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CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON CARRYING THROUGH THE DECISION OF THE STATE COUNCIL ON REFORM OF THE EXISTING EXPORT TAX REFUND MECHANISM

State Administration of Taxation

Circular of the State Administration of Taxation on Carrying through the Decision of the State Council on Reform of the Existing Export
Tax Refund Mechanism

GuoShuiFa [2003] No. 137

November 13th, 2003

The administrations of state taxation of all provinces, autonomous regions, municipalities directly under the Central Government,
and cities directly under State planning, as well as all the entities under the State Administration of Taxation:

With a view to seriously carrying through the Decision of the State Council on Reform of the Existing Export Tax Refund Mechanism
(GuoFa [2003] No. 24, hereinafter referred to as the “Decision”), actualizing the reform of export tax refund mechanism, and further
advancing the work of export tax refund, as well as promoting the sustainable and healthy development of foreign trade and economy,
we hereby make the following notice:

I.

Earnestly improving the understanding on the great significance of reforming the export tax refund mechanism

Since1985, the export tax refund policy of China has played an important role in supporting foreign trade and promoting the sustainable,
stable and healthy development of national economy. But there are still some contradictions and problems to be solved urgently in
the active export tax refund mechanism, to which the Central Committee of the Communist Party of China and the State Council have
attached high importance, and they have made the great decision on reforming the existing export tax refund mechanism after careful
investigation and widely soliciting the opinions of all parties concerned. The present reform on the export tax refund mechanism
concerns not only the adjustment of interest relations between the Central Government and the local governments, but also concerns
the reform of the foreign trade mechanism, the overall situation of foreign trade & export and the development of national economy
as well. As the major departments for carrying through the plan for reform of the export tax refund mechanism, the administrations
of state taxation at all levels shall earnestly study and profoundly understand the spirit of the Decision, be fully aware of the
great significance of the reform on export tax refund mechanism, and consolidate the thoughts and action into the spirit of the “Decision”
from the height of deeply putting into effect the spirits of the Sixteenth Congress of the Communist Party of China and completely
putting the important thought of “Three Represents” into practice, emphasizing the political awareness, paying attention to the overall
situation, and fully understanding the policies, as well as grasping the main points, so as to ensure that the reform of the export
tax refund mechanism goes on smoothly.

II.

Concentrating energy, firmly putting into effect and completely carrying through the spirits of the “Decision”

The period between the end of 2003 and the beginning of 2004 is the key phase for the reform of the export tax refund mechanism. The
administrations of state taxation at all levels shall, in light of the uniform deployment of the State Administration of Taxation,
and according to the particular circumstances of their own regions, make investigation and set down specific suggestions for putting
the reform into effect. The problems and effects that may be brought about by the reform shall be taken into full consideration,
and the actualization of the reform shall be followed up closely so as to have the new problems occurring in the reform found out,
studied and solved in time; the exchange of information between the upper level and the lower level shall be strengthened, and the
new conflicts appearing in the reform shall be dissolved at any time through continuously improving relevant policies and measures;
various measures shall be taken for making publicity and interpretation to the export enterprises as soon as possible, and to combine
the strict law enforcement with the optimization of tax refund services, so as to actually put the various reform measures into effect.

At the present time, the export tax refund work is confronted with new situations, the tasks thereof are heavy, and the management
is more difficult. The State Administration of Taxation, jointly with other relevant departments, is now urgently investigating and
formulating specific implementation measures for the reform, which shall, together with the promulgation of corresponding supporting
measures, be carried through earnestly by the administrations of state taxation at all levels. The principle of being responsible
not only for the State but also for the enterprises, and not only for the Central Government but also for the local governments shall
be followed in the administration of export tax refund, so as to have the work for the administration of export tax refund well done
in the process of alternation from the old mechanism to the new one.

III.

Further improving the efficiency of export tax refund work and speeding up the progress of export tax refund

1.

The administrations of state taxation at all levels shall, in light of the spirit of the recent meeting of the whole country on the
work of import and export taxation, earnestly implement the declaration, auditing, and examination and approval of the export tax
refund in the last two months of the year 2003, so as to further improve the efficiency of the work of export tax refund. The primary
responsible persons of the administrations of state taxation at all levels shall attach sufficient importance to the work, the leaders
of the administrations responsible for export tax refund shall assume leadership in person, and formulate specific work schemes,
so as to ensure that the work is actually put into effect.

2.

The administrations of state taxation at all levels shall supervise and urge the export enterprises to collect tax refund documents
as soon as possible, handle the determination of the special VAT invoices in time on the monthly basis, and declare for the tax refund
in time. The State Administration of Taxation hereby reaffirms that any declaration of the export enterprises may not be refused
by the local taxation authorities for lack of tax refund quotas. In the meantime, the local administrations shall strengthen cooperation
with the competent departments in charge of foreign trade and economy, requiring them to solve in time the problems encountered in
the collection of tax refund documents by the export enterprises, so as to help the export enterprises speed up the collection of
documents.

3.

The local taxation authorities shall make timely analysis on the declaration of tax refund by export enterprises, and in case the
export enterprises are unable to collect all the tax refund such documents as the documents of customs declaration for export, documents
for collecting, verifying and writing off export proceeds in foreign exchange, which caused the lagging behind of the declaration
of tax refund, the local tax authorities shall report to the local governments in time and explain the reason, so as to gain the
understanding and support of the governments. And the relevant matters concerned shall also be reported to the State Administration
of Taxation in time.

IV.

Strengthening administration on export tax refund, taking strict precautions against export tax refund fraud

Firstly, we shall keep alert on preventing and combating tax fraud at the time. The administrations of state taxation at all levels
shall put into effect the system of work post responsibility and the system of fault prosecution in law enforcement, and strengthen
supervision over law enforcement on export tax refund. Secondly, cooperation with such local departments as the finance, business
affairs, customs, and foreign exchange administration, etc. shall be strengthened so as to positively push the construction of Port
Electronic Law Enforcement System, bring into full play the advantages of interlink of the data of electronic port among such departments
as the customs, taxation, foreign exchange administrations, etc., and further improve the level of administration on electronic examination
and verification of export tax refund and the accuracy of law enforcement. Thirdly, we shall push forward the work of export tax
fund for the examination and verification on electronic information by using the special VAT invoices, change our minds, and establish
a new system for the administration on export tax refund as soon as possible, which shall be based on the information administration,
with the examination and verification on the special VAT invoices as the core, so as to bring into full play the role of the golden
taxation project for the prevention of tax fraud.



 
State Administration of Taxation
2003-11-13

 






MEASURES FOR THE ADMINISTRATION OF THE LANDING OF OVERSEAS SATELLITE TELEVISION CHANNELS

State Administration of Radio, Film and Television

Order of the State Administration of Radio, Film and Television

No.22

The Measures for the Administration of the Landing of Overseas Satellite Television Channels, which were approved by the executive
meeting of this Administration on November 14, 2003, are hereby issued and shall go into effect on January 10, 2004.

Xu Guangchun, the Director of the State Administration of Radio, Film and Television

December 4, 2003

Measures for the Administration of the Landing of Overseas Satellite Television Channels

Article 1

The present Measures are formulated with a view of strengthening the administration of the landing of overseas satellite television
channels.

Article 2

The present Measures shall be applicable to the administration of the landing of overseas satellite television channels within the
People’s Republic of China through satellite transmission.

Article 3

The State Administration of Radio, Film and Television (hereinafter referred to as SARFT) shall be in charge of the centralized administration
of the landing of overseas television channels, and implement the system of examination and approval to the landing of foreign satellite
television channels.

Article 4

Overseas satellite television channels may, upon approval of SARFT, land within the prescribed range, such as foreign-related hotels
at the three-star level or above, and the foreign-related flats especially provided to foreigners as office or residence, and other
specific ranges.

Article 5

an overseas satellite television channel to be landed in China shall satisfy the requirements as follows:

1)

The contents played shall not infringe the provisions of the laws, regulations and rules of China;

2)

The applicant is a legal television media in its home country (region);

3)

The applicant shall have the comprehensive strength to conduct mutually beneficial cooperation with the radio and television stations
of China, and make an commitment and actively assist in the landing abroad of China’s radio and television programs;

4)

The channel applying for landing and the institutions directly related thereto are friendly to China, and have established long and
friendly exchange and cooperation relationship with China in the field of radio and television;

5)

The applicant shall agree that the programs of its channel should be transmitted by the institution designated by SARFT (hereinafter
referred to as designated institution) in a unified way, and make an commitment not to land those programs within China through any
other means;

6)

The applicant shall agree to entrust the designated institution to act as its agent to handle all the matters related to the landing
within China.

Article 6

SARFT will make the examination and approval of the applications for landing of overseas satellite television channels once a year,
between July and September.

Article 7

In principle, only one channel for each foreign satellite television institution may be permitted to land within the specific range.
No news-oriented overseas satellite television channel shall be approved to land within China as a general principle. And no satellite
television channel that is launched or jointly operated abroad by any domestic radio and television institution or any other relevant
departments, organizations, enterprises or individuals shall be approved to land within China. For any special circumstances, the
application shall be submitted to SARFT for special approval.

Article 8

To apply for the landing of a foreign satellite television channel, the applicant must first submit the application to the designated
institution, fill in the Memorandum of Satellite Television Channels according to the requirements, and submit the certificates prescribed
in Articles 5 and 7 herein and the reception devices such as decoders, etc. If the application documents are incomplete, the applicant
shall supplement the lacking part within 14 days from the day of receiving the relevant notice, and shall be deemed as waiving the
application automatically if failing to make supplementation within the said time limit. The designated institution shall, after
receiving all of the application documents, submit the application to SARFT for the landing within China of the overseas satellite
television channel for which it acts as an agent.

Article 9

In the case that SARFT approve the designated institution to negotiate with the overseas satellite television channel on the agency
of the landing of its channel, if that overseas satellite television channel applies for landing for the first time, it shall negotiate
on the relevant cooperation matters with the designated institution within 60 days; if it obtained the landing qualification in the
last year, it shall make the negotiation within 45 days. If it fails to make the negotiation within the said deadline, it shall be
deemed as waiving the application automatically.

SARFT shall grant approval for the landing of the foreign satellite television channel, if it satisfies the provisions in Articles
5 and 7 hereof.

Article 10

An overseas satellite television channel approved to land must comply with the relevant provisions of China on the administration
of overseas satellite television.

Article 11

An overseas satellite television channel approved to land shall adjust the coverage of the original satellite signals in accordance
with the requirements of the designated institution; perform the agreement signed with the designated institution; and may not carry
out within China any promotion activities for the television channel, the brand thereof, and the relevant reception devices without
permission.

Article 12

It is not permitted for an overseas satellite television channel approved to land to play any program containing any of the following
contents:

1)

Those imperiling the unification of the state and the integrity of the sovereignty and territory of China;

2)

Those imperiling the state security of China, impairing the honor and interest of China, and divulging the state secrets of China;

3)

Those stirring up the splitting of nationalities, hatred and discrimination among the nationalities, undermining the solidarity of
the nationalities, and infringing upon the customs and habits of the nationalities of China;

4)

Those endangering the social stability of China, advocating obscenity, violence, superstition, evil religions, and instigating commitment
of crimes;

5)

Those defaming or insulting others and infringing upon the legal rights and interests of others;

6)

Those endangering the public morality of China and defaming the excellent cultural traditions of China; and

7)

Other contents that infringe the laws, regulations, and rules of China.

Article 13

Any of the following alterations to a foreign satellite television channel approved to land must be notified to and negotiate with
the designated institution beforehand, and the designated institution shall report to SARTF:

1)

Alterations of the shareholding structure, management power, investors, and principal managers of the channel and the institutions
directly related thereto;

2)

Alterations of the important matters specified in the Memorandum of Satellite Television Channels, such as the name of the channel,
the type of the channel, the constitution of the program, the broadcasting languages, and the subpost_titles, etc.;

3)

Alterations of relevant technical parameters, such as whether the broadcasting signals are coded or not, the transmitting satellites
and the coverage thereof, etc.

4)

Alterations of any of the contents involved in Articles 5 and 7 hereof.

If SARFT deems that a channel approved to land no longer satisfies the requirements provided for herein due to any of the alterations
mentioned above, it may deal with the channel correspondingly or even disqualify that channel from landing.

Article 14

The administrative departments of radio and television at various levels shall administer the reception of relevant overseas satellite
television channels in accordance with the Provisions on the Administration of Earth Reception Facilities for Satellite Television
and Radio Programs (Order 129 of the State Council) and the relevant provisions.

Article 15

The designated institution shall assist the administrative department of radio and television to supervise the relevant acts and the
contents played by the foreign satellite television channel for which it acts as an agent by taking necessary prevention and treatment
measures, cooperate with SARFT in the relevant handling, and report in good time any problems that have been identified.

In the case that an overseas satellite television channel approved to land plays any contents that infringe Article 12 hereof, the
designated institution shall immediately stop the transmission of the rule-breaking contents.

