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LETTER OF THE MINISTRY OF COMMERCE ABOUT REINFORCING THE PROTECTION OF INTELLECTUAL PROPERTY WHEN ATTENDING OR ORGANIZING OVERSEAS EXHIBITIONS

Letter of the Ministry of Commerce about Reinforcing the Protection of Intellectual Property When Attending or Organizing Overseas
Exhibitions

Shang Fa Han [2007] No.16

The people’s governments of all provinces, autonomous regions, municipalities directly under the Central Government, the cities specifically
designated in the state plan and Xinjiang Production and Construction Corporations.:

During these years, the Chinese enterprises have been involved in more and more disputes on intellectual property when attended overseas
exhibitions. On CPHL Worldwide 2006 which was held in France, the Chinese enterprise exhibitors were suspected of infringement on
intellectual property, which leaded to ill consequences, for example, some related personnel were detained and some exhibits were
confiscated. The same thing happened in March 2007 on CeBIT, which was held in Hanoverian, Germany. The repetitive occurrence of
such incidents shows that some Chinese enterprises are short of the awareness of protecting intellectual property and fail to place
enough emphasis on the protection of intellectual property when preparing to go abroad to attend exhibitions. Such incidents have
not only impaired China’s overseas good image in the facet of protection of intellectual property, but also resulted in great damage
to the reputation and interests of those enterprise exhibitors themselves and even endangered the personal safety of some individuals.

To respect and protect intellectual property is not only a requirement for the development of enterprises themselves, a requirement
for the development of national economy and science and technology, but also a requirement for promoting the sound development of
Chinese-foreign trade and economic relations. Therefore we should make continuous efforts to enhance enterprises’ understanding of
protecting intellectual property. For the purpose of guiding enterprises going abroad to attend exhibitions to do well the protection
of intellectual property, we hereby inform the related issues as follows:

1.

Great emphasis shall be laid on the protection of intellectual property in attending overseas exhibitions. More efforts in guiding
and supervising the related local functional management shall be made. And an effective work mechanism to avoid the occurrence of
infringements in overseas exhibitions shall be set up.

2.

The circumstances about the protection of intellectual property in the process of attending overseas exhibitions by local enterprises
shall be sorted out and analyzed. The administration of enterprises attending overseas exhibitions and entities organizing overseas
exhibitions shall be further reinforced. The examination and verification of the protection of intellectual property shall be taken
as an importance task.

3.

A responsibility system for infringements on intellectual property shall be set up. Those domestic enterprises that attend overseas
exhibitions or entities organizing overseas exhibitions which lead to serious consequences because of their infringement upon intellectual
property shall be imposed upon necessary punishment according to the actual circumstances.

4.

Enterprises attending overseas exhibitions or entities organizing overseas exhibitions shall be trained in terms of intellectual property
to improve their awareness of protecting intellectual property. They shall not only protect their own intellectual property but respect
others’ legitimate rights and interests.

5.

All regions shall actively conduct China’s business councils in foreign countries to hear the related suggestions when organizing
overseas exhibitions.

Each region shall contact the Department of Treaty and Law of the Ministry of Commerce in the case of any complaint or suggestion
in conducting the related work.

Contact person: Yang Hanhui, Chen Fuli

Tel: 65198154/8761

Ministry of Commerce

April 30, 2007



 
Ministry of Commerce
2007-04-30

 






CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION CONCERNING REFUND OF TAXES LEVIED ON PURCHASE OF DOMESTIC EQUIPMENT BY CONSTRUCTION ENTERPRISES ENTRUSTED BY FOREIGN-FUNDED ENTERPRISES THROUGH CONTRACTING FOR LABOR AND MATERIALS

Circular of the State Administration of Taxation concerning Refund of Taxes Levied on Purchase of Domestic Equipment by Construction
Enterprises Entrusted by Foreign-funded Enterprises through Contracting for Labor and Materials

Guo Shui Han [2007] No.637

All the state taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities
specifically designated in the state plan:

We have received letters from some areas recently requesting the State Administration of Taxation to clear the examination and approval
procedures for refund of taxes levied on purchase of domestic equipment by construction enterprises entrusted by foreign-funded enterprises
through contracting for labor and materials. Upon study, a circular on relevant issues is hereby rendered as follows:

1.

For the engineering projects which are contracted out by foreign-funded enterprises through contracting for labor and materials, if
such construction enterprises execute with their contractors an agreement for purchase of domestic equipment, entrusted to purchase
domestic equipment, and get VAT invoices (the purchasers on VAT invoices should be the Construction Enterprises) issued therefore,
the invoices shall be delivered to the foreign-funded enterprises for application for tax refund under relevant rules.

2.

