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CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON ACCEPTANCE OF THE VOLUNTARY FILE OF TAX RETURNS BY THE TAXPAYERS WITH AN ANNUAL INCOME OF 120,000 YUAN OR MORE

Circular of the State Administration of Taxation on Acceptance of the Voluntary File of Tax Returns by the Taxpayers with an Annual
Income of 120,000 Yuan or More

Guo Shui Fa [2006] No. 164

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

For the purpose of implementing the Law on Individual Income Tax and the Regulation for the Implementation of the Law on Individual
Income Tax as well as the Measures for the Voluntary File of Individual Income Tax Returns (for Trial Implementation, and hereinafter
referred to as this Measures), we hereby notify the relevant issues on the acceptance of the voluntary file of tax returns by the
taxpayers with an annual income of 120,000 yuan or more as follows:

1.

Achieving unity in thinking, advancing understanding, and fully realizing the significance of voluntary file of tax returns.

The voluntary file of tax returns by taxpayers is a way of collecting individual income taxes in China, as well as a universal practice
of all other countries in the world. To enlarge the scope of voluntary file of individual tax returns is an important content for
the revision of the Law on Individual Income Tax in 2005. The Law on Individual Income Tax as revised adds the content that the taxpayers
“with an annual income of 120,000 yuan or more” and those “under other circumstances as prescribed by the State Council” shall file
tax returns voluntarily to the tax authority. The enlargement of the scope of voluntary file of individual tax returns is instrumental
in developing the faithful taxation sense of taxpayers, clarifying the legal liabilities of taxpayers, and enhancing the compliance
of tax law; it is beneficial to the tax authority to strengthen the administration of tax sources and enhance the adjustment of high-income
groups; it facilitates strengthening analysis and comparison, and further boosting the scientific and refined administration of individual
income tax; and it is also advantageous for creating conditions and accumulating experiences for further transition to the tax system
combined integration with classification.

To enlarge the scope of voluntary file of individual tax returns is a completely new job, and involves the immediate interests of
the vast taxpayers. New requirements are brought forward to the tax authority in terms of personnel, management, technology, and
equipment, and etc. Therefore, the tax authorities at all levels shall, in view of constructing a harmonious socialist society, implementing
the scientific concept of development, perfecting tax payment services, improving the taxation sense of citizens and strengthening
the tax collection, fully understand the importance of the administration of voluntary file of individual income tax returns by taxpayers,
achieve unity in thinking, enhance understanding and attach great importance.

2.

Strengthening leadership, perfecting measures, and actively and steadily boosting the voluntary file of tax returns.

The voluntary file of individual income tax returns is of high policy-related, high demanding, complexity in operation and large workload.
Particularly, the enlargement of the scope of voluntary file of tax returns and the addition of the provisions on annual voluntary
file of tax returns by the taxpayers with an annual income of 120,000 yuan or more have set new and higher requirements for the voluntary
file of tax returns. The annual voluntary file of tax returns by the taxpayers with an annual income of 120,000 yuan or more is a
kind of integrated tax returns on the basis of current itemized tax system, and is different from the former kind of voluntary file
of tax returns in the aspects of nature, contents and forms, and these two kinds of voluntary file of tax returns have their respective
emphasis but also overlap with each other. Thereby, the relationship of the said two kinds of voluntary file of tax returns shall
be dealt correctly and different pertinent measures shall be separately adopted for the said two kinds of voluntary file of tax returns.
Presently, the emphasis shall be put on the annual voluntary file of tax returns by the taxpayers with an annual income of 120,000
yuan or more, and on the earnest implementation of leadership in this work. As to the voluntary file of tax returns by the taxpayers
with an annual income of 120,000 yuan or more from 2007, it is necessary to carefully analyze all links of work required for tax
returns, forecast possible problems and difficulties, bring forward preliminary schemes and measures for dealing with problems and
difficulties, conduct careful organization and arrangement, and actively and stably promote the job.

3.

Enhancing propaganda, strengthening tutorship, and laying a good foundation for voluntary file of tax returns

The tax authorities at all levels shall emphasize the publicity on the relevant issues about voluntary file of tax returns by the
taxpayers with an annual income of 120,000 yuan or more in various forms and by various means. Primarily, they shall promptly organize
the relevant personnel for tax administration, collection administration and information, and etc., to study the Measures and understand
the ideas prescribed in the Measures; And then, they shall, by means of trainings, symposia, arrangement of talks, printing of explaining
materials, and etc., strengthen the training and tutorship to taxpayers, so as to let taxpayers grasp such matters as the contents,
places, time and procedures, and etc. for voluntary file of tax returns, particularly, to make the taxpayers liable for voluntary
file of tax returns of their own statutory obligations, the methods and procedures for performing obligations, their rights as well
as the legal liabilities for failing to perform such obligations.

4.

Organizing carefully, optimizing service, and ensuring smooth operation of the voluntary file of tax returns

The tax authorities at all levels, especially the grass-roots tax authorities for directly contacting with taxpayers, shall further
enhance the service awareness, provide various kinds of services for the voluntary file of tax returns by the taxpayers with an annual
income of 120,000 yuan or more, and try to facilitate the taxpayers in terms of publicizing and explaining policies, accepting tax
returns efficiently, and handling formalities for making up the underpaid taxes and giving tax rebates in a timely manner. The year
of 2007 is the first year for accepting the voluntary file of tax returns by the taxpayers with an annual income of 120,000 yuan
or more, and the tax authorities of all regions shall carefully do various jobs as follows.