Article 16

In the case that an overseas satellite television channel approved to land infringes any provisions hereof, if the offence is minor,
SARFT shall give it a warning and demand it to state the situation and make correction; if the offence is serious, SARFT shall suspend
the transmission of the specific contents, and suspend or revoke the landing qualification of the relevant channel.

Article 17

In the case that an overseas satellite television channel approved to land has caused any negative effect, it shall, apart from accepting
the corresponding treatments, eliminate such negative effect within the same dissemination range in accordance with the requirements
of SARFT.

Article 18

The present Measures shall be referred to with respect to the administration of the overseas satellite television channels approved
by SARFT to land within the specified areas within China.

Article 19

The present Measures shall go into effect on January 10, 2004. The Interim Measures for the Administration of the Examination and
Approval of the Landing of Foreign Satellite Television Channels (Order No.8 of SARFT) shall be abolished at the same time.



 
State Administration of Radio, Film and Television
2003-12-04

 






COMMERCIAL BANKS LAW

Law of the People’s Republic of China on Commercial Banks

(Adopted at the 13th Meeting of the Standing Committee of the Eighth National People’s Congress on May 10, 1995,
promulgated by Order No. 47 of the President of the People’s Republic of China on May 10, 1995, and amended in accordance with the
Decision of the Standing Committee of the National People’s Congress on Amending the Law of the People’s Republic of China on Commercial
Banks adopted at the Sixth Meeting of the Standing Committee of the Tenth National People’s Congress on December 27, 2003) 

Contents 

Chapter I     General Provisions 

Chapter II    Establishment and Organizational Structure of Commercial Banks 

Chapter III   Protection of depositors 

Chapter IV    Basic Rules for Loans and Other Business Operations 

Chapter V     Financial Affairs and Accounting 

Chapter VI    Supervision and Control 

Chapter VII   Assumption of Control and Termination 

Chapter VIII  Legal Responsibility 

Chapter IX    Supplementary Provisions 

Chapter I 

General Provisions 

Article 1 This Law is enacted in order to protect the lawful rights and interests of commercial banks, depositors and other clients,
to standardize the behavior of commercial banks, to raise the quality of credit assets, to strengthen supervision and control, to
ensure the stable and sound operation of commercial banks, to maintain financial order and to promote the development of the socialist
market economy. 

Article 2 For the purposes of this Law, the term “commercial banks” means enterprise legal persons that are established in conformity
with this Law and the Company Law of the People’s Republic of China and that take in deposits from the general public, grant loans,
handle settlements, etc. 

Article 3 Commercial banks may engage in some or all of the following business operations: 

(1) taking in deposits from the general public; 

(2) granting short-term, medium-term and long-term loans; 

(3) handling domestic and foreign settlements; 

(4) handling the acceptance and discounting of negotiable instruments; 

(5) issuing financial bonds; 

(6) acting as an agent for the issue, honoring and underwriting of government bonds; 

(7) buying and selling government bonds and financial bonds; 

(8) engaging in interbank lending; 

(9) buying and selling foreign exchange and acting as an agent for the purchase and sale of foreign exchange; 

(10) engaging in the business of bank cards; 

(11) providing letter of credit services and guaranty; 

(12) acting as an agent for the receipt and payment of money and acting as an insurance agent; 

(13) providing safe deposit box services; and 

(14) other business operations as approved by the banking regulatory authority under the State Council. 

The scope of business shall be specified in the articles of association of the commercial bank, and submitted to the banking regulatory
authority under the State Council for approval. 

Upon approval of the People’s Bank of China, commercial banks may engage in the business of the settlement and sale of foreign exchange. 
     

Article 4 The business operations of commercial banks shall be governed by the principles of safety, liquidity and efficiency. 
Commercial banks shall make their own decisions regarding their business operations, take responsibility for their own risks, assume
sole responsibility for their profits and losses and exercise self-restriction. 

Commercial banks shall, pursuant to law, conduct business operations without interference from any unit or individual. 

Commercial banks shall independently assume civil liability with their entire legal person property. 

Article 5 Commercial banks shall adhere to the principles of equality, voluntariness, fairness and good faith in business dealings
with their clients. 

Article 6 Commercial banks shall safeguard the lawful rights and interests of depositors against infringement by any unit or individual. 

Article 7 In credit transactions, commercial banks shall strictly examine the credit-worthiness of a borrower and implement the system
of guaranty in order to ensure that the loan is recovered on schedule. 

Commercial banks shall be protected by law when they recover the principal of loans that have become due and the interest thereon
from the borrowers in accordance with legal provisions. 

Article 8 In business transactions, commercial banks shall abide by the relevant provisions of laws and administrative rules and
regulations and may not harm the interests of the State or of the public. 

Article 9 In business transactions, commercial banks shall abide by the principle of fair competition and may not engage in illegitimate
competition.  

Article 10 Commercial banks shall, in accordance with law, accept supervision and control of the banking regulatory authority under
the State Council, but where laws provide that their relevant business operations shall be subject to supervision and control of
other regulatory departments or bodies, such provisions shall prevail. 

Chapter II 

Establishment and Organizational Structure of Commercial Banks 

Article 11 The establishment of commercial banks shall be subject to examination and approval by the banking regulatory authority
under the State Council. 

No unit or individual may engage in commercial banking business such as taking in deposits from the general public, and no unit may
use the word “bank” in its name, without approval of the banking regulatory authority under the State Council. 

Article 12 A commercial bank shall meet the following requirements for establishment: 

(1) having articles of association that conform to this Law and the Company Law of the People’s Republic of China; 

(2) having the minimum amount of registered capital as specified in this Law; 

(3) having directors and other senior administrators with the expertise and experience in work commensurate with the positions they
are holding; 

(4) having a sound organizational structure and management system; and 

(5) having the required place of business, security and precautionary measures and other facilities relevant to it business operations. 

The establishment of a commercial bank shall, in addition, meet other requirements of prudence. 

Article 13 The minimum amount of registered capital required for the establishment of a national commercial bank shall be RMB one
billion yuan. The minimum amount of registered capital required for the establishment of an urban commercial bank shall be 100 million
yuan, and the minimum amount of registered capital required for the establishment of a rural commercial bank shall be 50 million
yuan. Registered capital shall be paid-up capital. 

The banking regulatory authority under the State Council may readjust the minimum amount of registered capital on the basis of the
requirements of prudent supervision and control, however, the readjusted amount may not be lower than the amount specified in the
preceding paragraph.     

Article 14 To establish a commercial bank, the applicant shall provide the following documents and information to the banking regulatory
authority under the State Council: 

(1) a written application, in which the name, location, registered capital, scope of business, etc. of the proposed commercial bank
are clearly stated ; 

(2) a feasibility study; and 

(3) other documents and information to be provided as specified by the banking regulatory authority under the State Council. 

Article 15 If an application for establishing a commercial bank is found, after examination, to be in conformity with the provisions
of Article 14 of this Law, the applicant shall complete an official application form and provide the following documents and information: 

(1) a draft of the articles of association; 

(2) the qualification certificates of the director or other senior administrator who is to hold office; 

(3) an investment verification certificate issued by a statutory investment verification organization; 

(4) a list of the names, capital contributions and shares of shareholders; 

(5) credit-worthiness certificates and relevant information concerning the shareholders that hold five percent or more of the registered
capital each; 

(6) business policies and plans; 

(7) information concerning the place of business, security and precautionary measures and other facilities relevant to business operations;
and 

(8) other documents and information as specified by the banking regulatory authority under the State Council. 

Article 16 A commercial bank the establishment of which has been approved shall be issued a permit for operation by the banking regulatory
authority under the State Council and, on the strength of such permit, register with the administrative department of industry and
commerce and obtain a business license from it. 

Article 17 The organizational form and structure of commercial banks shall be governed by the Company Law of the People’s Republic
of China. 

Commercial banks, established prior to the implementation of this Law, that do not entirely conform to the provisions of the Company
Law of the People’s Republic of China in organizational form and structure   may continue to be governed by previous regulations.
The date on which the preceding paragraph shall apply to such commercial banks shall be specified by the State Council. 

Article 18 A board of supervisors shall be established in a wholly State-owned commercial bank. Measures for forming the board of
supervisors shall be formulated by the State Council. 

The board of supervisors shall exercise supervision over the quality of credit assets of the wholly State-owned commercial bank,
its assets-liabilities ratios and maintenance of and increase in the value of State-owned assets, and over the senior administrators
of the commercial bank to see whether they violate any laws, administrative rules and regulations or the articles of association
or commit any acts which harm the interests of the bank. 

Article 19 Commercial banks may establish branches within and outside the People’s Republic of China, in light of their needs in
business operations. The establishment of such a branch shall be subject to examination and approval by the banking regulatory authority
under the State Council. The establishment of branches within the People’s Republic of China shall not be restricted by the administrative
division of regions. 

When a commercial bank establishes a branch within the People’s Republic of China, it shall allocate operating funds in keeping with
the scale of its business, in accordance with regulations. The sum total of operating funds allocated to all the branches may not
exceed 60 percent of the total amount of the capital of the head office. 

Article 20 To establish a branch of a commercial bank, the applicant shall submit the following documents and information to the
banking regulatory authority under the State Council: 

(1) a written application, in which the name, amount of operating funds and scope of business of the proposed branch, the location
of the head office and the branch, etc. are clearly stated; 

(2) the applicant’s financial and accounting reports of the preceding two years; 

(3) the qualification certificates of the senior administrators who are to hold office; 

(4) business policies and plans; 

(5) information concerning the place of business, security and precautionary measures and other facilities relevant to business operations;
and 

(6) other documents and information as specified by the banking regulatory authority under the State Council. 

Article 21 A commercial bank’s branch the establishment of which has been approved shall be issued a permit for operation by the
banking regulatory authority under the State Council and, on the strength of such permit, register with the administrative department
of industry and commerce and obtain a business license from it. 

Article 22 With respect to their branches, commercial banks shall apply across the board a financial system of centralized accounting
and centralized movement of funds, and of management at different levels. 

Branches of commercial banks shall not have the status of a legal person and shall lawfully conduct their business operations within
the scope authorized by their head offices, and their civil liability shall be assumed by their head offices. 

Article 23 The banking regulatory authority under the State Council shall announce its approval of the establishment of commercial
banks and their branches. 

If a commercial bank or branch thereof fails, without good reason, to commence business more than six months after the date of obtaining
its business license or, after commencing business, suspends business without authorization for six months or more in succession,
the banking regulatory authority under the State Council shall revoke its permit for operation and make it known to the public. 

Article 24 A commercial bank shall obtain the approval of the banking regulatory authority under the State Council for making any
of the following changes: 

(1) change of name; 

(2) change in the registered capital; 

(3) change of location of the head office or a branch; 

(4) adjustment of the scope of business; 

(5) change of shareholders that hold five percent or more of the total amount of capital or shares each; 

(6) revision of the articles of association; or 

(7) changes in other matters as are governed by the regulations of the banking regulatory authority under the State Council. 

When a director or a senior administrator is to be replaced, the qualifications of the substitute for the position shall be submitted
to the banking regulatory authority under the State Council for examination.              
 

Article 25 Division and merger of commercial banks shall be governed by the provisions of the Company Law of the People’s Republic
of China. 

Division and merger of commercial banks shall be subject to examination and approval by the banking regulatory authority under the
State Council. 

Article 26 Commercial banks shall use their permits for operation  in accordance with the provisions of laws and administrative
rules and regulations. Forging, alteration, assigning, leasing out or lending of such permits is prohibited. 

Article 27 None of the following persons may serve as a director or a senior administrator of a commercial bank: 

(1) persons who have been sentenced to criminal punishment for the crime of embezzlement, bribery, seizure or misappropriation of
property  or disruption of  the public and economic order, or persons who have been deprived of their political rights
for committing a crime; 

(2) directors of companies or enterprises, or factory directors or managers who have been  subjected to bankruptcy liquidation
due to mismanagement, and who bear personal liability for the bankruptcy; 

(3)  legal representatives of companies or enterprises that had their business licenses revoked for breaking law, who bear personal
liability therefor; and 

(4) persons with comparatively large amounts of overdue personal debts . 

Article 28 Purchase by any unit or individual of five percent or more of the total amount of the shares of a commercial bank shall
be subject to prior approval by the People’s Bank of China. 

 

Chapter III 

Protection of Depositors 

Article 29 In handling savings deposits for individuals, commercial banks shall adhere to the principles of voluntary deposit, unimpeded
withdrawal, interest payment on deposits and confidentiality for the depositors. 

Commercial banks shall have the right to refuse to answer the inquiries into and to refuse to freeze, deduct or transfer an individual’s
savings deposits– as made or requested by any unit or individual, except where otherwise provided for by law. 

Article 30 Commercial banks shall have the right to refuse to answer the inquiries into a unit’s deposits by any other unit or individual,
except where otherwise provided for by laws and administrative rules and regulations, and shall have the right to refuse to freeze,
deduct  or transfer  a unit’s deposits as  requested by any other unit or individual, except where otherwise provided
for by law. 