Procedures for Application for Tax Refund

(1)

When applying for tax refund, the foreign-funded enterprises should fill out Application Form for Purchase of Domestic Equipment by
Foreign-funded Projects, together submit the credence stipulated in Circular of the State Administration of Taxation and National
Development and Reform Commission on Printing and Issuing the Trial Measures for the Administration of Refund of Taxes Levied on
Purchase of Domestic Equipment by Foreign-funded Projects (Guo Shui Fa [2006] No.111), VAT invoices for the purchase of domestic
equipment by the construction enterprises on behalf of the engineering projects, the General Contract by the foreign-funded enterprises
and the construction enterprises, the list of domestic equipment purchased on entrustment, the list of equipment delivered by the
construction enterprises to the foreign-funded enterprises, the Opinion Letter on Checking and Accepting the Equipment issued by
relevant departments of the foreign-funded enterprises, and payment voucher, etc. to the competent tax authorities for tax refund.

(2)

After accepting the application for tax refund, for those equipments under the General Contract between the foreign-funded enterprises
and the construction enterprises, whose VAT invoices read the construction enterprises as the purchasers, the competent tax authorities
should send letters to the tax competent authorities of the supply enterprises to make an investigation. If the replies affirm the
authenticity of the invoices and that the tax declaration of the equipment in the invoices has been made, the tax competent authorities
shall handle the application. If the replies cannot affirm the authenticity of the invoices, or if the replies cannot affirm whether
the tax declaration of the equipment in the invoices has been made, or if the replies can not be received, the tax competent authorities
shall not transact the application.

3.

Other matters not covered in this Circular shall be governed by the document “Guo Shui Han [2006] No.111”.

State Administration of Taxation

June 12, 2007



 
State Administration of Taxation
2007-06-12

 






ANNOUNCEMENT NO.124, 2005 OF MINISTRY OF COMMERCE, PROMULGATING GRADED LICENSE-ISSUING LIST OF COMMODITIES UNDER IMPORT LICENSE ADMINISTRATION IN 2006

Ministry of Commerce

Announcement No.124, 2005 of Ministry of Commerce, Promulgating Graded License-issuing List of Commodities under Import License Administration
in 2006

[2005] No.124

In accordance with Announcement No. 90, 2005 of Ministry of Commerce and General Administration of Customs on List of Commodities
under Import License Administration in 2006, Graded License-issuing List of Commodities under Import License Administration in 2006
(please refer to Appendix) is now issued and relevant matters are announced as follows:

1.

3 kinds of commodities (83 eight-digit HS codes) are under import license administration in 2006. Local administrative commercial
department will be responsible for the license releasing.

2.

When enterprises under the central government in Beijing import commodities in this List, the bureau of license affairs of Ministry
of Commerce will be responsible for import license releasing.

3.

Administrative Measures on Import and Export License of Substances and Technologies of Double Functions shall be followed to deal
with related matters of chemicals subject to control and easily made poisonous chemicals.

4.

License-issuing institutions should strictly follow relevant regulations of Administrative Measures on Commodities Import Licenses,
List of Commodities under Import License Administration in 2006 and Operation Specification of Applying and Issuing Import License
to issue the import license. For commodities not under administration of “one commodity with one license “, license-issuing institutions
must mark the words “not one commodity with one license” in the remarks column of import licenses.

This graded license-issuing list will take effect as from Jan 1, 2006, and the Graded License-issuing List of Commodities under Import
License Administration in 2005 will be terminated at the same time.

Appendix: Graded License-issuing List of Commodities under Import License Administration in 2005(omitted)

Ministry of Commerce

Jan 1, 2006



 
Ministry of Commerce
2006-01-01

 






CIRCULAR OF THE STATE FOOD AND DRUG ADMINISTRATION ON THE RELEVANT ISSUES CONCERNING THE BUSINESS SCOPE OF THE FOREIGN-FUNDED ENTERPRISES ENGAGING IN THE PRODUCTION OF HERBAL MEDICINES FOR DECOCTION

