal act is not serious, some of the penalties or a lighter ones shall apply.

In the case of conjoining different penalties, if there are provisions on fines in two or more inspection and quarantine laws, administrative
regulations, or rules, and the fines shall not be accumulated, the clause with a larger amount of fine shall apply.

In the case of enjoining penalties, if the provisions on the time limit for filing a reconsideration or litigation by the parties
in any entry/exit inspection and quarantine law or administrative regulation involved are different, the time limit which is longer
shall apply.

Article 31

If there is necessity to make a decision on administrative punishment to a case, the department of legal affairs shall fill in a Form
of Examination and Approval for Handling Administrative Punishment Cases, and report it to the person-in-charge of the entry/exit
inspection and quarantine organ for examination and approval.If no punishment is given, or if the case is complicated, or a heavier
administrative punishment may be given, it shall be determined through collective discussion.

Article 32

When a decision on administrative punishment is made, a Letter of Determination on Administrative Punishment shall be made.

The following contents shall be specified in the Letter of Determination on Administrative Punishment:

1.

Name of the party or the name and address of the entity;

2.

Illegal facts and evidence;

3.

Basis for administrative punishment;

4.

Kinds of administrative punishment;

5.

Ways of implementation of administrative punishment and the time limit thereof;

6.

Ways of applying for reconsideration or filing an administrative litigation when the party is not satisfied with the decision on administrative
punishment and the time limit thereof;

7.

Name of the entry/exit inspection and quarantine organ that has made the decision on administrative punishment; and

8.

Date for making the decision on administrative punishment.

The Letter of Determination on Administrative Punishment shall be affixed with the seal of the entry/exit inspection and quarantine
organ that makes the decision on administrative punishment.

Article 33

A decision on administrative punishment shall be made within 30 days from the day when the investigation on a case is terminated.
Where there is necessity to hold a hearing, the decision shall be made within 30 days from the day when the hearing is terminated.

Chapter V Summary Procedures

Article 34

If the illegal facts of a case is clear, and the evidence thereof is solid, and the following administrative punishment shall be given
according to law, the entry/exit inspection and quarantine organ may make a decision on administrative punishment on site by applying
summary procedures:

1.

Warning;

2.

Giving a fine of less than 50 Yuan to a citizen; or

3.

Giving a fine of less than 1000 Yuan to a legal person or other organization.

Article 35

If the law enforcement personnel make a decision on administrative punishment on the spot, they shall show their law enforcement certificate
to the party or his/its representatives on the scene, and issue a Letter of Determination on On-site Administrative Punishment.

The Letter of Determination on On-site Administrative Punishment shall specify the illegal act of the party or his/its representative
on the scene, the time and the place of the illegal act, basis of administrative punishment, kind of punishment, time for making
punishment decision, ways of implementation of punishment and the time limit thereof, and ways of applying for administrative reconsideration
or filing administrative litigation in case the said personnel are not satisfied with the decision on administrative punishment and
the time limit thereof, name of the entry/exit inspection and quarantine organ, and the seal of the organ shall be affixed. The party
or his/its representative on the scene shall affix his signature or seal or press his fingerprint on the Letter of Determination
on On-site Administrative Punishment, which shall then be delivered to the party or his/its representative on the scene after it
is signed by the law enforcement personnel.

In case the party or his/its representative on the scene refuses to affix his signature or seal or refuses to press his fingerprint,
the law enforcement personnel shall indicate it on the Letter of Determination on On-site Administrative Punishment. If there is
any witness present, who may be asked to sign, seal, or press fingerprint, on it.

There shall be no less than two law enforcement personnel present when implementing an on-site punishment.

In case the party or his/its representative on the scene dissents with the determination of the illegal facts, and such facts could
not be proved on the spot, the summary procedure shall not be applied.

Article 36

The law enforcement personnel shall, within 5 days from the day when the on-site punishment decision is made, send a Letter of Determination
on On-site Administrative Punishment to the department of legal affairs of the entry/exit inspection and quarantine organ it subordinates
for archival filing.

Chapter VI Hearing

Article 37

Before an entry/exit inspection and quarantine organ makes any of the following punishment decisions, it shall notify the party he/it
has the right to request a hearing:

1.

Giving a citizen a fine of 10,000 Yuan or more;

2.

Giving a legal person or other organization a fine of 100,000 Yuan or more;

3.

Revoking administrative license or suspending certificate of administrative license;

4.

Suspending the quarantine documentation that has been obtained;

5.

Ordering to stop production or business operations; and

6.