Article 31 Commercial banks shall determine the interest rates on deposits in accordance with the upper and lower limits interest
rates on deposits specified by the People’s Bank of China and make them known  to the public. 

Article 32 Commercial banks shall place a deposit reserve with the People’s Bank of China and maintain sufficient provision for payment,
in accordance with the regulations of the People’s Bank of China. 

Article 33 Commercial banks shall guaranty, and may not delay or refuse, payment of the principal of deposits and the interest thereon. 

Chapter IV 

Basic Rules for Loans and Other Business Operations 

Article 34 Commercial banks shall conduct their business of lending in accordance with the needs of the national economic and social
development and under the guidance of the industrial policies of the State. 

Article 35 Before granting a loan, commercial banks shall strictly examine the borrower’s purpose for the loan, ability to repay
the loan, method of repayment, etc. 

When granting a loan, commercial banks shall implement the system of separating the examination of a loan from the actual provision
of the loan and the system of examination and approval at different levels. 

Article 36 To obtain a loan from a commercial bank, a borrower shall provide a guaranty. The commercial bank shall strictly examine
the surety’s ability to repay the loan, the ownership and value of the mortgage or the collateral and the feasibility of realizing
the right of mortgage or  right of pledge. 

If, after examination and appraisal by a commercial bank, a borrower’s credit is found to be good, and the borrower is deemed truly
able to repay the loan, the borrower need not provide a guaranty . 

Article 37 For granting a loan, the commercial bank shall conclude a written contract with the borrower. The contract shall stipulate
the type, purpose, amount and interest rate of the loan, the time limit for repayment, the method of repayment, liability for breach
of contract and other matters deemed necessary by the parties. 

Article 38 Commercial banks shall determine loan interest rate in accordance with the upper and lower limits for loan interest rates
prescribed by the People’s Bank of China. 

Article 39 When granting a loan, commercial banks shall abide by the following provisions on the control of assets-liabilities ratios: 

(1) the capital adequacy ratio may not be lower than 8 percent; 

(2) the ratio of the outstanding of loans to the outstanding of deposits may not exceed 75 percent; 

(3) the ratio of the balance of floating assets to the balance of floating liabilities may not be lower than 25 percent; 

(4) the ratio of the outstanding of loans granted to the same borrower to the balance of the capital of the commercial bank may not
exceed 10 percent; and 

(5) other provisions of the banking regulatory authority under the State Council concerning the control of assets-liabilities ratios. 

If, after the implementation of this Law, the assets-liabilities ratios of a commercial bank established prior to the implementation
of this Law are found not in conformity with the provisions of the preceding paragraph, the bank shall make it conform to the provisions
of the preceding paragraph within a certain time limit. The specific measures therefor shall be formulated by the State Council. 

Article 40 Commercial banks may not grant fiduciary loans to their connections. The conditions for granting secured loans to their
connections may not be more preferential than those for granting  the same type of loans to other borrowers. 

For the purposes of the preceding paragraph, the term “connections” means: 

(1) directors, supervisors, administrators and loan officers of the commercial bank and close relatives of such persons; 

(2) companies, enterprises and other economic organizations in which the persons mentioned in the preceding paragraph have invested
or in which they hold senior administrative positions. 

Article 41 No unit or individual may forcibly demand a commercial bank to grant a loan or to provide a guaranty. Commercial banks
shall have the right to refuse to grant a loan or to provide a guaranty forcibly demanded by any unit or individual. 

Article 42 Borrowers shall repay the loan principal and the interest thereon on schedule. 

If a borrower fails to repay a secured loan upon maturity, the commercial bank shall lawfully have the right to require the surety
to repay the loan principal and the interest thereon or the right to preferential compensation in respect of the collateral. Immovable
property or stock rights obtained by a commercial bank through the exercise of the right of mortgage or the right of pledge shall
be disposed of by it within two years from the date it obtains the same. 

If a borrower fails to repay a fiduciary loan upon maturity, he shall bear liability in accordance with the provisions of the contract. 

Article 43 No commercial banks may, within the territory of the People’s Republic of China, engage in trust investment or securities
business, or invest in immovable property which is not for private use, in non-banking financial institutions or in enterprises,
except where otherwise provided for in the regulations of the State. 

Article 44 When handling matters of settlement such as acceptance or remittance of negotiable instruments or entrusted receipt of
payment, etc., commercial banks shall encash the instruments  and enter receipts and expenditures in their accounts within the
specified time limits, and may not deliberately delay or withhold payment of bills and negotiable instruments or reject negotiable
instruments in violation of regulations. Regulations relating to the time limits for encashing of instruments  and  entering
of receipts and expenditures in the accounts shall be  announced. 

Article 45  To issue financial bonds or to raise loans from outside the People’s Republic of China, commercial banks shall first
submit applications  for approval in accordance with the provisions of laws and administrative rules and regulations. 

Article 46 Inter-bank lending shall be carried out in adherence to the regulations of the People’s Bank of China. It is forbidden
to use such loans for granting fixed assets loans or making investment. 

Funds lent under such loans shall be limited to idle funds that remain after a sufficient reserve against deposit has been retained,
sufficient provision for payment has been made and matured loans from the People’s Bank of China have been repaid. Funds borrowed
under such loans shall be used to make up deficiencies in the settlement of negotiable instruments and in the funds available for
covering remittance differences with correspondent banks and to meet the temporary need for working capital. 

Article 47 Commercial banks may not raise or lower interest rates in violation of regulations or use other improper means to take
in deposits or grant loans. 

Article 48 Enterprises and institutions may select for themselves the place of business of a commercial bank where to open a basic
account for the day-to-day settlement of account transfers and for cash receipts and payments. They may not open more than one basic
account. 

No unit or individual may open an account in the name of an individual to deposit the funds of a unit therein. 

Article 49 The business hours of commercial banks shall be such as to be convenient to clients and shall be announced. Commercial
banks shall carry out business during announced business hours; they may not suspend business or shorten their business hours without
authorization. 

Article 50 In carrying out business operations and providing services, commercial banks shall charge commissions in accordance with
relevant regulations. The items and rates for such commissions shall be specified by the banking regulatory authority under the State
Council and the People’s Bank of China based on their division of responsibilities, in conjunction with the department of pricing
under the State Council respectively.      

Article 51 Commercial banks shall preserve their financial and accounting statements, business contracts and other materials in accordance
with relevant regulations of the State. 

Article 52 Employees of commercial banks shall abide by laws and administrative rules and regulations and all other regulations for
the control of business operations; they may not: 

(1) use their positions to demand, receive or accept bribes, or receive or accept rebates or commissions of any description in violation
of State regulations; 

(2) use their positions to embezzle, misappropriate or seize money belonging to the bank or any client; 

(3) practise favoritism towards relatives or friends in granting loans or providing guaranty in violation of regulations; 

(4) hold a concurrent position in another economic organization; or 

(5) commit other acts in violation of laws, administrative rules and regulations or other regulations for the control of business
operations. 

Article 53 No employees of commercial banks may disclose State or business secrets that they come to know during their employment. 

Chapter V 

Financial Affairs and Accounting 

Article 54 Commercial banks shall establish and perfect their own financial and accounting systems in accordance with laws, the uniform
accounting system of the State and the relevant regulations of the banking regulatory authority under the State Council.    
 

Article 55 Commercial banks shall, in accordance with relevant State regulations, truthfully record and give a complete account of
their business activities and financial position, draw up annual financial and accounting reports and, without delay, submit them
to the banking regulatory authority under the State Council, the People’s Bank of China and the department of finance under the State
Council. Commercial banks may not establish any account books in addition to statutory account books.      

Article 56 Within three months after the end of every fiscal year, commercial banks shall announce their business results and audit
reports for that year in accordance with the regulations of the banking regulatory authority under the State Council. 

Article 57 Commercial banks shall, in accordance with relevant State regulations make allocations to a doubtful account reserve,
in order to set off doubtful accounts. 

Article 58 The fiscal year of commercial banks shall commence on January 1 and end on December 31 of the Gregorian calendar. 

Chapter VI 

Supervision and Control 

Article 59 Commercial banks shall, in accordance with relevant regulations, formulate their own operating rules, and establish and
perfect their systems for risk management and internal control.     

Article 60 Commercial banks shall establish and perfect their own systems for examination and inspection of deposits, loans, settlements,
doubtful accounts, etc. 

Commercial banks shall conduct routine examination, inspection and supervision with respect to their branches. 

Article 61 Commercial banks shall, in accordance with relevant regulations, submit to the banking regulatory authority under the
State Council and the People’s Bank of China their balance sheets, profit accounts and other financial, accounting and statistical
statements and information. 

Article 62 The banking regulatory authority under the State Council shall have the right at any time to carry out inspection of and
exercise supervision over the deposits, loans, settlements, doubtful accounts, etc. of commercial banks, in accordance with the provisions
of Chapters III, IV and V of this Law. When carrying out inspection and supervision, the inspectors and supervisors shall produce
their lawful identification papers. Commercial banks shall provide financial and accounting information, business contracts and other
information concerning operation and management in compliance with the requirements of the banking regulatory authority under the
State Council. 

The People’s Bank of China shall have the power to inspect and supervise the commercial banks in accordance with the provisions of
Articles 32 and 34 of the Law of the People’s Republic of China on People’s Bank of China. 

Article 63 Commercial banks shall, according to law, accept supervision by audit institutions through auditing. 

Chapter VII 

Assumption of Control and Termination 

Article 64 When a commercial bank has suffered or will possibly suffer, credit crisis, thereby seriously affecting the interests
of the depositors, the banking regulatory authority under the State Council may assume control over the bank. 

The purposes of assumption of control are, through taking such measures as are necessary in respect of the commercial bank over which
control is assumed, to protect the interests of the depositors and to enable the commercial bank to resume normal business. The debtor-creditor
relationship with regard to a commercial bank over which control is assumed shall not change as a result of the assumption of control. 

Article 65 The assumption of control shall be decided upon, and its implementation shall be a

IMPLEMENTATION RULES FOR PROVISIONAL REGULATIONS OF THE ADMINISTRATION OF INTERNATIONAL NETWORKING OF COMPUTER INFORMATION

Implementation Rules for Provisional Regulations of the Administration of International Networking of Computer Information in the
PRC

     Article 1 In accordance with Provisional Regulations of the Administration of international networking of Computer Information in
the People’s Republic of China (hereinafter referred to as Provisional Regulations), these Rules are formulated for the purpose of
strengthening the administration of the international networking of computer information and ensuring the healthy development of
the exchange of international information through computers.

   Article 2 These Rules shall apply to the connection of computer information networks within the territory of the People’s Republic of China
with international networks.

   Article 3 Following are the definitions of terms used in these Rules:

(1) International networking refers to the connection of computer inter- connected networks, specialized computer information networks,
corporate computer information networks and other computer information networks linked by special lines within the territory of People’s
Republic of China with foreign computer information networks.

(2) Access networks refer to computer information networks which are connected with international networks through interconnected
networks. Access networks can be those connected at multi-levels.

(3) International inward and outward channels refer to physical information channels required for international networking.

(4) Subscribers refer to individuals, legal persons and other organizations which connect their computers or networks with international
networks through access networks. Personal subscribers refer to individuals with account numbers for networking.

(5) Specialized computer information networks refer to those operated for the exclusive use of certain sectors.

(6) Corporate computer information networks refer to those operated within enterprises for internal use.

   Article 4 The State shall develop an overall plan for the layout of international networking and the utilization of various resources. International
networking shall adopt technical codes, safety standards and policies on service charges set by the State in a unified form so that
the quality of the service can be improved. International networking shall subject itself to the administration by level, that is,
interconnected units, access units and subscribers are under the administration by level, and meanwhile international inward and
outward channels are subject to the unified administration. The State encourages fair competition in a good order in services related
to international networking and advocates resources sharing so as to promote the healthy development of international networking.

   Article 5 The office of Leading Group for Information Technology Advancement under the State Council is responsible for organizing and coordinating
relevant departments in the formulation of regulations and standards for safety, operations, charges and services related to international
networking. The office shall check and supervise the enforcement of those regulations and standards.

   Article 6 China Internet Information Center is responsible for the management of internet addresses, domain names and catalogues of network
resources and shall provide relevant information services.

   Article 7 Computer information networks within the territory of China, when connected with international networks, must use international inward
and outward channels provided by the national public telecommunication network of the Ministry of Posts and Telecommunications.

No units and individuals are allowed to set up channels by themselves or use other channels for international networking.

   Article 8 China Public Computer Interconnected Network, China Golden Bridge Information Network, China Education and Research Computer Network,
China Science and Technology Network are under the administration of Ministry of Posts and Telecommunications, Ministry of Electronic
Industry, State Education Commission and Chinese Academy of Sciences respectively. China Public Computer Interconnected Network and
China Golden Bridge Information Network are profit-making networks, while China Education and Research Computer Network and China
Science and Technology Network are non-profit-making ones.

Profit-making networks shall be given equal treatment on service rates and technical support.