e037742006011020060110the State Food and Drug Administrationepdf/e04723.pdfB3,A4traditional Chinese medicines prepared in ready-to-use forms, foreign investmente04723Circular of the State Food and Drug Administration on the Relevant Issues concerning the Business Scope of the Foreign-funded Enterprises
Engaging in the Production of Herbal Medicines for DecoctionGuo Shi Yao Jian An [2006] No. 14The food and drug administration bureaus (drug administration bureaus) of all provinces, autonomous regions, and municipalities directly
under the Central Government,According to the provisions of the Industrial Catalogue for Guiding Foreign Investment (promulgated by the Order No. 24 of the State
Development and Reform Commission of the People’s Republic of China and the Ministry of Commerce of the People’s Republic of China)
which came into force as of January 1, 2005, “the application of preparing techniques of traditional Chinese medicine in small pieces
ready for decoction and the products of secret recipe of traditional Chinese medicine already prepared” falls within the category
of industries prohibited from foreign investment.According to the General Rules on Processing Medicine Materials as prescribed in the Drug Code of the People’s Republic of China (2005):
“The term ‘processing of medicine materials’ refers to that medicine materials are manufactured into herbal medicines of certain
specimen for decoction after cleaning, cutting, roasting and boiling so as to meet the requirements of medical treatment and mixture
or preparation, and guarantee the safety and effectiveness of medication.” The processing of medicine materials includes cleaning,
cutting, roasting and boiling. The application of preparing techniques of herbal medicines for decoction refers to the application
of the aforesaid processing techniques.In order to make the foreign investment compatible with the planning of the national economy and social development of China, the
administrative departments of food and drug of all provinces (regions and cities) shall strictly implement the state policies and
guard the access to the industries prohibited from foreign investment. As to any foreign-funded enterprise that has obtained the
approval of access to prohibited industries, the administrative department of food and drug at the provincial level shall, when the
relevant enterprise that engages in the production of herbal medicine for decoction renews its Pharmaceutical Production License,
clearly indicate “cleaning and cutting” on the License so as to restrict the production scope thereof.State Food and Drug AdministrationJanuary 10, 2006



 
the State Food and Drug Administration
2006-01-10

 






NOTICE OF THE MINISTRY OF COMMERCE ON ALTERING CHARGE ACCOUNT OF CERTIFICATE APPROVAL OF FOREIGN-FUNDED ENTERPRISE

The Ministry of Commerce

Notice of the Ministry of Commerce on Altering Charge Account of Certificate Approval of Foreign-funded Enterprise

Zi Zong Bian Zi[2006] N0. 002

To the administrative departments responsible for commerce of all provinces, autonomous region, municipalities directly under the
central government as well as Xinjiang Production and Construction Corporations:

Due to the alteration of the charge account of certificate approval of foreign-funded enterprises, the related issues are hereby given
as follows:

Deposit bank: Dongdan Branch in Beijing, China CITIC Bank

Account number: 7112410189800000214

Name of account: the Ministry of Commerce

Henceforth, the related departments who plans to purchase certificate approval of foreign-funded enterprises are required to transfer
the payment sum to the above-mentioned account.

In case related issues emerges, please contact with our department promptly.

Person to contact: Gong Liqin

Tel: 010-65197328

Fax: 010-65197332

The Ministry of Commerce

January 18, 2006



 
The Ministry of Commerce
2006-01-18

 






CIRCULAR OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON THE TAX REBATE RATE APPLICABLE TO PART OF THE EXPORT COMMODITIES IN 2006

export commodities, tax rebate rate

Circular of the Ministry of Finance and the State Administration of Taxation on the Tax Rebate Rate Applicable to Part of the Export
Commodities in 2006

Cai Shui [2006] No.6

Departments (Bureaus) of Finance, Bureaus of State Taxes of all provinces, autonomous regions, municipalities directly under the Central
Government, and cities specially designated in the state plan, and Bureau of Finance of the Xinjiang Production and Construction
Corps:

In 2006, the customs commodity codes have been readjusted. And in order to guarantee the correct carrying-out and implementation of
the policies concerning export rebates, this Circular is hereby released on the new customs commodity code and the export rebates
rate for these commodities as follows:

htm/e04725.htmSerial Number

￿￿

Serial Number

Customs Commodity Code

Name of Commodity

Applicable Export Rebates Rate

1

7601101000

The unforged aluminum containing more than or equal to 99.5% of aluminum by weight

Cancelled

2

7601109000

Other unforged aluminums

5￿￿

3

7901119000

Other unforged zinc containing more than or equal to 99.99% but less than 99.995% of zinc

5￿￿

4

2712909000

Paraffin wax subject to the antecedent Duty Paragraph

  

5

2903590010

Aldrin, Heptachlor and Toxaphene

  

6

2903620000

Hexachlorobezene and DDT

 

7

2925200020

Chlordimeform

 

8

2924199011

Azodrin and Phosphamidon

5￿￿

9

2903590020

Chlordane

10

2931000031

Chloroethane Mercury subject to the antecedent Duty Paragraph

11

2842900011

Mercuric Arsenide, Potassium Mercuric Thiocyanate, Ammonium Mercuric Thiocyanate

12

2842900012

Mercuric Amide Chloride, Mercuric Potassium Chloride and Mercuric Potassium Iodide

13

2851009020

Mercury Arsenide subject to the antecedent Duty Paragraph

14

2851009090

Mercury Rhodanate subject to the antecedent Duty Paragraph

15

2834299010

Mercuric Nitrate and Mercurous Nitrate

16

2833299010

Mercuric Sulfate and Mercurous Sulfate

17

2827399090

Mercuric Chloride subject to the antecedent Duty Paragraph

18

2827600010

Mercuric Iodide and Mercurous Iodide

19

2931000090

Mercuric Acetate and other Organic Mercury subject to the antecedent Duty Paragraph