Other conditions that comply with the hearing conditions as prescribed by any law or administrative regulation.

Article 38

In case any party requests a hearing, he/it shall bring it forward within 3 days after the entry/exit inspection and quarantine organ
has notified him/it.

Article 39

An entry/exit inspection and quarantine organ shall serve the Notice on Hearing of Administrative Punishment to the party 7 days before
holding a hearing.

The following matters shall be specified in the Notice on Hearing of Administrative Punishment:

1.

Name of the party or the post_title of the entity;

2.

Time, place and ways for holding the hearing;

3.

Name and post of the chairperson and the clerk;

4.

Notifying the party his/its right to apply for withdrawal; and

5.

Notifying the party to prepare for evidence, notify the witness and other matters concerned.

The Notice on Hearing of Administrative Punishment shall be affixed with the seal of the entry/exit inspection and quarantine organ.

Article 40

A hearing shall be held openly, unless any state secret, business secret or individual privacy is involved.

Article 41

The hearing shall be presided over by the person who is not an investigator in this case as designated by the entry/exit inspection
and quarantine organ. The investigators, the parties, witnesses, and clerks shall take part in the hearing.

A chairperson shall perform the following functions:

1.

Determining the time and place for holding the hearing and notify the participants to the hearing;

2.

Examining the qualification of the participants to the hearing;

3.

Presiding over the hearing, and making inquiries on the facts, evidence of the case, and the relevant laws to be related, and requesting
the hearing participants to provide or make up evidence;

4.

Maintaining the hearing order, and giving warning to those in violation of hearing disciplines or taking necessary measures to stop
them;

5.

Making review on the written records of hearing, and bringing forward examination opinions;

6.

Determining to postpone or terminate the hearing or declaring to terminate the hearing; and

7.

Other functions as prescribed by any law, administrative regulation, or rule.

In case any party believes that the chairperson or the clerk has any relationship of interest with this case, he/it shall have the
right to apply for their withdrawal.

The withdrawal of the chairperson shall be decided by the person in charge of the entry/exit inspection and quarantine organ. The
withdrawal of the clerk shall be decided by the chairperson.

Article 42

The party may take part in the hearing personally, or entrust one to two agents to take part in the hearing.

In case any party entrusts an agent to take part in the hearing, he/it shall submit a power of attorney.

In case any party who is unable to take part in the hearing as scheduled, he/it shall notify the entry/exit inspection and quarantine
organ that holds the hearing.

Article 43

The hearing shall be carried out according to the following procedures:

1.

The chairperson checks the identities of the parties or the agent, and declares the disciplines on the hearing;

2.

The chairperson declares the beginning of the hearing, and notifies the parties of their rights and obligations, and inquires the
parties whether they apply for withdrawal;

3.

The case investigators state the illegal facts of the parties and the evidence thereof, as well as the basis and contents of the decision
on administrative punishment to be made;

4.

The parties make cross-examination and defenses on the facts of the case and the evidence thereof, as well as the basis and contents
for the decision on administrative punishment to be made;

5.

The chairperson makes inquiry on the parties, case investigators, and the witnesses concerning the relevant issues; and

6.

The parties make final statements.

After the hearing finishes, the Minutes of Meeting on the Hearing of Administrative Punishment shall be given to the parties, witnesses,
and the case investigators on the spot with their names signed or seals affixed if it is found to have no error. If the parties refuse
to sign or seal, the chairperson shall indicate it on the Minutes of Meeting on the Hearing of Administrative Punishment.

Article 44

The following matters shall be specified in the Minutes of Meeting on the Hearing of Administrative Punishment:

1.

Nature of the case;

2.

Name of the hearing participants or the name and address of the entity;

3.

Name and post of the chairperson and the clerk;

4.

Time and place for holding the hearing;

5.

The illegal facts, evidence stated by the case investigators, and the legal basis and contents of decision on the administrative punishment
to be made; and

6.

The contents of the statements, cross-examination, and averments of the parties.

Article 45

Under any of the following circumstances, the chairperson may decide to postpone the hearing:

1.

The party is not present due to the justifiable reason;

2.

The reasons for the party to apply for withdrawal can be established, and there is necessity to determine the chairperson once again;

3.

There are new facts to be investigated and verified;

4.

The party is a natural person who loses the capacity to conduct, and it is necessary to wait for his legal agent;

5.

The party is a legal person or other organization, which occurs merger, division, or other matters concerning the alteration of subjects,
and there is necessity to wait for the successors for their rights and obligations; and

6.

Other circumstances under which the hearing needs to be postponed.