Non-profit-making networks refer to those serving the public interest which are not operated for making profits.

Charges for the channel utilization of non-profit-making networks shall be collected at a preferential rate.

   Article 9 With regard to the establishment of new interconnected networks, interconnected units must, after being approved by competent authorities
at ministerial level, submit their applications and feasibility reports to Leading Group for Information Technology Advancement under
the State Council. After examined by the Leading Group, applications and feasibility reports shall be submitted to the State Council
for approval.

Feasibility reports on interconnected networks shall mainly include the nature and scope of networking services, technical programs
of networking, economic analyses, management and safety measures, etc.

   Article 10 Access networks must be connected with international networks through interconnected networks. International networking conducted
in other ways is prohibited.

Access units must meet the requirements stipulated in Article 9 of Provisional Regulations. Their applications and feasibility reports
on access networks shall be submitted to competent authorities or units charged with the administration of interconnected units.
The competent authorities or units shall inform applicants of their decision in a written form within 20 working days from the date
they receive applications.

Feasibility reports on access networks shall mainly include the nature and scope of networking services, technical program of networking,
economic analysis, management and safety measures, etc.

   Article 11 Access units engaged in profit-making operations concerning international networking (hereinafter referred to as profit-making access
units) shall be subject to the administration of the system of international networking business licenses (hereinafter referred to
as business licenses). The pattern of business licenses shall be drawn up by Leading Group for Information Technology Advancement
under the State Council in a unified form.

Business licenses shall be issued by competent authorities charged with the administration of profit-making interconnected units and
shall be reported to Leading Group for Information Technology Advancement under the State Council for the record. Competent authorities
charged with the administration of interconnected units shall carry out the annual examination of profit-making access units.

Access units engaged in trans-provincial (or regional, municipal) operations shall apply to competent authorities charged with the
administration of profit-making interconnected units for international networking business licenses. Access units engaged in business
operations within their own provinces (or regions, municipalities) shall apply to competent authorities charged with the administration
of profit-making interconnected units or other competent authorities at the provincial level under their authorization for international
networking business licenses.

With business licenses issued by competent authorities, profit-making access units shall perform registration procedures with the
State administrative departments of industry and commerce and go through formalities with enterprises offering telecommunication
services for the connection of telecommunication lines. Those enterprises shall begin to provide telecommunication lines and other
related services to access units within 30 working days.

   Article 12 Computers or computer information networks of individuals, legal persons and other institutional subscribers must be connected with
international networks through access networks. International networking conducted in other ways is prohibited.

   Article 13 When applying to access units for international networking, subscribers shall submit valid identification papers and other supporting
documents and fill in subscribers’ registration forms.

Access units shall send a written reply to subscribers within 5 working days from the date they receive applications.

   Article 14 In accordance with Provisional Regulations and these Rules, Ministry of Posts and Telecommunications shall formulate rules on the
administration of international networking inward and outward channels which shall be reported to Leading Group for Information Technology
Advancement under the State Council for the record.

In accordance with Provisional Regulations and these Rules, competent authorities or units charged with the administration of interconnected
units shall formulate rules on the administration of interconnected networks which shall be reported to Leading Group for Information
Technology Advancement under the State Council for the record.

   Article 15 The pattern of application forms and subscribers’ registration forms shall be drawn up by competent authorities charged with the
administration of interconnected units in accordance with these Rules.

   Article 16 Suppliers of international inward and outward channels shall be responsible for offering international inward and outward channels
as well as fair, excellent and safe services to interconnected units. They may collect charges for the use of channels at regular
intervals.

Interconnected units shall go through relevant formalities with suppliers of international inward and outward channels for the connection
or extension of international inward and outward channels which shall be reported to Leading Group for Information Technology Advancement
under the State Council for the record. Suppliers of international inward and outward channels shall provide channels to interconnected
units within 100 working days from the date they receive applications.

Suppliers of international inward and outward channels and interconnected units shall sign corresponding agreements and strictly perform
their respective duties and commitments.

   Article 17 Suppliers of international inward and outward channels, interconnected units and access units must set up network management centers,
strengthen management systems and improve the safety management of network information.

Interconnected units shall sign agreements with access units so as to strengthen the management of their own networks and access networks;
carry out technical training and management education concerning international networking for access units; provide access units
with fair, excellent and safe services; and collect charges for networking from access units in accordance with relevant State regulations.

Access units shall subject themselves to the administration of interconnected units and access units at higher levels; sign agreements
with access units at lower levels and make subscription regulations with subscribers so as to strengthen the administration of access
units at lower levels and subscribers; carry out management education, technical consulting and training for access units at lower
levels and subscribers; provide access units at lower levels and subscribers with fair, excellent and safe services; and collect
charges from access units at lower level and subscribers in accordance with relevant State regulations.

   Article 18 Subscribers shall subject themselves to the administration of access units and observe subscription regulations. They are forbidden
from entering certain computer systems without permission and illegally changing others’ information; distributing malicious information,
giving out information in other people’s names and violating others’ privacy through networks; developing and spreading computer
viruses and engaging in other activities in violation of legitimate rights and interests of networks and individuals.

Subscribers are enpost_titled to receiving services of various kinds from access units and obligated to pay relevant charges.

   Article 19 Suppliers of international inward and outward channels, interconnected units and access units shall store all the data related to
their services. When the office of Leading Group for Information Technology Advancement under the State Council and other competent
authorities carry out examinations, they shall forward relevant data in a timely manner.

In every February, suppliers of international inward and outward channels and interconnected units shall submit reports about their
network operation, business development and organizational management in the previous year to the office of Leading Group for Information
Technology Advancement under the State Council.

   Article 20 Interconnected units, access units and subscribers shall abide by relevant State laws and regulations and strictly observe rules
on safety and security. They are not allowed to engage in activities at the expense of State security and secrets and forbidden from
producing, retrieving, duplicating and spreading information that may disrupt public order and contain obscene and pornographic contents.
Harmful information, once detected, shall be reported immediately to relevant competent authorities and effective measures shall
be taken to prevent it from being spread.

   Article 21 Specialized computer information networks which are connected with international networks are not allowed to engage in the business
operation of international networking. Corporate computer information networks and other networks which are connected with international
networks through special lines shall be operated for internal use only. Units in charge of the operation of specialized computer
information networks, corporate computer information networks and other networks which are connected with international networks
through special lines shall set up network operation centers, strengthen management systems and improve the safety management of
network information with reference to these Rules.

   Article 22 Those who violate Article 7 and Item 1 of Article 10 of these Rules shall be ordered to terminate their networking activities by
public security departments and may be imposed a fine less than RMB 15,000. Unlawful incomes, if made, shall be confiscated.

Those who violate Article 11 of these Rules and engage in the business operation of international networking without business licenses
shall be given warning and required by public security departments to secure business licenses within a stated time. Those who do
not secure business licenses within the stated time shall be ordered to terminate their networking activities. Unlawful incomes,
if made, shall be confiscated.

If acting in violation of Article 12 of these Rules, individuals shall be imposed a fine less than RMB 5,000 and legal persons as
well as other institutional subscribers shall be given warning and imposed a fine less than RMB 15,000 by public security departments.

Those who violate Item 1 of Article 18 of these Rules shall be imposed punishment by public security departments in accordance with
relevant laws and regulations.

Those who violate Item 1 of Article 21 of these Rules shall be given warning and may be imposed a fine less than RMB 15,000 by public
security departments. Unlawful incomes, if made, shall be confiscated. Those who violate Item 2 of Article 21 of these Rules shall
be given warning and may be imposed a fine less than RMB 15,000 by public security departments. Unlawful incomes, if made, shall
be confiscated.

   Article 23 Those who violate Provisional Regulations, these Rules and other relevant laws and regulations at the same time shall be imposed
punishment in accordance with relevant laws and regulations. They shall be prosecuted for criminal liabilities according to the law
for any crimes committed.

   Article 24 These Rules shall also apply to computer networking with Hong Kong Special Administrative Region, Taiwan and Macao.

   Article 25 These Rules shall go into effect as of the date of promulgation.

    





SPECIAL PROVISIONS OF THE STATE COUNCIL CONCERNING THE FLOATATION AND LISTING ABROAD OF STOCKS BY LIMITED STOCK COMPANIES

Special Provisions of the State Council Concerning the Floatation and Listing Abroad of Stocks by Limited Stock Companies

     Article 1 This set of provisions has been formulated according to Article 85 and Article 155 of the “Company Law of the People’s Republic
of China” in order to meet the needs of the floatation and listing abroad of stocks by limited stock companies.

   Article 2 Limited stock companies may issue their stocks to given or non-given investors and list them abroad with the approval of the Securities
Committee of the State Council.

The term “listing abroad” used in this set of provisions means to issue stocks to investors abroad and list them for transactions
and transfer on the stock exchanges by limited stock companies.

   Article 3 The stocks issued and listed abroad (hereinafter referred to as “foreign capital stock listed abroad”) by limited stock companies
shall be in the form of inscribed stocks, with the per value indicated in Renminbi and subscribed to in foreign currencies.

The foreign capital stock listed abroad may be in the form of stock deposit receipts or in other derivations.

   Article 4 The Securities Committee of the State Council or its supervision and management and executive organization the China Securities Supervision
and Management Committee may reach understanding or an agreement with securities supervision and management organizations abroad
to exercise cooperative supervision and management of the limited stock companies in their activities of issuing and listing their
stocks abroad and other relevant activities.

   Article 5 A limited stock company wishing to issue and list its stocks abroad shall file a written application according to the requirements
by the Securities Committee of the State Council and submit it, together with relevant documents, to the Securities Committee of
the State Council for approval.

   Article 6 If a State-owned enterprise or an enterprise with State-owned property occupying the dominant position is to be converted into a
limited stock company that will issue and list its stocks abroad according to the relevant regulations of the State, the number of
promoters may be less than five if it is incorporated by way of promotion. Such a limited stock company may issue new stocks as soon
as it is incorporated.

   Article 7 The stocks issued to domestic investors (hereinafter referred to as “domestic capital stocks”) by a limited stock company (hereinafter
referred to as “company”) that has issued and listed its stocks abroad shall be in the form of inscribed stocks.

   Article 8 The board of directors may make separate arrangements for the plan of issuing and listing foreign capital stocks and domestic capital
stocks approved by the Securities Committee of the State Council.

The plan for the issuing and listing of foreign capital stocks and domestic capital stocks worked out according to the provisions
in the preceding paragraph may be executed separately within 15 months starting from the date of approval by the Securities Committee
of the State Council.

   Article 9 If a company issues foreign capital stocks and domestic capital stocks listed abroad within the total amount fixed in the stock issue
plan, it shall float them in full in one issue. If special circumstances prevent this from being realized, it may issue them in installments
with the approval of the Securities Committee of the State Council.

   Article 10 If a company fails to issue all the stocks as planned in one issue, it is not allowed to issue new stocks not covered by the plan.
If a company needs to adjust the stock issue plan, the shareholders meeting shall adopt a resolution for the examination by the company
examination and approval department authorized by the State Council and the approval by the Securities Committee of the State Council.

The interval between the second issue of foreign capital stocks listed abroad by adding capital and the previous issue shall not be
less than 12 months.

   Article 11 In issuing foreign capital stocks listed abroad within the total amount fixed in the stock issue plan, it may, with the approval
of the Securities Committee of the State Council, agree with the underwriter(s) in the underwriting agreement to reserve a certain
amount of stocks apart from the amount underwritten but the amount reserved shall not exceed 15% of the total amount planned to be
issued and listed abroad. The issue of the reserved shares is regarded as part of the same issue.

   Article 12 A company shall reveal in full and detail the plan for separately issuing foreign capital stocks listed abroad and domestic capital
stocks in the prospectus for all issues. Rerevelation is required if the stock issue plan approved is altered.

   Article 13 The Securities Committee of the State Council, together with the company examination and approval department, may provide specific
stipulations concerning the essential clauses in the articles of association of a company.

The articles of association of a company shall specify clearly the contents required by essential clauses. A company is not allowed
to alter or omit, without approval, the contents of the essential clauses in the articles of association.

   Article 14 A company shall specify the term of its operation in the articles of association. The term of operation of a company may be extended
for ever.

   Article 15 The articles of association of a company are binding to the company and its shareholders, directors, supervisors, managers and other
senior management personnel.

The company and its shareholders, directors, supervisors, managers and other senior management personnel all may apply for arbitration
or take legal proceedings according to the advocacy and rights provided for in the articles of association.

The term “senior management personnel” referred to in the first and second paragraphs of this article include people responsible for
the financial and accounting affairs of the company, secretaries of the board of directors and other people as provided for in the
articles of association.

   Article 16 The names of investors abroad holding foreign capital stocks listed abroad and registered in the list of shareholders of a company
shall be the foreign capital stock holders abroad of the company.

Owners of the rights and interests of foreign capital stocks listed abroad may registered their shares under the names of nominal
shareholders according to the provisions of the laws of the place where the list of foreign capital stock holders is kept or the
place where the stocks are listed.