20

2838000010

Mercuric Thiocyanate

21

2827590010

Mercuric Bromide and Mercurous Bromide

22

2825909010

Mercuric Oxide and Mercurous Oxide

￿￿￿￿This circular shall enter into force as of the date of January 1, 2006 

The Ministry of Finance

The State Administration of Taxation

 January 26, 2006



CIRCULAR OF THE MINISTRY OF COMMERCE ON TRANSMISSION OF AGRICULTURAL PRODUCTS QUOTAS FOR FOREIGN-FUNDED ENTERPRISES IN 2006

the Ministry of Commerce

Circular of the Ministry of Commerce on Transmission of Agricultural Products Quotas for Foreign-funded Enterprises in 2006

Shang Zi Han [2005] No.106

To competent departments of commerce of all provinces, autonomous region, municipalities directly under the Central Government and
cities specifically designated in the state plan:

In accordance with the relevant provisions concerning quotas certificate for foreign-funded enterprises, the Amount of Exported Agricultural
Products Prescribed in Foreign-funded Enterprises Quotas Certificate in 2006 is hereby given to you and transmitted to lower levels
simultaneously via the management system network for foreign-funded enterprises. Please inform relevant enterprises to apply for
export certificate in accordance with the provisions of the Circular.

Please strictly put into practice the implementation of the quotas concerning agricultural products export by foreign-funded enterprises
and feedback promptly to the Department (Foreign Capital Department) the implementation of the Circular. Where the export quotas
are applied thereby to be reduced, increased or reassessed, please submit promptly the relevant applications to the Department after
your initial examination.

Appendix: Amount of Exported Agricultural Products Prescribed in Foreign-funded Enterprises Quotas Certificate in 2006

the Ministry of Commerce

February 8, 2006 htm/e04817.htmAppendix

￿￿

￿￿

Appendix: 

Amount of Exported Agricultural Products Prescribed in Foreign-funded Enterprises Quotas Certificate in 2006

￿￿

￿￿￿￿Name of Articles: sawn timber

Unit: cubic meter

Provinces and cities

Name of the enterprise

Amount

Remark

Shanghai

Shanghai Qinghe Wood Co., Ltd

2,400

Process with customers’ materials

Shanghai Honghong Wood Co., Ltd

1,500

Process with customers’ materials

Sichuan

Sichuan Gongyi Wood Co., Ltd

500

General trade

Sichuan Xinqi Wood Co., Ltd

1,500

Jiangsu

Weisheng Wood ( Suzhou) Co., Ltd

4,000

Proceeding with imported materials

Lianyungang Xinhong Wood Co., Ltd

3,000

Processing trade

Ningbo

Ningbo Dafeng Wood Co., Ltd

500

Proceeding with imported materials

Shandong

Dezhou Sengyang Industry Co., Ltd

1,000

Process with customers’ materials

Tianjin

Zhengyang Wood Co., Ltd

3,500

Process with customers’ materials

Jiatong Wood Co., Ltd

5,500

Process with customers’ materials

Jiatong Wood Co., Ltd

3,000

Process with customers’ materials

Fuxing Wood Co., Ltd

1,000

Process with customers’ materials

Inner Mongolia

Manchuria Lianfa Industry Co., Ltd

30,000

Processing trade

Xiamen

Xiamen Lijian Wood Co., Ltd

100

General trade

Yunnan

Ruili Bangda Wood Co., Ltd

2,000

Processing trade

Totaling up

59,500

￿￿

￿￿￿￿Remark: the general trade quotas in the enterprises in Sichuan province and Xiamen city shall be deducted from the 
aggregate quotas thereof respectively ( Shang Mao Han[ 2005] No. 108).

￿￿

￿￿￿￿Name of Articles: live pig

Unit: head

provinces and cities

Name of the enterprise

Amount

Of which : Hong Kong

Hubei

Wuhan Huamei Feedstuff Co., Ltd

3,525

3,525

Totaling up

3,525

3,525

￿￿

￿￿￿￿Name of Articles: live chicken

Unit: ten thousand

provinces and cities

Name of the enterprise

Amount

Of which : Hong Kong

Guangdong province

Guangdong Lufeng Overseas Chinese Hennery

30

30

Shenzhen city

Wufeng Food(Shenzhen) Co., Ltd

10.62

10.62

Totaling up

40.62

40.62



ACCOUNTING STANDARD FOR BUSINESS ENTERPRISES NO. 10 – ENTERPRISE ANNUITY FUND

Ministry of Finance

Accounting Standard for Business Enterprises No. 10 – Enterprise Annuity Fund

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

To standardize the confirmation and measurement of enterprise annuity fund and the presentation of financial statements, these Standards
are formulated in accordance with the Accounting Standard for Business Enterprises – Basic Standards.