Article 46

Under any of the following circumstances, the hearing procedures shall be terminated:

1.

The party concerned fails to attend the hearing without justifiable reasons or quits the hearing without permission;

2.

The party concerned violates the hearing disciplines, and does not obey the chairperson, and the circumstance is serious;

3.

The party concerned dies or terminates;

4.

The party concerned clearly expresses to give up the hearing;

5.

The party concerned occurs matter of alteration of the subject, and the successors of his/its rights and obligations clearly expresses
to give up the hearin

MINISTRY OF COMMERCE ANNOUNCEMENT NO.7, 2006 ON FINAL ARBITRATION ON BENZOFURANOL

Ministry of Commerce

Ministry of Commerce Announcement No.7, 2006 on Final Arbitration on Benzofuranol

[2006] No.7

On August 12, 2004, in accordance with Anti-dumping Regulations of People’ Republic of China, Ministry of Commerce issued an announcement
to start anti-dumping investigation on imported Benzofuranol originating from Japan, EU and the U.S. (hereinafter referred to as
“investigated product”).

Ministry of Commerce issued the preliminary determination on June 16, 2005, confirming that dumping of the investigated product had
taken place and it had caused material injury to China’ domestic industries, and there was a causal relationship between the dumping
and the injury.

As the final arbitration, Ministry of Commerce decided to impose anti-dumping duties on the investigated product. Customs Tariffs
Committee of the State Council will levy anti-dumping duties on the investigated product as of February 12, 2006.

The investigated product is listed under No. 29329910 in the Import and Export Tariffs of the People’ Republic of China.

The anti-dumping duty rates levied on the related companies are listed as follows:

Companies of U.S.:

1.

FMC: 44%

2.

All Others: 113.2%

Companies of Japan: 113.2%

Companies of EU: 113.2%

FMC of the U. S. and ￿￿￿ũҩ￿ʽ￿￿ has signed Prices Commitment Protocol with Ministry of Commerce of PRC (see Appendix 2 & 3),
which shall take effect with this Final Arbitration.

Importers shall, while importing Benzofuranol originating from Japan, EU and the U.S. as of February 12, 2006, pay relevant anti-dumping
duties to General Administration of Customs of PRC. Anti-dumping Duty= Customs Tax Payment Price * Anti-dumping Duty Rate.

The levy of anti-dumping duties on imported Benzofuranol originating from Japan, EU and the U.S. will last 5 years as from February
12, 2006.

The relevant interested parties could apply, in written forms, to the Ministry of Commerce for an interim review during the levy of
anti-dumping duties in accordance with Article 49 of Anti-dumping Regulations of People’ Republic of China.

The relevant interested parties, disagreed with the final arbitration or the levy of the anti-dumping duties, could apply for an administrative
reconsideration or lawsuit in accordance with Article 53 of Anti-dumping Regulations of People’ Republic of China.

Ministry of Commerce

February 12, 2006

 
Ministry of Commerce
2006-02-12

 



ACCOUNTING STANDARDS FOR ENTERPRISES NO. 13 – CONTINGENCIES

The Ministry of Finance

Accounting Standards for Enterprises No. 13 – Contingencies

Cai Kuai [2006] No.3

February 15, 2006

Chapter I General Provisions

Article 1

These Standards are formulated in accordance with the Accounting Standards for Enterprises – Basic Standards for the purpose of regulating
the recognition and measurement of Contingencies, and the disclosure of relevant information.

Article 2

The term ” Contingencies” refers to the conditions that formed by past transactions or events, and the outcome of which will be confirmed
only by the occurrence or non-occurrence of future events.

Article 3

Other accounting standards shall apply to the Contingencies formed by events such as employee wages and salaries, construction contracts,
income taxes, business combination, leases, original insurance contracts, and re-insurance contracts.

Chapter II Recognition and Measurement

Article 4

The obligation pertinent to a Contingencies shall be recognized as an estimated debts when the following conditions are satisfied
simultaneously:

(1)

That obligation is a current obligation of the enterprise;

(2)

It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation; and

(3)

The amount of the obligation can be measured in a reliable way.

Article 5

The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the performance
of the current obligation.

If there is a sequent range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the
best estimate shall be determined in accordance with the middle estimate within the range.

In other cases, the best estimate shall be conducted in accordance with the following situations, respectively:

(1)

If the Contingencies concern a single item, it shall be determined in the light of the most likely outcome.

(2)

If the Contingencies concern two or more items, the best estimate should be calculated and determined in accordance with all possible
outcomes and the relevant probabilities.