The list of foreign capital stock holders is the full evidence testifying the holding of the company’s foreign capital stocks, except
otherwise testified by opposite evidence.

   Article 17 A company may keep the original list of its foreign capital stock holders abroad and entrust a foreign agency for its safekeeping
according to the understanding and agreement referred to in Article 4 of this set of provisions. The company shall keep the copy
of the list of foreign capital stock holders made by the foreign agency at the residence of the company. The entrusted foreign agency
shall ensure the all-time identity of the original and copy of the list of foreign capital stock holders.

   Article 18 If an alteration of the list of foreign capital stock holders needs to be made according to judicial rulings, the ruling may be made
by the court exercising the jurisdiction over the place where the original of the list is kept.

   Article 19 If a holder of foreign capital stocks lost his or her shares and applies for re-issue, the case may be handled according to the law
where the list of the foreign capital stock holders is kept, the rules of the stock exchange and other relevant regulations.

   Article 20 In calling shareholders meetings, a company shall issue a written notice 45 days in advance to all the listed shareholders, specifying
the matters to be examined and discussed, the date and place of the meeting.

The shareholders planning to attend the shareholders meeting shall send back the reply in writing to the company 20 days before the
convocation of the meeting.

The specific format of the written notice and written reply shall be specified in the articles of association of a company.

   Article 21 In its annual meeting of shareholders, the shareholders holding more than 5% of the voting stocks have the right to put forward new
bills in writing and the company should list the matters falling into the scope of the functions of the shareholders meeting into
the agenda of the meeting.

   Article 22 A company shall count the number of voting stocks represented by shareholders according to the number of written replies received
on 20th day away from the shareholders meeting. If the number of voting stocks represented by shareholders planning to attend the
meeting has reached half of the total number of voting stocks, the company may call the shareholders meeting. If the number has not
reached half of the total number of voting stocks, the company should, within five days, inform the shareholders in the form of announcement
of the matters to be discussed and the date and place of the meeting. After the announcement is made, the company may call the shareholders
meeting.

   Article 23 The directors, supervisors, managers and other senior management personnel of a company have the obligations of being honest, trustworthy
and industrious to the company.

The people listed in the preceding paragraph shall observe the articles of association of the company, faithfully perform their duties
and protect the interests of the company. They are not allowed to seek personal gains by abusing the positions and powers they hold
in the company.

   Article 24 A company shall appoint an independent certified accountants office that conforms to the relevant regulations of the State to audit
its annual report and cross check other financial reports of the company.

The company shall provide relevant materials to the certified accountants office it has appointed and answer its inquires.

The period of appointment of a certified accountants office starts from the date when the first annual shareholders meeting ends to
the date when the next annual shareholders meeting ends.

   Article 25 In dismissing or discontinuing the appointment of a certified accountants office, a company shall notify the said accountants office
in advance and the said accountants office has the right to make its statement to the shareholders meeting.

If a certified accountants office quits, it shall state to the shareholders meeting whether or not there is anything improper in the
company.

   Article 26 The decision to appoint, dismiss or discontinue to appoint a certified accountants office shall be taken by the shareholders meeting
and the decision shall be submitted to the China Securities Supervision and Management Committee for the record.

   Article 27 The dividends on foreign capital stocks and other relevant payments made to shareholders abroad shall be priced and announced in
Renminbi and paid in foreign currencies. The settlement of the capital raised by the company in foreign currencies and the foreign
exchange needed by a company to pay the stock dividends and make other payments to shareholders shall be handled according to the
provisions concerning the foreign exchange control of the State.

If the articles of association provide that the said payments shall be converted into foreign currencies and paid to shareholders
by other organizations, the provisions of the articles of association shall apply.

   Article 28 The documents of information compiled by a company for revelation at home and abroad shall not be self-contradictory in contents.

If there are disparities between the information revealed at home, abroad or in different countries according to the domestic and
foreign laws and regulations and rules of stock exchanges, the company shall reveal the differences simultaneously at relevant stock
exchanges.

   Article 29 The disputes arising from the matters relating to the contents of the articles of association and other affairs of the company between
foreign capital stock holders and the company, between foreign capital stock holders and the directors, supervisors and managers
of the company and between foreign capital stock holders and domestic capital stock holders shall be settled in the way provided
for in the articles of association.

The law of the People’s Republic of China shall apply in settling the disputes mentioned in the preceding paragraph.

   Article 30 This set of provisions shall be implemented starting from the date of promulgation.

    





CIRCULAR ON TRANSMITTING THE CIRCULAR OF THE STATE DEVELOPMENT PLANNING COMMISSION AND THE MINISTRY OF FINANCE ON RE-VERIFICATION OF THE CHARGING CRITERIA OF REGULATORY FEES OF THE SECURITIES MARKET AND THE RELEVANT ISSUES

The China Securities Regulatory Commission Commission

Circular On Transmitting the Circular of the State Development Planning Commission and the Ministry of Finance on Re-Verification
of the Charging Criteria of Regulatory Fees of the Securities Market and the Relevant Issues

ZhengJianHuiJiZi [2003] No.2

February 9, 2003

Stock and futures exchanges, securities, fund and futures companies, and enterprises applying for public issuance of stocks, convertible
bonds and funds:

Here is to transmit the Circular of the State Development Planning Commission and the Ministry of Finance on Re-Verification of the
Charging Criteria of Regulatory Fees of the Securities Market and the Relevant Issues (JiJiaGe [2003] No. 60, see Attachment) and
notify you of the issues on payment of the fees as follows:

I.

The adjustment of the charging criteria on the regulatory fees of securities transactions only involves the increase and decrease
of the charging criteria between the CSRC and the stock exchanges while the charging criteria with the securities institutions and
investors remains the same. Upon the adjustment of the charging criteria on the regulatory fees of securities transactions, the formalities
fees for stock transactions with Shanghai and Shenzhen Stock Exchanges are decreased by 0.005￿￿nd that for fund transactions increased
by 0.04￿￿nd that for bond (exclusive of repurchase of treasury bonds) transactions increased by 0.01￿￿The regulatory fees of
securities transactions should be paid monthly, and Shanghai and Shenzhen Stock Exchanges shall pay the regulatory fees of securities
transactions of the previous month to the special remittance account of the central treasury before the 20th day of the next month.

II.

The fees for review and verification of public issuance should be paid to the special remittance account of the central treasury by
the enterprise applying for public issuance of stocks (including initial public issuance, additional issuance and allocation), convertible
bonds and funds when the CSRC accepts and investigates on application materials.

III.

The regulatory fees of financial institutions should be based on the registered capital as of the end of the last year, which should
be paid to the special remittance account of the central treasury by the securities firms, fund companies, futures companies before
April each year.

IV.

The regulatory fees of the futures markets should be paid monthly, and Shanghai, Dalian and Zhengzhou Futures Exchanges shall pay
the corresponding regulatory fees of futures market of the previous month to the special remittance account of the central treasury
prior to the 20th day of the next month.

V.

The special remittance account of the central treasury is as follows:

(I)

By T/T or M/T

Opening bank: CITIC Industrial Bank Head Office

Name of account: CSRC (special remittance account of the central treasury)

Bank account: 7111010189800000162

(II)

By transfer cheque or bank draft

Opening bank: CITIC Industrial Bank Head Office

Name of account: CSRC Accounting Department

Bank account 7111010189800000162

The above-mentioned paying units are required to pay the fees in a timely manner and upon payment timely notify our Accounting Department
of the communication addresses. In case of failure to pay the relevant fees, the CSRC may temporarily stop accepting the relevant
securities and futures businesses.

Contact: CSRC Accounting Department

Contact Tel: ￿￿010￿￿88061689 88061330

Contact with: Wang Meiling, Liu Yunfeng

Attachment: The Circular of the State Development Planning Commission and the Ministry of Finance on Re-Verification of the Charging
Criteria of Regulatory Fees of the Securities Market and the Relevant Issues Attachment:Circular of the State Development Planning Commission and the Ministry of Finance on Re-Verification of the Charging Criteria of Regulatory
Fees of the Securities Market and the Relevant Issues

JiJiaGe [2003] No. 60

January 8, 2003

China Securities Regulatory Commission Commission :

Your Letter Concerning Applying for the Adjustment of the Charging Criteria on Regulatory Fess of Securities and Futures Markets (ZhengJianHan
[2002] No. 268) has been acknowledged. And through study, the re-verified charging criteria of regulatory fees of the securities
market and the relevant issues are notified as follows in the principle of compensation of reasonable fees:

I.

The regulatory fees of securities transactions. For stocks, the fees should be decreased from 0.045% as per annual transaction volume
to 0.04￿￿for securities investment fund, charged at 0.04￿￿for bonds (exclusive of repurchase of treasury bonds), at 0.01￿￿The
fees should be paid by Shanghai and Shenzhen Stock Exchanges.

II.

The fees for review and verification of public issuance. For the enterprises applying for public issuance of stocks (inclusive of
convertible bonds), the criteria on collection of the fees for examination and verification of public issuance is adjusted from RMB30,000
to RMB200,000 per enterprise, and considering the different issuance procedures between funds and stocks, the fees concerned for
fund issuance are slightly lower than those for the stock issuance, which is RMB160,000 per enterprise.

III.

The regulatory fees of financial institutions. The fees collected only from the securities firms are adjusted as being collected from
the securities firms, fund management companies and futures brokerage companies that are registered in the territory of the PRC.
The fees collected from the securities firms annually at 1￿￿f the registered capital but no less than RMB10,000 and no more than
RMB100,000 are adjusted as annually at 0.5￿￿f the registered capital but no more than RMB300,000. The fees collected from the fund
management companies are annually at 0.5￿￿f the registered capital but no more than RMB300,000, and those from futures brokerage
companies annually at 0.5￿￿f the registered capital but no more than RMB50,000.

IV.

The regulatory fees of the futures markets. The fees still remain at annual 0.002￿￿s per the annual transaction volume, to be collected
from Shanghai, Dalian and Zhengzhou Futures Exchanges.

V.

The CSRC shall go through the formalities as specified with the State Development Planning Commission for alteration of the charging
licenses, and adopt the bills uniformly made and printed by the Ministry of Finance.

VI.

The CSRC shall execute the relevant charging of fees according to the charging items, charging scope and charging criteria as specified
and accept the regulatory supervisions by the state pricing and financial departments.

VII.

The Circular shall enter into force as of January 1, 2003 for a term of three years, upon expiration of which the CSRC shall submit
applications to the State Development Planning Commission and the Ministry of Finance. The fees to be charged of 2002 by the CSRC
should be executed in compliance with the Circular of the State Development Planning Commission and the Ministry of Finance on Adjustment
of the Charging Criteria of Regulatory Fees of the Securities Market (JiJiaGe [2000] No. 1059). As of the date of the execution of
this Circular, the provisions concerning the charging criteria on regulatory fees of the securities and futures markets of the State
Development Planning Commission and the Ministry of Finance shall be nullified simultaneously.



 
The China Securities Regulatory Commission Commission
2003-02-09

 






INTERIM PROVISIONS ON MERGERS AND ACQUISITIONS OF DOMESTIC ENTERPRISES BY FOREIGN INVESTORS






The Ministry of Foreign Trade and Economic Cooperation,the State Administration of Taxation,the State Administration for Industry
and Commerce,the State Administration of Foreign Exchange

Decree of the the Ministry of Foreign Trade and Economic Cooperation, the State Administration of Taxation, the State Administration
for Industry and Commerce and the State Administration of Foreign Exchange

No.3

The Interim Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (hereinafter referred to as the “Provisions”),
reviewed and adopted at the First Ministry Meeting of the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic
of China on January 2, 2003, is hereby published and will come into force on April 12, 2003.

Minister of the Ministry of Foreign Trade and Economic Cooperation Shi Guangsheng

Director General of the State Administration of Taxation Jin Renqing

Director General of State Administration for Industry and Commerce Wang Zhongfu

Director General of State Administration of Foreign Exchange Guo Shuqing

March 7, 2003

Interim Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors

Article 1

The Provisions are formulated in accordance with the laws and administrative regulations governing foreign investment enterprises
and other relevant laws and administrative regulations to promote and regulate foreign investors’ investment in China introduce advanced
technologies and management experience from abroad, improve the utilization of foreign investment, rationalize the allocation of
resources, ensure employment and safeguard fair competition and national economic security.

Article 2

For the purpose of the Provisions, mergers and acquisitions of a domestic enterprise by foreign investors shall mean that foreign
investors, by agreement, purchase equity interest from shareholders of domestic enterprise with no foreign investment (hereinafter
referred to as the “Domestic Company”) or subscribe to the increase in the registered capital of the Domestic Company with the result
that such Domestic Company changes into a foreign investment enterprise (hereinafter referred to as “Equity Merger and Acquisition”);
or the foreign investors establish a foreign investment enterprise and then, through such enterprise, purchase the assets of a domestic
enterprise by agreement and operate such assets, or the foreign investors purchase the assets of a domestic enterprise by agreement
and use such assets as investment to establish a foreign investment enterprise to operate such assets (hereinafter referred to as
“Asset Merger and Acquisition”).