Article 2

The term “enterprise annuity fund” refers to fund raised by an enterprise in the light of the enterprise annuity plan and the supplementary
endowment insurance fund raised by its operating income of investment.

Article 3

The enterprise annuity funds shall be confirmed, measured and presented as independent accounting subjects.

The entrusting party, entrusted party, trustee, account manager, investment manager and other subjects providing services for the
management of enterprise annuity fund shall strictly distinguish the enterprise annuity fund and its fixed assets from other assets
so as to ensure the safety of the enterprise annuity fund.

Chapter II Confirmation and Measurement

Article 4

The enterprise annuity fund shall be confirmed and measured respectively on the basis of assets, liabilities, incomes, expenses and
net assets.

Article 5

The assets formed by payments for the enterprise annuity fund and by the operation of the annuity fund shall include the monetary
funds, settlement accounts receivable of securities, interests receivable, purchases of resale securities, other receivables, bond
investments, fund investments, stock investments and other investments.

Article 6

During the operation of the enterprise annuity fund, the initial acquisition values and subsequent values of the national debt gained
under the State investment scope, the financial debentures and enterprise obligations with the credit rating at the investment grade
or above, convertible obligations, investment insurance products, securities investment funds, stocks and other financial products
with good liquidity shall be measured as the fair value:

(1)

The transaction price paid on the transaction date shall be measured as the fair value when an initially investment obtained. The
transaction fee shall be directly recorded as profit or loss for the current period; and

(2)

When estimating the value of an investment on the estimate day, the original carrying value of the investment shall be adjusted according
to its fair value, and the difference between its fair value and its original carrying value shall be recorded as profit or loss
for the current period.

The determination of the fair value of an investment shall be subject to the Accounting Standard for Business Enterprises No. 22 –
Recognition and Measurement of Financial Instruments.

Article 7

The liabilities formed during the operation of the enterprise annuity fund include the settlement accounts receivable of securities,
beneficiaries’ treatments payable, the management fees payable to the entrustee, the management fees payable to the custodian, the
management fees payable to the investment manager, the taxes payable, the sale accounts of repurchased bonds, the interests payable,
the commissions payable, and other accounts payables.

Article 8

The incomes formed by the operations of the enterprise annuity fund include the interest incomes on deposits, interests, from the
buying of resold bonds, gains on the changes in the fair value, incomes of investment disposal, and other incomes.

Article 9

The incomes shall be confirmed and measured according to the following provisions:

(1)

The interest incomes on deposits shall be determined according to the principal and applicable interest rate;

(2)

The incomes from buying of resold bonds shall, within the time limit of securities loan, be determined according to the purchase price
of the resold bonds, and the interest rate as stipulated in the agreement;

(3)

The gains on the changes in the fair value shall, on the estimate date, be determined according to the difference between the fair
value of the investment on the current date and the original carrying value (namely the fair value of the investment on the previous
estimate date);

(4)

The incomes of investment disposal shall be determined according to the difference between the price obtained from the sale of investment,
and the carrying value of the investment; and

(5)

Other incomes such as risk reserves shall be determined according to the amount actually incurred.

Article 10

The expenses incurred during the operation of the enterprise annuity fund include the transaction expenses, management fees of the
entrusted party the trustee, and the investment manager, the disbursements for the sale of repurchased bonds, and other expenses.

Article 11

The expenses shall be confirmed and measured according to the provisions as follows:

(1)

The transaction expenses, including the commission charge, commissions and other necessary disbursements paid to the commissioned
agents, consultation agents and broker, the amount of which shall be determined in accordance with the actually incurred amount;

(2)

The management fees payable to the entrusted party, trustee, and investment manager shall be determined according to the actual amount
of provisions;

(3)

The disbursements for the sale of repurchased bonds shall, within the time limit for financing, be determined in accordance with the
sales price of the repurchased bonds and the interest rate as stipulated in the agreement;

(4)

Other expenses shall be determined in accordance with the actually incurred amount.

Article 12

The net assets of the enterprise annuity fund refers to the balance of the assets of the enterprise annuity fund minus liabilities.
The date of balance sheet shall carry forward the incomes and expenses of the current period into the net assets.

Different accounts shall be created for the net assets of an enterprise in view of the enterprise itself and the individual employees,
and the distributed operating proceeds shall timely be recorded in each of the aforesaid accounts in accordance with the plan of
the enterprise on annuity fund.