Article 6

To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and
other factors pertinent to the Contingencies.

If the time value of money is of great significance, the best estimate shall be determined after discounting the relevant future outflow
of cash.

Article 7

When all or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is expected to be compensated
by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement
will be obtained. The amount recognized for the reimbursement should not exceed the book value of the estimated debts.

Article 8

Where an executory contract turns to be a loss contract, the obligation generated from the loss contract which meets the provisions
of Article 4 of these Standards shall be recognized as an estimated debts.

The term “executory contract” refers to a contract, the contractual obligations of which fail to be performed by the relevant contracting
parties, or some of the equal obligations have been performed.

The term “loss contract” refers to a contract whose performance of the contractual obligations will inevitably incur costs in excess
of the expected economic benefits.

Article 9

The future operating losses of an enterprise shall not be recognized as estimated debts.

Article 10

If a restructuring obligations undertaken by an enterprise meets the provisions of Article 4 of these Standards, it shall be recognized
as an estimated debts. The simultaneous existence of the following situations indicates that the enterprise has undertaken the restructuring
obligation:

(1)

Having a detailed and formal restructuring plan, which consists of the businesses concerning restructuring, the main places, the number
of employees to be compensated and the nature of their posts, the expected expenditure for the recombination, the execution time
of the plan; and

(2)

The restructuring plan has been proclaimed to the general public.

The term “restructuring” refers to the act of implementing a plan made and controlled by an enterprise, which may substantially change
the organizational form, business scope or operating manner of the enterprise.

Article 11

The enterprise shall determine the amount of estimated debts in the light of the direct expenditure pertinent to the restructuring.

The direct expenditure exclude the expenses for the pre-post training of the employees who stay on to work, market promotion, new
systems, marketing network, etc.

Article 12

An enterprise shall check the book value of the estimated debts on the balance sheet date. If there is any exact evidence indicating
that the book value cannot really reflect the current best estimate, the enterprise shall adjust the book value in accordance with
the current best estimate.

Article 13

Any enterprise may not recognize any contingent debts or contingent asset.

The term “contingent debts ” refers to a potential obligation caused by past transactions or events and whose existence will be confirmed
only by the occurrence or non-occurrence of uncertain future events; or refers to a current obligation caused by a past transaction
or event but is not recognized because the performance of the obligation is not likely to incur an outflow of economic benefits from
the enterprise or because the amount of the obligation cannot be measured in a reliable way.

The term “contingent asset” refers to a potential asset caused by a past transaction or event and whose existence will be confirmed
only by the occurrence or non-occurrence of uncertain future events.

Chapter III Disclosure

Article 14

An enterprise shall, in its notes, disclose the information pertinent to the Contingencies as follows:

(1)

Estimated debts

(a)

The types and causes of the estimated debts, as well as an explanation for the uncertainty of the outflow of economic benefits;

(b)

The changes at the beginning and the end of the period, and the current changes in the estimated debts;

(c)

The amount of expected compensations pertinent to the estimated debts, and the amount of excepted compensation that has been recognized
in the current period.

(2)

Contingent debts (excluding those contingent liabilities that caused little possibility of any outflow of economic benefits).

(a)

The types and causes of the contingent debts , consisting of the contingent debts arising from discounted commercial acceptance bills
of exchange, pending litigations, pending arbitrations, and guarantees provided for the debts of other enterprises;

(b)

An explanation for the uncertainty of the outflow of the economic benefits;

(c)

An estimate of the expected financial effect of the contingent debts and the possibility of any expenditure. If it is unable to make
an estimate, the reasons shall be explained.

(3)

In general, no enterprise may disclose the contingent assets. However, if a contingent asset will probably give rise to an inflow
of economic benefits to the enterprise, the enterprise shall disclose the cause, the expected financial effect, etc.

Article 15

In the case of a pending litigation or arbitration, if the disclosure of some or all information in accordance with the provisions
as prescribed in Article 14 of these Standards can be expected to produce great unfavorable impact upon the enterprise, the enterprise
shall not need to disclose the information, but shall disclose the nature of the pending litigation or arbitration as well as the
truth and reasons for the failure to disclose the information.



 
The Ministry of Finance
2006-02-15

 






1...262728...83Page 27 of 83

CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

Disclaimer: There is no confidential attorney-client relationship formed by using Laws.com website and information provided on this site is not legal advice. For legal advice, please contact your attorney. Attorneys listed on this website are not referred or endorsed by this website. By using Laws.com you agree to Laws.com Terms Of Use.
Facebook
© LAWS.COM NETWORK 2023-2024