Article 3

In mergers and acquisitions of domestic enterprises, foreign investors shall comply with the laws, administrative regulations and
departmental rules and adhere to the principles of fairness, reasonableness, compensation for equal value, and honesty and good faith,
and shall not create excessive concentration, eliminate or hinder competition, disturb the social economic order or harm the societal
public interests.

Article 4

In mergers and acquisitions of domestic enterprises, foreign investors shall comply with the requirements regarding the investors’
qualifications and industrial policy as set forth in the laws, administrative regulations and departmental rules and the relevant
requirements under industry policies.

In the case of industries where no wholly foreign ownership is allowed under the Guidance Catalog of Foreign Investment Industries,
any merger or acquisition of a domestic enterprise engaging in the industry shall not lead to the foreign investors’ wholly ownership
of all equity interest in the acquired enterprise. In the case of industries which require the Chinese party to be controlling or
relatively controlling, the Chinese party shall remain to be in the controlling or relatively controlling position in the acquired
enterprise after any merger or acquisition of the domestic enterprise engaging in such industries. In the case of industries where
operation by foreign investors is prohibited, no foreign investors may merge with or acquire any enterprise engaging in such industries.

Article 5

Any merger or acquisition of a domestic enterprise by foreign investors to set up a foreign investment enterprise shall be subject
to the approval of the examination and approval authorities in accordance with the Provisions, and procedures for change registration
or establishment registration shall be handled with the registration authorities. The contribution made by the foreign investors
to the registered capital of the foreign investment enterprise established after the merger or acquisition shall generally not be
less than 25% of the registered capital. Except as provided otherwise by the laws or administrative regulations, if the contribution
made by foreign investors is less than 25% of the registered capital, the foreign investment enterprise shall be subject to the examination,
approval and registration in accordance with the currently applicable examination and registration procedures for the establishment
of a foreign investment enterprise. When issuing the foreign investment enterprise approval certificates, the examination and approval
authority shall add a notation “foreign investment proportion less than 25%”. When issuing the foreign investment enterprise business
licenses, the registration authority shall add the notation “foreign investment proportion less than 25%” .

Article 6

For the purpose of the Provisions, the examination and approval authority shall be the Ministry of Foreign Trade and Economic Cooperation
of the PRC (hereinafter referred to as “MOFTEC”) or the administrative authority in charge of foreign trade and economic cooperation
at the provincial level (hereinafter referred to as the “Provincial Examination and Approval Authority”), and the registration authority
shall be the State Administration for Industry and Commerce of the PRC (hereinafter referred to as “SAIC”) or its authorized local
industrial and commercial bureaus.

If the foreign investment enterprise established after the merger or acquisition falls into a specific type or a specific industry
subject to MOFTEC approval in accordance with the laws, administrative regulations and departmental rules, the provincial examination
and approval authority shall submit the application documents to MOFTEC for examination and approval and MOFTEC shall decide to approve
or disapprove the application in accordance with the law.

Article 7

In the case of Equity Merger and Acquisition by foreign investors, the foreign investment enterprise established thereafter shall
succeed to the creditor’s rights and liabilities of the merged or acquired Domestic Company .

In the case of Asset Merger and Acquisition by foreign investors, the domestic enterprise selling assets shall assume all its original
creditor’s rights and liabilities.

The Foreign investors, merged or acquired domestic enterprises, creditors and other parties may reach separate agreements regarding
the disposition of the creditor’s rights and liabilities of the merged or acquired domestic enterprises, provided that the agreement
shall not result in any damage to any third party interest or societal public interest. Any agreement on the disposition of the creditor’s
rights and liabilities shall be submitted to the examination and approval authority.

The domestic enterprise selling assets shall, within 10 days of the adoption of the resolution to sell its assets, gives notice to
its creditors and makes a public announcement on a newspaper at the provincial level or above with national circulation. A creditor
of the domestic enterprise may, within 10 days from the date of receipt of such notice or publication of such public announcement,
requests the domestic enterprise selling assets to provide the corresponding security.

Article 8

The parties to a merger or acquisition shall determine the transaction price on the basis of the result of the evaluation of the equity
interest to be transferred or of the assets to be sold conducted by the asset evaluation institution. The parties to a merger or
acquisition may agree on an asset evaluation institution established within the territory of China in accordance with the law. Asset
evaluation shall be conducted by adopting internationally recognized evaluation methods.

Where the merger or acquisition of a domestic enterprise leads to any change in the equity interest formed by the investment of state-owned
assets or resulting in any transfer of the property right in state-owned assets, evaluation shall be conducted and transaction price
shall be determined in accordance with the relevant regulations governing the administration of state-owned assets.

It is prohibited to transfer equity interest or sell assets at a price obviously lower than the evaluation result for the peupose
of transferring the capital out of China in a disguised way.

Article 9

In case of a merger or acquisition of a domestic enterprise by foreign investors to set up a foreign investment enterprise, the foreign
investors shall, within 3 months from the date of issuance of the foreign investment enterprise business license, pay the full consideration
to the shareholder(s) transferring equity interest or to the domestic enterprise selling assets. If the above time limit needs to
be extended under special circumstances, the foreign investors shall, upon the approval by the examination and approval authority,
pay 60% or more of the total consideration within 6 months and full considerations within 1 year from the date of issuance of the
foreign investment enterprise business license, and shall distribute the proceeds in proportion to the actual capital contribution.

Where the foreign investors conduct Equity Merger and Acquisition and the foreign investment enterprise established after such mergers
and acquisitions increases its registered capital, the investors shall set forth a time schedule for capital contribution in the
contract and the articles of association of the foreign investment enterprise. If it is set forth that the capital contribution shall
be paid up in one lump sum, the investors shall make the contribution within 6 months from the date of issuance of the foreign investment
enterprise business license ; or if it is set forth that the capital contribution shall be paid by installments, the investors’ first
installment shall not be less than 15% of their respective capital subscription and shall be made within 3 months from the date of
issuance of the foreign investment enterprise business license .

In case of an Asset Mergers and Acquisition by foreign investors, the investors shall set forth the time schedule for capital contribution
in the contract and the articles of association of the foreign investment enterprise to be established. If the investors intend to
establish a foreign investment enterprise and purchase and operate such assets of a domestic enterprise through such enterprise,
the investors shall pay the part of its capital contribution equal to the price of such assets within the time schedule specified
for consideration payment in Paragraph 1 of this Article and the remaining part of its capital contribution shall be paid within
the time schedule agreed upon in accordance with Paragraph 2 of this Article .

Where foreign investors establish a foreign investment enterprise through merger or acquisition of a domestic enterprise, and the
proportion of the foreign investors’ capital contribution is less than 25% of the registered capital ,if the investors pay their
capital contribution in cash, the full contribution shall be made within 3 months from the date of issuance of the foreign investment
enterprise business license ; if the investors pay their capital contribution in kind or in industrial property rights and so on,
full contribution shall be made within 6 months from the date of issuance of the foreign investment enterprise business license.

The instruments of payment of any consideration shall be in compliance with the provisions of the relevant state laws and administrative
regulations. Where a foreign investor intends to use any stock it has the right to dispose of or any Renminbi assets it legitimately
possesses as the instrument of payment, such payment shall be subject to the approval of the foreign exchange administration authority
.

Article 10

Where a foreign investor acquires any equity interest held by a shareholder of a Domestic Company by agreement, after the Domestic
Company has changed into and established as a foreign investment enterprise, the registered capital of such foreign investment enterprise
shall be the registered capital of the original Domestic Company and the proportion of the the foreign investor’s capital contribution
shall be the proportion of the equity interest acquired by the foreign investor in the original registered capital. Where a Domestic
Company subject to Equity Merger and Acquisition an Equity Merger and Acquisition also increases its capital at the same time, the
registered capital of the foreign investment enterprise established upon the Merger and Acquisition shall be the sum of the registered
capital of the original Domestic Company and the increased capital. The foreign investors and the other original investors of the
acquired Domestic Company shall determine the proportion of their capital contribution respectively to the registered capital of
the foreign investment enterprise based on the evaluation of the Domestic Company’s assets.

Where foreign investors subscribe to any increased capital of a Domestic Company, after the Domestic Company has changed into and
established as a foreign investment enterprise, the registered capital of such foreign investment enterprise shall be the sum of
the registered capital of the original Domestic Company and the increased capital. The foreign investors and the other original shareholders
of the acquired Domestic Company shall determine the proportion of their capital contribution respectively to the registered capital
of the foreign investment enterprise based upon the evaluation of the Domestic Company’s assets.

If a natural person shareholder of the Domestic Company subject to Equity Merger and Acquisition has been a shareholder of such Domestic
Company for more than 1 year, the person may, upon approval, continue to be a Chinese party investor of the foreign investment enterprise
established after the change.

Article 11

In case of an Equity Merger and Acquisition by foreign investors, the ceiling for the total amount of investment of the foreign investment
enterprise established upon the Merger and Acquisition shall be determined according to the following proportions:

(1)

no more than ten sevenths (10/7) of the registered capital of the foreign investment enterprise, if the registered capital is less
than US$ 2.1 million;

(2)

no more than twice the registered capital, if the registered capital is between US$ 2.1million and US$ 5 million;

(3)

no more than two and a half times the registered capital, if the registered capital is more than US$ 5 million but less than or equal
to US$ 12 million; or

(4)

no more than three times the registered capital, if the registered capital is more than US$ 12 million.

Article 12

In case of an Equity Merger and Acquisition by foreign investors, the investors shall submit the following documents to the examination
and approval authority with corresponding jurisdiction of approval based on the total amount of investment of the foreign investment
enterprise established upon the Merger and Acquisition:

(1)

the resolution adopted by the shareholders of the domestic limited liability company subject to the Merger and Acquisition unanimously
approving the Equity Merger and Acquisition by the foreign investors, or the resolution adopted by the shareholders’ meeting of the
domestic company limited by shares subject to the Merger and Acquisition approving the Equity Merger and Acquisition by the foreign
investors;

(2)

the application of the Domestic Company subject to the Merger and Acquisition to be changed in to and established as a foreign investment
enterprise in accordance with the law;

(3)

the contract and the articles of association of the foreign investment enterprise established upon the Merger and Acquisition;

(4)

the agreement for the purchase of the shareholders’ equity interest or subscription for the increased capital of the Domestic Company
by the foreign investors

(5)

the audited financial report for the most recent fiscal year of the Domestic Company subject to the Merger and Acquisition;

(6)

identification documents or incorporation certification and creditworthiness certification of the foreign investors;

(7)

explanation of the situation regarding the enterprises the Domestic Company subject to the Merger and Acquisition has invested in;

(8)

the business licenses (duplicates) of the Domestic Company subject to the Merger and Acquisition and enterprises it has invested in;

(9)

the plan for the re-settlement of the employees of the Domestic Company subject to the Merger and Acquisition; and

(10)

documents required to be submitted under Articles 7 and 19 of the Provisions.

Where any permission given by any other government authority is required in connection with the business scope or business scale,
or obtaining of any land use right by the foreign investment enterprise to be established upon the Merger and Acquisition, the relevant
documents of such permission shall be submitted simultaneously.

The business scope of any company the Domestic Company subject to the Merger and Acquisition originally invested in shall comply with
the requirements of relevant foreign investment industrial policies. Adjustments shall be made in case of noncompliance.

Article 13

The equity interest purchase agreement or the agreement to increase the capital of the Domestic Company as set forth in Article 12
of these Provisions shall be governed by the Chinese law and shall contain the following main contents:

(1)

information regarding each of the parties to the agreement, including its full name, address, and the name, position and citizenship
of its legal representative,etc.;

(2)

proportions and the price of the equity interest to be acquired or the increased capital to be subscribed;

(3)

term and methods of performance of the agreement;

(4)

rights and obligations of the parties to the agreement;

(5)

liabilities for breach of the agreement and settlement of dispute; and

(6)

the date and the place of the execution of the agreement.

Article 14

In the case of an Asset Merger and Acquisition by foreign investors, the total amount of investment of the foreign investment enterprise
established upon the Merger and Acquisition shall be determined on the basis of the transaction price of such assets and the actual
scale of production and operation. The proportion between the registered capital and the total amount of investment of the foreign
investment enterprise to be established shall be consistent with the relevant regulations.