Article 13

The net assets shall be confirmed and measured in accordance with the provisions as follows:

(1)

For the payments collected from the enterprise and employees, the net assets shall be increased according to the amount received;

(2)

For the treatments paid to the beneficiaries, the net assets shall be reduced in accordance with the amount payable;

(3)

As the transfer-in amount of an individual account incurred due to an employee’s transfer into the enterprise, the net assets shall
be increased; and

(4)

As the transfer-out amount of an individual account incurred due to an employee’s transfer out of the enterprise, the net assets shall
be reduced.

Chapter III Presentation

Article 14

The financial statements for the enterprise annuity fund include the balance sheets, net assets change statements and annotations.

Article 15

The balance sheet shall reflect the financial status of the enterprise annuity fund on a specific date. It shall be presented and
sorted by the assets, liabilities and net assets.

Article 16

The items of the assets shall at least present the information as follows:

(1)

The monetary fund;

(2)

The settlement accounts receivable of bonds;

(3)

The receivable interests;

(4)

The purchases of resold securities;

(5)

Other accounts receivable;

(6)

The bond investments;

(7)

The fund investments;

(8)

The stock investments;

(9)

Other investments; and

(10)

Other assets.

Article 17

The items of the liabilities shall at least present the information as follows:

(1)

The settlement accounts payable of bolds;

(2)

The beneficiaries’ treatments payable;

(3)

The management fees payable to the entrustee;

(4)

The management fees payable to the trustee;

(5)

The management fees payable to the investment manager;

(6)

The taxes payable;

(7)

The amounts from the sale of repurchased bonds;

(8)

The payable interests;

(9)

The commissions payable; and

(10)

Other payables.

Article 18

The items of the net assets shall present the net value of the enterprise annuity fund.

Article 19

The net assets change statements shall reflect the increases and reductions of the net assets of the enterprise annuity fund, and
present the information as follows:

(1)

The opening net assets;

(2)

The current amount of increase of the net assets, including the current incomes, payments collected from the enterprise, payments
collected from the employees, transfer-in of individual accounts;

(3)

The current amount of reduction of net assets, including the current expenses, treatments paid to the beneficiaries, transfer-out
of individual account; and

(4)

The closing net assets.

Article 20

The annotations shall disclose the information as follows:

(1)

The main contents and important changes of the annuity fund plan of an enterprise;

(2)

The sorts of investments, amounts, and methods for the confirmation of the fair value;

(3)

The proportion of each kind of investments to the total amount of investments; and

(4)

Any other item that is likely to cause important influence on the investment value.

Appendix: Balance Sheet htm/e04960.htm￿￿¼

￿￿

￿￿

Appendix:

Balance Sheet

￿￿

No. 01 Annual Annuity Fund

￿￿￿￿Entity:                               Year    Month   Date Unit: Yuan






Assets

Line No.

Opening Amount of the year

Closing Amount

Liabilities and Net Assets

Line No.

Opening Amount of the year

Closing Amount

Assets

 

 

 

Liabilities

 

 

 

Monetary funds

 

 

 

Settlement accounts payable of securities

 

 

 

Settlement accounts receivable of securities

 

 

 

Payable treatments to beneficiaries

 

 

 

Interests receivable

 

 

 

Management fees payable to the entrustee

 

 

 

Purchases of resale securities

 

 

  

Management fees payable to the trustee

 

 

 

Other receivables

 

 

 

Management fees payable to the investment manager

 

 

 

Bond investments

 

 

 

Taxes payable

 

 

 

Fund investments

 

 

 

Price of sale of repurchased bonds

 

 

 

Stock investment

 

 

 

Interests payable

 

 

 

Other investments

 

 

 

Commission payable

 

 

 

Other assets

 

 

 

Other payables

 

 

 

 

 

  

 

Total amount of liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets:

 

 

 

 

 

 

 

Net value of annuity funds of the enterprise

 

 

 

 

 

 

 

ACCOUNTING STANDARDS FOR ENTERPRISES NO. 20 – BUSINESS COMBINATIONS

the Ministry of Finance

Accounting Standards for Enterprises No. 20 – Business Combinations

Cai Kuai [2006] No. 3

February 15, 2006

Chapter I General Provisions

Article 1

With a view to regulating the recognition and measurement of business combinations, and disclosure of relevant information, the present
Standards are formulated according to the Accounting Standards for Enterprises￿DBasic Standards.

Article 2

The term “business combinations” refers to a transaction or event bringing together two or more separate enterprises into one reporting
entity.

Business combinations are classified into the business combinations under the same control and the business combinations not under
the same control.

Article 3

The business combinations regarding business operation shall be subject to the present Standard.

Article 4

The present Standards does not apply to the following business combinations:

(1)

Any business combination in which two or more enterprises form a joint venture;

(2)

Any business combination in which two or more separate enterprises are brought together into a reporting entity merely by contract
other than ownership shares.

Chapter II Business Combinations under the Same Control

Article 5

A business combination under the same control is a business combination in which all of the combining enterprises are ultimately controlled
by the same party or the same parties both before and after the business combination and on which the control is not temporary.

In a business combination under the same control, the party which obtains control of other combining enterprise(s) on the combining
date is the combining party, the other combining enterprise(s) is (are) the combined party.

The “combining date” refers to the date on which the combining party actually obtains control on the combined party.

Article 6

The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying
amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by
the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional
paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall
be adjusted.

Article 7

Where, during a business combination under the same control, the accounting policy adopted by the combined party is different from
that adopted by the combining party, the combining party shall, according to accounting policy it adopts, adjust the relevant items
in the financial statements of the combined party, and shall, pursuant to the present Standard, recognize them on the basis of such
adjustment.

Article 8

The direct cost for the business combination of the combining party shall, including the expenses for audit, assessment and legal
services, be recorded into the profits and losses at the current period.

The bonds issued for a business combination or the handling fees, commissions and other expenses for assuming other liabilities shall
be recorded into the amount of initial measurement of the bonds or other debts. The handling fees, commissions and other expenses
for the issuance of equity securities for the business combination shall be credited against the surplus of equity securities; if
the surplus is not sufficient, the retained earnings shall be offset.

Article 9

Where a relationship between a parent company and a subsidiary company is formed due to a business combination, the parent company
shall, on the combining date , prepare a consolidated balance sheet, a profit statement and a cash flow statement.

In the consolidated balance sheet, the assets and liabilities of the combined party shall be measured pursuant to their carrying amount.
If it is necessary to make an adjustment according to the present Standard because the accounting policy adopted by the combined
party is different from that adopted by the combining party, the assets and liabilities of the combined party (parties) shall be
measured on the basis of the post-adjustment carrying amount.

The consolidated profit statement shall include the incomes, expenses and profits of the combining party incurred from the beginning
of the current period to the combining date. The net profits of the combined party which has been realized prior to the combination
shall be reflected through an item separately presented in the profit statement.

The consolidated cash flow statement shall include the cash flow of the parties to the combination from the beginning of the current
period to the combining date.

When preparing consolidated financial statements, the internal dealings of the parties to the combination shall be treated according
to the Accounting Standards for Enterprises No. 33 – Consolidated Financial Statement.

Chapter III Business Combination Not under the Same Control

Article 10

A business combination not under the same control is a business combination in which the combining enterprises are not ultimately
controlled by the same party or the same parties both before and after the business combination.

In a business combination not under the same control, the party which obtains the control on other combining enterprise(s) on the
purchase date is the acquirer, and other combining enterprise(s) is (are) the acquiree.

The “acquisition date” refers to the date on which the acquirer actually obtains the control on the acquiree.

Article 11

An acquirer shall determine the combination costs respectively in light of the following circumstances:

(1)

For a business combination realized by a transaction of exchange, the combination costs shall be the fair values, on the acquisition
date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the
control on the acquiree.

(2)

For a business combination realized by two or more transactions of exchange, the combination costs shall be the summation of the costs
of all separate transactions.

(3)

All relevant direct costs incurred to the acquirer for the business combination shall also be recorded into the cost of business combination.

(4)

Where any future event that is likely to affect the combination costs is stipulated in the combination contract or agreement, if it
is likely to occur and its effects on the combination costs can be measured reliably, the acquirer shall record the said amount into
the combination costs.

Article 12

The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or assumed by an enterprise for a business
combination in light of their fair values, and shall record the balances between them and their carrying amounts into the profits
and losses at the current period.

Article 13

The acquirer shall distribute the combination costs on the acquisition date, and shall, according to Article 14 of the present Standards,
recognize all identifiable assets, liabilities and contingent liabilities it obtains from the acquiree.

(1)

The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets
it obtains from the acquiree as business reputation.

The business reputation upon initial measurement shall be measured on the basis of its costs minus the accumulative impairment provisions.
The impairment of business reputation shall be treated according to the Accounting Standards for Enterprises No. 8 – Asset Impairment.

(2)

The acquirer shall, pursuant to the following provisions, treat the balance between the combination costs and the fair value of the
identifiable net assets it obtains from the acquiree:

(a)It shall reexamine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains
from the acquiree as well as the combination costs;

(b)If, after the reexamination, the combination costs are still less than the fair value of the identifiable net assets it obtains
from the acquiree, it shall record the balance into the profits and losses of the current period.

Article 14

The” fair value of the identifiable net assets of the acquiree” refers to the balance of the fair value of the identifiable assets
acquired from the acquiree in a business combination minus the fair value of the liabilities and contingent liabilities. The identifiable
assets, liabilities and contingent liabilities which meet the following conditions shall be recognized separately:

(1)

As for the assets other than intangible assets acquired from the acquiree in a business combination (not limited to the assets which
have been recognized by the acquiree), if the economic benefits brought by them are likely to flow into the enterprise and their
fair values can be measured reliably, they shall be separately recognized and measured in light of their fair values.