Article 15

In the case of an Asset Merger and Acquisition by foreign investors, the investors shall submit the following documents to the examination
and approval authority with the corresponding jurisdiction of approval, based on the total amount of investment, enterprise type,
and industry of the foreign investment enterprise to be established and in accordance with the laws, administrative regulations and
departmental rules governing the establishment of foreign investment enterprises:

(1)

the resolution by the property rights holders or the agency of authority of the domestic enterprise approving the sale of such assets;

(2)

the application for the establishment of the foreign investment enterprise;

(3)

the contract and the articles of association of the foreign investment enterprise to be established;

(4)

the asset purchase agreement executed between the foreign investment enterprise to be established and the domestic enterprise or the
asset purchase agreement executed between the foreign investors and the domestic enterprise;

(5)

the articles of association and the business license (duplicates) of the domestic enterprise subject to the Merger and Acquisition;

(6)

certification proving that the domestic enterprise subject to the Merger and Acquisition has given notice and the public announcement
to its creditors;

(7)

identification documents or incorporation certification and creditworthiness certification of the foreign investors;

(8)

the plan for the re-settlement of employees of the domestic enterprise subject to the Merger and Acquisition; and

(9)

documents required to be submitted under Articles 7 and 19 of the Provisions.

Where any permission given by any other government authority is required in connection with the purchase and operation of the assets
of the domestic enterprise as specified in the above paragraph, the relevant documents of such permission shall be submitted simultaneously.

If foreign investors purchase any assets by agreement with the domestic enterprise and invest such assets to set up a foreign investment
enterprise, such assets shall not be used for operation purposes until and unless the foreign investment enterprise has been duly
established.

Article 16

The asset purchase agreement set forth in Article 15 shall be governed by the Chinese law and shall contain the following main contents:

(1)

information regarding each of the parties to the agreement, including its name and address, and the name, position and citizenship
of its legal representative, etc.;

(2)

list and the price of the assets to be purchased;

(3)

term and methods of performance of the agreement;

(4)

rights and obligations of the parties to the agreement;

(5)

liabilities for breach of the agreement and settlement of dispute; and

(6)

the date and the place of the execution of the agreement.

Article 17

Except as otherwise provided for in Article 20 , where foreign investors establish a foreign investment enterprise through merger
and acquisition of a domestic enterprise,, the examination and approval authority shall, within 30 days upon its receipt of all the
documents required to be submitted, decide according to law whether to approve the application for the establishment. Upon such approval,
the examination and approval authority shall issue the foreign investment enterprise approval certificate.

If the examination and approval authority decides to approve foreign investors’ acquisition of equity interest of a Domestic Company
from its shareholders, the examination and approval authority shall concurrently copy the relevant approval documents to the local
foreign exchange administration authority of the transferor and of the Domestic Company respectively. The foreign exchange administration
authority in the locality of the transferor shall complete the foreign capital foreign exchange registration procedures for the transferor’s
receipt of foreign exchange and shall issue the foreign capital foreign exchange registration certificate certifying the payment
of the consideration for the above acquisition by the foreign investors.

Article 18

In the case of an Asset Merger and Acquisition by foreign investors, the investors shall, within 30 days of its receipt of the foreign
investment enterprise approval certificate for, apply to the registration authority for the establishment registration and obtain
the foreign investment enterprise business license.

In the case of an Equity Merger and Acquisition by foreign investors, the acquired Domestic Company shall apply to its original registration
and administration authority for the change of registration and obtain the foreign investment enterprise business license in accordance
with the Provisions. If the original registration and administration authority has no jurisdiction of registration and administration,
it shall, within 10 days upon its receipt of the application documents, deliver such documents to the registration and administration
authority with such jurisdiction, accompanied by the registration files of the Domestic Company. The acquired Domestic Company shall
submit and be responsible for the authenticity and effectiveness of the following documents at the time of its application for the
change of registration:

(1)

the application for the change of registration;

(2)

the resolution adopted by the shareholders’ meeting of the acquired Domestic Company in accordance with the Company Law of the PRC
and its articles of association, approving the transfer of equity interest or the increased capital;

(3)

the agreement for the purchase of the shareholders’ equity interest or subscription for the increased capital of the Domestic Company
by the foreign investors

(4)

amended articles of association of the Domestic Company or any amendment to the original articles of association and the contract
of the foreign investment enterprise to be submitted as required by law;

(5)

the foreign investment enterprise approval certificate ;

(6)

identification documents or incorporation certification and creditworthiness certification of the foreign investors;

(7)

the amended list of directors, the document specifying the names and addresses of new directors and the documents of appointment of
new directors; and

(8)

other relevant documents and certificates required by SAIC.

In case of the transfer of state-owned equity interest and in case of foreign investors’ subscription to any increased capital of
a company with state-owned equity interest, the approval documents of the authority in charge of economic and trade administration
shall also be submitted.

Investors shall, within 30 days upon the receipt of the foreign investment enterprise business license, handle the necessary registration
formalities with authorities for taxation, customs, land administration and foreign exchange administration, etc..

Article 19

In case of any of the following occurrences in connection with the merger or acquisition of a domestic enterprise by foreign investors,
the investors shall submit notification to MOFTEC and SAIC:

(1)

the revenue of a party to the merger or acquisition in the domestic market for the current year exceeds RMB1.5 billion ;

(2)

the foreign investors have merged with or acquired more than 10 domestic enterprises in aggregate engaging in the related businesses
within one year;

(3)

the market share of a party to the merger or acquisition in the domestic market has reached 20%; or

(4)

the market share of a party to the merger or acquisition in the domestic market will reach 25% as a result of the merger or acquisition.

Even without the above occurrences, MOFTEC or SAIC may still require the foreign investors to submit notification upon the request
by any competing domestic enterprise, relevant functional department or industrial association, if MOFTEC or SAIC finds that the
merger or acquisition will involve a huge market share, or if there is any other material aspect of the merger or acquisition which
might severely affect market competition, national economy or people’s livelihood and national economic security.

The above-mentioned “a party to a merger or acquisition” shall include any affiliated enterprise of foreign investors.

Article 20

In case of any of the described in Article 19 in connection with a merger or acquisition of a domestic enterprise by foreign investors,
and if MOFTEC and SAIC believe that the merger or acquisition might lead to over-concentration, impair fair competition or damage
consumers’ interests, MOFTEC and SAIC shall, within 90 days upon its receipt of all the documents required to be submitted, jointly
or separately after consultation with each other, hold a hearing of the relevant departments, organizations, enterprises and other
related parties and decide according to law whether to approve the application for the merger or acquisition.

Article 21

In case of any of the following occurrences in connection with an offshore merger or acquisition, any party to the merger and acquisition
shall, prior to its public announcement of the plan for the merger or acquisition or together with its application to the regulatory
authorities of the country where it is located, submit to MOFTEC and SAIC the plan for the merger or acquisition. MOFTEC and SAIC
shall examine whether the merger or acquisition might cause over-concentration of the domestic market, impair fair competition in
the domestic market or damage the domestic consumers’ interests, and decide whether to approve the plan:

(1)

the assets owned by a party to the offshore merger and acquisition within China exceeds RMB 3 billion;

(2)

the sales of a party to the offshore merger or acquisition in the domestic market for the current year have exceeded RMB 1..5 billion;

(3)

the aggregate market share in the domestic market by a party to the offshore merger or acquisition and its affiliated enterprises
has reached 20%;

(4)

the aggregate market share in the domestic market by a party to the offshore merger or acquisition and all of its affiliated enterprises
in the domestic market will reach 25% as a result of the offshore merger or acquisition; or

(5)

as a result of the offshore merger or acquisition, a party to the offshore merger or acquisition will hold, directly or indirectly,
equity of more than 15 foreign investment enterprises engaging in the related businesses within China.

Article 22

In case of any of the following occurrences in connection with a merger or acquisition, a party to the merger or acquisition may apply
to MOFTEC and SAIC for an exemption from examination:

(1)

the merger or acquisition may improve the conditions for fair competition in the domestic market;

(2)

the merger or acquisition will restructure the enterprise running at a loss and ensure employment;

(3)

the merger or acquisition will absorb advanced technologies and management professionals and enhance the international competitiveness
of the domesticenterprise; or

(4)

the merger or acquisition will improve the environment.

Article 23

All documents submitted by investors shall be grouped into categories as required by the regulations and accompanied by a table of
contents of the documents. All documents required to be submitted shall be in Chinese.

Article 24

The Provisions shall apply to all mergers and acquisi

IMPLEMENTATION MEASURES OF THE MINISTRY OF CONSTRUCTION ON QUALIFICATION ADMINISTRATION IN THE ADMINISTRATIVE PROVISIONS ON ENTERPRISE MANAGEMENT OF CONSTRUCTION ENTERPRISES WITH FOREIGN INVESTMENT

The Ministry of Construction

Circular of Printing and Distributing the Implementation Measures of the Ministry of Construction on Qualification Administration
in the Administrative Provisions on Enterprises Management of Construction Enterprises with Foreign Investment

JianShi [2003] No.73

Construction departments at provincial or autonomous regional level, construction commissions of municipalities directly under the
Central Government, construction administration bureaus of Shandong and Jiangsu, construction departments of relative sections under
the State Council, Construction Bureau of the Production and Construction Corps of Xinjiang, Engineering Bureau of Barracks Department
of General Logistics:

The Circular of Printing and Distributing the Implementation Measures of the Ministry of Construction on Qualification Administration
in the Administrative Provisions on Enterprise Management of Construction Enterprises with Foreign Investment is hereby printed and
distributed to you for implementation. For any problem found during the course of implementation, please inform the Construction
Market Management Department of our Ministry immediately.

The Ministry of Construction of the People’s Republic of China

April 8, 2003

Implementation Measures of the Ministry of Construction on Qualification Administration in the Administrative Provisions on Enterprise
Management of Construction Enterprises with Foreign Investment

These Measure are formulated for the purpose of implementing the Administrative Provisions on Enterprise Management of Construction
Enterprises with Foreign Investment (Decree No.113 of the Ministry of Construction and the Ministry of Foreign Trade and Economic
Cooperation) (hereafter referred to as the “Provisions”).

I.

Targets that the Construction Enterprise with Foreign Investment Qualification Certificates are granted to

The Construction Enterprises with Foreign Investment Qualification Certificates shall be granted to the following construction enterprises
with foreign investment that have gained legal entity qualifications:

1.

Construction enterprise which whole capital is invested by foreign investor(s);

2.

Construction enterprise established jointly by Chinese investor(s) and foreign investor(s) through a way of joint-venture or cooperation.

3.

Newly-established construction enterprise, in the name of an enterprise with foreign investment, or share-purchased construction enterprise
by an enterprise with foreign investment founded legally in China.

Construction Enterprises with Foreign Investment Qualification Certificates shall not be granted to the foreign corporations or branches
established in China by foreign corporations or other economic organizations.

II.

Scope of construction activities of construction enterprises with foreign investment

The construction activities mentioned in Article 3 of the Provisions refer to the activities performed in the territory of China
according to the provisions in Construction Law of the People’s Republic of China and Regulations of Construction Project Quality
Management, including civil engineering, construction, pipe/line infrastructure building, and new construction, expansion and rebuilding
of fitment projects.

III.

Verification of the qualifications of construction enterprises with foreign investment

Applications of construction enterprises with foreign investment for the construction enterprise qualifications shall be accordance
with the Provisions on Enterprise Management of Construction Enterprises with Foreign Investment (Decree No.113 of the Ministry of
Construction and the Ministry of Foreign Trade and Economic Cooperation), Regulations on Administration of Construction Enterprise
Qualifications (Decree No.87 of the Ministry of Construction), Opinions of Implementing the Regulations on Administration of Construction
Enterprise Qualifications (JianBanJian [2001] No.24), Criteria of Grading of Construction Enterprise Qualifications (JianJian [2001]
No.82) and other provisional and standardization documents concerning qualification administration of construction enterprises.

1.

The qualification grade of a new construction enterprise with foreign investment shall be verified at the lowest grade, with an interim
period of one year.

2.

A new construction enterprise with foreign investment invested by a foreign enterprise that has contracted project(s) in China may
apply directly for a qualification of Grade B or above, provided that it meets following requirements in addition to other requirements
necessary for the construction enterprise qualification:

(1)

It has gained a foreign enterprise qualification certificate or an approval certificate for contracting projects, which is issued
by Ministry of Construction, or provincial competent administration on construction or by a competent administration of special economic
zone or costal opening city prior to September 30, 2003, according to the Interim Measures for Qualification Administration on Foreign
Enterprise Contracting Construction Projects in China (Decree No.32 of The Ministry of Construction).

(2)

For the applications for the construction enterprise with foreign investment qualifications, the performances of contracted projects
in China by the applicant foreign corporations shall meet with the standards for contracting projects which are required for applying
for the construction enterprise with foreign investment qualifications. For the application for a qualification of Chinese-foreign
equity joint venture construction enterprise or Chinese-foreign cooperative construction enterprise, the performance of the projects
contracted in China by the foreign corporations as well as the total performance of contracted projects by the Chinese parties shall
meet with the standards for contracting projects that are required for applying for the construction enterprise qualifications.

3.

For the domestic construction enterprises with foreign shares invested by foreign corporations, which natures therefore become Chinese-foreign
equity joint venture construction enterprises or Chinese-foreign cooperative construction enterprises, the qualifications shall be
re-graded according to the standards actually reached.

4.

For the domestic construction enterprises purchased by foreign enterprises, which nature therefore become construction enterprises
with foreign investment, the qualifications shall be graded according to the standards actually reached.