As for any intangible asset acquired in a combination, if its fair value can be measured reliably, it shall be separately recognized
as an intangible asset and shall measured in light of its fair value.

(2)

As for the liabilities other than contingent liabilities acquired from the acquiree, if the performance of the relevant obligations
are likely to result in any out-flow of economic benefits from the enterprise, and their fair values can be measured reliably, they
shall be separately recognized and measured in light of their fair values.

(3)

As for the contingent liabilities of the acquiree obtained in a combination, if their fair values can be measured reliably, they shall
separately recognized as liabilities and shall be measured in light of their fair values. After a contingent liability is measured
initially, it shall be subject to a subsequent measurement according to the higher one of the following amounts:

(a)the amount which shall be recognized according to the Accounting Standards for Enterprises No. 13 – Contingent Events.

(b)the balance of the initially recognized amount minus the accumulative amortization amount which is recognized according to the
principle of the Accounting Standards for Enterprises No. 14 – Revenue.

Article 15

Where a relationship between a parent company and a subsidiary company is formed due to a business combination, the parent company
shall prepare accounting books for future reference, which shall record the fair values of the identifiable assets, liabilities and
contingent liabilities it obtains from the subsidiary company on the acquisition date. When preparing consolidated financial statements,
it shall adjust the financial statements of the subsidiary company on the basis of the fair values of the identifiable assets, liabilities
and contingent liabilities determined on the acquisition date.

Article 16

Where a business combination occurs at the end of the current period, if the fair values of the identifiable assets, liabilities and
contingent liabilities acquired in the combination or the cost of the business combination can only be determined temporarily, the
acquirer shall recognize and measure the business combination on the basis of the temporarily determined values.

Where an adjustment is made to the temporarily determined values within 12 months after the acquisition date, it shall be deemed as
the recognition and measurement on the acquisition date.

Article 17

Where a relationship between a parent company and a subsidiary company is formed due to a business combination, the parent company
shall prepare a combined balance sheet on the acquisition date, which shall present the identifiable assets, liabilities and contingent
liabilities acquired in the combination at their fair values. As for the balance between the combination cost of the parent company
and the fair value of the identifiable net assets it obtains from the subsidiary company, it shall present the result of the treatment
according to the present Standards.

Chapter IV Disclosure

Article 18

Where a business combination occurs at the end of the current period, the combining party shall, in its notes, disclose the following
information related to the business combination under the same control:

(1)

the basic information on the combining enterprises;

(2)

the grounds for the judgment of the business combination under the same control;

(3)

the basis for the determination of the combining date;

(4)

Where the consideration for the combination is the cash paid, the non-cash assets transferred and the liabilities assumed, it shall
disclose the carrying amount of the consideration on the combining date. Where equity securities are issued as consideration for
the combination, it shall disclose the number of the equity securities issued during the combination, the pricing principle as well
as the proportion of the shares with voting power exchanged by the parties to the combination;

(5)

The carrying amounts of the assets and liabilities of the combined party on the balance sheet date of the prior accounting period
as well as on the combining date; the information on the revenue, net profits and cash flow of the combined party from the beginning
of the current period, in which the combination occurs, to the combining date;

(6)

the information on the contingent liabilities of the combined party to be assumed according to the stipulations of the combination
contract or agreement;

(7)

an explanation on the adjustment made because the accounting policy adopted by the combined party is different from that adopted by
the combining party; and

(8)

the carrying amount or disposal price of the combined party’s assets or liabilities which have been disposed of or are to be disposed
of.

Article 19

Where a business combination occurs at the end of the current period, the acquirer shall, in its notes, disclose the following information
on the business combination not under the same control:

(1)

the basic information on the combining enterprises;

(2)

the basis for the determination of the acquisition date;

(3)

the composition, carrying amount and fair value of the combination costs, as well as the method for the determination of the fair
value thereof;

(4)

the carrying amounts and fair values of the identifiable assets and liabilities of the acquiree on the balance sheet date of the previous
accounting period as well as on the acquisition date

(5)

the information on the acquiree’s contingent liabilities to be assumed according to the stipulations of the combination contract or
agreement;

(6)

the information on the revenues, net profits and cash flow of the acquiree from the acquisition date to the end of the reporting period

(7)

the amount of business reputation and the determination method adopted;

(8)

the amount which is recorded into the profits and losses of the current period because the combination cost is smaller than the fair
value of the identifiable net assets acquired from the acquiree in the business combination;

(9)

the carrying amount or disposal price of the acquiree’s assets or liabilities which have been disposed of or are to be disposed of.

 
the Ministry of Finance
2006-02-15

 



1...818283Page 83 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

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