5.

A Chinese-foreign equity joint venture construction enterprise or a Chinese-foreign cooperative construction enterprise established
prior to the enforcement of the Provisions, which registered capital had not met with the requirements in the former Provisions on
Founding Construction Enterprise with Foreign Investment promulgated jointly by the Ministry of Construction and the Ministry of
Foreign Trade and Economic Cooperation may, after the enforcement of the Provisions, apply for an appropriate grade of qualification
of construction enterprise.

IV.

Requirements for the foreign service-providers in construction enterprises with foreign investment

If a construction enterprise with foreign investment employs a foreign service-provider as technical or economic manager, labor contract
signed legally shall be presented when applying for the qualification.

1.

If a construction enterprise with foreign investment employs a foreign service-provider as its operation manager, such foreign service-provider
shall possess the working experience in construction management which is required in the standards for construction enterprise qualification
and shall provide corresponding proofs.

2.

If a construction enterprise with foreign investment employs a foreign service-provider as technical or economic manager, such foreign
service-provider shall possess a professional post_title equivalent to the required standards for construction enterprise qualification.

3.

A foreign service-provider with a college degree or above and with over 10-year working experience in this field, who is employed
by a construction enterprise with foreign investment as technical or economic manager, may be reported as a staff with a senior professional
post_title when applying for the qualification. One with an associate degree or above and with over 5-year working experience in this
field may be reported as one with a middle professional post_title.

4.

A foreign service-provider employed by a construction enterprise with foreign investment as the project manager, who meets with the
following requirements and can provide corresponding proofs, may be approved to be with the corresponding qualification for the project
manager by the qualification administration authority when the enterprise is applying for the qualification.

(1)

A foreign service-provider declared as Grade A project manager shall have been the principal construction manager for one construction
project that meets with the requirements for Grade A construction enterprise or two construction projects that meet with the requirements
for Grade B construction enterprise.

(2)

A foreign service-provider declared as Grade B project manager shall have been the principal construction manager for two construction
projects including at least one project that meets with the requirements for Grade B construction enterprise.

(3)

A foreign service-provider declared as Grade C project manager shall have been the principal construction manager for two construction
projects including at least one project that meets with the requirements for Grade C construction enterprise. The headcounts of the
foreign service-providers approved as the project managers of the enterprise according this Article shall not exceed one-of-the-third
of the headcounts for project managers specified in the standards for qualification of construction enterprise.

5.

The accumulated residing time within the territory of China of each foreign service-provider employed by the construction enterprise
with foreign investment as technical or economic manager shall be no less than 3 months each year.

V.

Verification of the performances of construction enterprises with foreign investment in contracting construction projects

After the enforcement of the Provisions, if the foreign party of a construction enterprise with foreign investment contracts a project
jointly with a Chinese construction enterprise or subcontracts a project to a Chinese construction enterprise, the performance of
such project may be regarded as the performance of this construction enterprise with foreign investment for applying for the construction
enterprise qualification or for annual audit.

VI.

Scope of contracting projects of construction enterprise with foreign investment

“Jointly contracting by Chinese-foreign construction enterprises” mentioned in Item 4, Article 15 in the Provisions means that construction
enterprise with foreign investment may contract projects jointly with domestic construction enterprises, Chinese-foreign equity joint
venture construction enterprises or Chinese-foreign cooperative construction enterprises.

VII.

Acceptance time for the applications for qualifications of construction enterprises with foreign investment

The period from December 1, 2002 to October 1, 2003 is the transition period for implementing both Decree No.32 of the Ministry of
Construction and the Provisions at the same time. Within this transition period, the qualification administration authorities are
ready to accept the applications for construction enterprise with foreign investment qualifications at any time. After October 1,
2003, the applications for construction enterprise with foreign investment qualifications will be accepted by the schedule arranged
by the qualification administration authorities.

VIII.

Relation between the Provisions and former Decree No.32 of the Ministry of Construction

Prior to October 1, 2003, according to Article 26 of the Provisions, construction enterprises with foreign investment may continue
contracting projects in accordance with the former Decree No.32 of the Ministry of Construction, i.e. Interim Measures for Qualification
Management on Foreign Corporations Contracting Construction Projects in China.

1.

Foreign enterprises that have gained qualification certificates for contracting construction projects may continue contracting construction
projects in accordance with the requirements in the Interim Measures for Qualification Management on Foreign Corporations Contracting
Construction Projects in China, including continuing uncompleted construction projects, continuing to apply for expanding contracted
areas and continuing to apply for term extension of the qualification certificate.

2.

Foreign enterprises that have not gained qualification certificates for contracting construction projects may continue to apply for
foreign enterprise qualification certificates in accordance with the requirements in the Interim Measures for Qualification Management
on Foreign Corporations Contracting Construction Projects in China.

3.

After October 1, 2003, the qualification administration authorities will not accept the applications from foreign corporations for
contracting construction projects within the territory of China, and will not deal will the applications for extending qualification
terms or for expanding contracted areas. Foreign corporations may continue to complete the projects contracted before this date which
contract terms or actual performance terms exceed this date.

 
The Ministry of Construction
2003-04-08

 



CIRCULAR ON THE ISSUES RELATING TO THE CONDITIONS FOR THE LISTING AND TRANSACTION OF THE STOCKS OF TAKEN-OVER COMPANIES INVOLVED IN TENDER OFFER

e00283,e00241,e031252003052020030520The China Securities Regulatory Commissionepdf/e03139.pdfe03139Itender offer, stock, list, transaction, conditionCircular on the Issues Relating to the Conditions for the Listing and Transaction of the Stocks of Taken-over Companies Involved in
Tender OfferZhengJianGongSiZi [2003] No.16May 20, 2003Shanghai and Shenzhen Stock Exchanges and Public Listed Companies:According to the relevant provisions of the Company Law of the PRC, the Securities Law of the PRC and the Measures for the Regulation
of Public Listed Companies, here is to notify you of the issues relating to the conditions for the listing and transactions of the
stocks of the taken-over companies involved in tender offer:I.Upon expiration of the tender offer, in case the distribution of the equity shares of the taken-over companies is not in compliance
with the Company Law and the taker-over aims at terminating the listing and transactions of the taken-over companies, the listing
and transactions of the stocks of the taken-over companies should be terminated.II.Upon expiration of the tender offer, in case the taker-over does not aim at terminating the listing and transactions of the taken-over
companies, the transactions of the stocks of the taken-over companies should be handled with as follows:(I)in case the distribution of the equity shares of the taken-over companies is in compliance with the listing conditions specified in
the Company Law, the listing position is not affected;(II)in case the distribution of the equity shares of the taken-over companies is not in compliance with the listing conditions specified
in the Company Law, the taker-over shall formulate the specific program on maintaining the listing position of the taken-over company,
and implement the program with one month upon the expiration of the tender offer so as to enable the distribution of the equity shares
of the taken-over company eligible for the listing conditions; and from the expiration of the tender offer to the completion of the
implementation of the above-mentioned program, the Stock Exchange adopts “special treatment for warning on the existence of risk
of being terminated with listing” for the taken-over companies(i.e., warning on risks of being withdrawn”);(III)In case the shares held by the taker-over exceed 90% of total equity shares of the taken-over company, the taker-over shall according
to the provision of the Item (II) formulate and implement the specific program on maintaining the listing position of the taken-over
company within the period specified; and the taken-over company shall apply with the Stock Exchange for temporary suspension of the
listing and transaction of its stocks, while the Stock Exchange will make a decision in consideration of the distribution of the
equity shares of the taken-over company and the actual circumstances;(IV)Upon completion of the implementation of the above-mentioned program by the taker-over, the Stock Exchange will make a decision on
whether to revoke the warning on risk of being withdrawn or recover the listing and transactions according to the application of
the taken-over company and the circumstances of the implementation of the program by the taker-over; and in case the taker-over fails
to complete the implementation of the above-mentioned program within the specific period, the listing of the taken-over company should
be terminated by force of law.III.The taker-over shall in the report on the tender offer completely disclose the program formulated according to this Circular, and
fully disclose the relevant risks thereof.Upon implementing the program on maintaining the listing position of the taken-over company within the period specified, the taker-over
shall timely implement its duties for information disclosure.IV.In case other laws, regulations and the CSRC have provided for any other special stipulations on the take-over of public listed companies
by foreign investment, the taker-over shall also observe such stipulations.



 
The China Securities Regulatory Commission
2003-05-20

 






SUPPLEMENTARY CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE TAXATION SCOPE AFTER REFORM OF THE SHARING SYSTEM OF INCOME TAX REVENUES

The State Administration of Taxation

Supplementary Circular of the State Administration of Taxation on the Taxation Scope after Reform of the Sharing System of Income
Tax Revenues

GuoShuiFa [2003] No.76

June 25, 2003

The bureaus of state taxations and the bureaus of local taxations of the provinces, autonomous regions, municipalities directly under
the Central Government, and municipality separately listed on the State plan, and the entities in those bureaus:

In accordance with the spirit of the Circular of the State Council on Distributing the Scheme on the Reform of Income Tax Revenue
Sharing (GuoFa [2001] No.37), the State Administration of Taxation (SAT) handed down the Circular of the State Administration of
Taxation on the Taxation Scope after Reform of the Sharing System of Income Tax Revenues (GuoShuiFa [2002] No.8 ), which provide
for the specific taxation scope of the bureaus of state taxation and the bureaus of local taxation after the reform of the sharing
system of income tax revenues. Since execution of the new taxation scope from over one year ago, the bureaus of state taxation and
the bureaus of local taxation at various levels have taken consideration for the interests of the whole, strengthened the coordination
and cooperation in the division of taxation scope, and thus guaranteed the smooth progress of the reform of the sharing system of
income tax revenue. However, with the deepening of the enterprise reform, the forms of enterprise restructuring become more and more
varied, and some new situations have brought new problems to the taxation work of income taxes, in order to implement the principle
of taxation according to law, and to make up the omissions in taxation, the taxation scope for enterprise income tax after the enterprises’
restructuring and operation form changes shall be further clarified. For this purpose, the supplementary circular is hereby made
concerning the taxation scope of enterprise income tax on the basis of the spirit provided for by document GuoShuiFa [2002] No.8:

1.

Where the original enterprise is in any of the following situations, even if it has made the establishment (business start) registration,
its enterprise income tax shall be subject to taxation by the original taxation organ:

1)

The original enterprise is transferred or sold (auctioned) as a whole, but continues to exist and be qualified as an independent taxpayer.
However, if the original enterprise, after being transferred or sold (auctioned) as a whole, becomes a wholly-funded subsidiary of
the acquiring enterprise, and is brought into the scope of consolidate tax payment of the acquiring enterprise, then the income tax
of the enterprise transferred or sold (auctioned) as a whole shall be taxed by the taxation organ in charge of the taxation of income
tax of the acquiring enterprise.

2)

An enterprise acquires any other enterprise by merger (the acquired enterprise is written off) and continues to exist.

3)

A partnership enterprise is restructured into a limited liability company or a joint stock limited company, and no new investment
is absorbed in the restructuring.

4)

Alteration registration shall be made pursuant to the provisions of the State Administration for Industry and Commerce, such as for
expansion of the enterprise, alteration of the leading (subordinate) relationship, enterprise name, enterprise type, economic nature,
business scope, business duration, operation method, legal representative, shareholders, name (post_title) of the shareholder of the promoter
of the company, registered capital, addition or cancellation of any branch, as well as the alteration of domicile, or business site,
etc.

2.

Where an original domestic-funded enterprise is restructured into a foreign-funded enterprise, and the income tax of foreign-funded
enterprise and foreign enterprise shall be collected pursuant to the provisions, no matter the enterprise makes whichever industrial
and commercial registration, the taxation scope shall be determined pursuant to the Circular of the General Office of the State Council
on Transmitting the Opinions of the State Administration of Taxation on Adjusting the Taxation Scope of the Bureaus of state Taxation
and the Bureaus of Local Taxation (GuoBanFa [1996] No.4) on the limit of authority of the administration of income tax of foreign-funded
enterprises and foreign enterprises.

3.

The taxation scope for public institutions and social organizations shall comply with the spirit of document GuoShuiFa [2002] No.8
and the aforesaid provisions.

4.

The bureaus of state taxation and bureaus of local taxation at various levels shall further strengthen cooperation in the division
of taxation scope of income taxes, shall strengthen contact, coordination and communication in the aspects of execution of the policies
on enterprise income tax and determination and collection of enterprise income tax, etc., shall strictly comply with the policies
on reduction and exemption of enterprise income tax, and thus to ensure the uniformity and seriousness of the tax law.

5.

The Provisions shall be implemented as of July 1, 2003. In order to keep the stability of taxation order, where the taxation scope
in respect of any domestic-funded enterprise that is subject to the actual taxation by a bureau of state taxation or local taxation
is inconformity with the Circular, such scope will not be adjusted any more.



 
The State Administration of Taxation
2003-06-25

 






1...202122Page 21 of 22

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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