(1)

Before December 10, 2006, the Individual Income Tax Return (For the taxpayers with an annual income of 120,000 yuan or more) shall
be extend to a convenient site that taxpayers can easily get and use, for instance, uploaded onto the website of the tax authority,
placed on the tax service hall, sent to the entities with many high-income individuals;

(2)

Within the term for filing tax returns in the first quarter of 2007, the tax authorities for acceptance of file of tax returns shall
make full and good preparations for the acceptance of tax return. The tax service hall for acceptance of file of tax returns shall
establish a special window for the acceptance of voluntary file of tax returns by the taxpayers with an annual income of 120,000
yuan or more, or provide service for easy and efficient acceptance of tax returns to facilitate the submission of the tax returns
by taxpayers. A region that expects a large number of individuals that need to make declarations shall reduce the number of individuals
that make direct declarations at the tax service hall by all means, such as promoting the network-based file of tax returns and filing
tax returns by mail, and etc.

(3)

The tax service hall for the acceptance of tax returns filed by the taxpayers with an annual income of 120,000 yuan or more shall
set up a special window for accepting the file of tax returns for making up the underpaid taxes so as to provide fast and convenient
service for it.

(4)

The tax authority with computerized means shall, in accordance with the ideas prescribed by the Measures, pay attention to business
demands, adjust and perfect the tax collection management software for acceptance of the file of tax returns, and make full use of
computerized means to ensure the smooth file of tax returns by the taxpayers with an annual income of 120,000 yuan or more.

(5)

After the term for the file of tax returns is over, the tax authorities of all regions shall establish archives for the materials
on voluntary file of tax returns by the taxpayers with an annual income of 120,000 yuan or more, which shall be sorted out, compared,
and analyzed, and shall be taken a dynamic administration thereof.

All regions shall, upon receipt of this Circular, promptly carry out the ideas prescribed in this Circular, take measures to earnestly
implement it; and shall find and solve the problems encountered in the implementation thereof in a timely manner, and report the
relevant matters to the State Administration of Taxation.

The State Administration of Taxation

November 6, 2006



 
The State Administration of Taxation
2006-11-06

 






MEASURES FOR THE ADMINISTRATION OF QUOTAS FOR COAL EXPORT

State Development and Reform Commission, Ministry of Commerce, Customs General Administration

Decree of the State Development and Reform Commission, the Ministry of Commerce and the General Administration of Customs of the People’s
Republic of China

No. 7

In accordance with the Foreign Trade Law of the People’s Republic of China and the Regulation of the People’s Republic of China on
the Administration of Import and Export of Goods, the State Development and Reform Commission has, in conjunction with the Ministry
of Commerce and the Customs General Administration, formulated the Measures for the Administration of Quotas for Coal Export, which
are hereby promulgated, and shall come into force on July 1, 2004.

Ma Kai, Director General of the State Development and Reform Commission

Lv Fuyuan, Minister of the Ministry of Commerce

Mou Xinsheng, Director General of the Customs General Administration

January 7th, 2004

Measures for the Administration of Quotas for Coal Export

Chapter I General Provisions

Article 1

With a view to regulating coal export, guarantee the compliance of the administration of quotas for coal export with the principles
of efficiency, impartiality, publicity and transparency, and to maintaining the normal order of coal export, the present Measures
are formulated in accordance with the relevant provisions in the Foreign Trade Law of the People’s Republic of China and the Regulation
of the People’s Republic of China on the Administration of Import and Export of Goods.

Article 2

The State Development and Reform Commission (hereinafter referred to as the SDRC) shall, in conjunction with the Ministry of Commerce,
be responsible for determining the total quantity of quotas for coal export of the whole country and the distribution thereof.

Article 3

The present Measures shall be applied to coal export under ordinary trade. The coal export by other trade means shall be subject to
the relevant existing provisions.

Chapter II Total Volume of and Application for Quotas for Coal Export

Article 4

The total volume of quotas for coal export in each year and the application procedures shall be announced by the SDRC on the website
of China Economic Information (https://www.cei.gov.cn) and that of the State Development and Reform Commission (https://www.sdpc.gov.cn)
by October 31 of the last year.

Article 5

The following factors shall be taken into account when determining the total volume of quotas for coal export:

(1)

Guaranty of the State’s economic safety;

(2)

Rational utilization of coal resources;

(3)

Conformity with the development planning, targets and polices of the State in respect of the relevant industries; and

(4)

Supplies and demands in the international and domestic markets.

Article 6

Coal export shall apply state-run trade administration. An export enterprise that has obtained the state-run trade right for coal
export may apply for quotas for coal export.

Article 7

An export enterprise shall file a quota application to the SDRC in due written form, and shall submit the relevant documents as required.

Article 8

The SDRC shall, from November 1 to 15 of each year, accept the applications filed by coal export enterprises for quotas for coal export
of the next year.

Chapter III Distribution, Adjustment and Administration of Quotas for Coal Export

Article 9

The SDRC shall, jointly with the Ministry of Commerce, distribute to the enterprises 80% of the total volume of quotas for coal export
for the next year by December 15 of each year, with the remaining part to be distributed no later than June 30th of the very year.

Article 10

The quotas for coal export shall be distributed by referring to the coal export performance of the enterprises during the last year.

Article 11

The validity period of a quota for coal export shall expire on December 31 of the current year.

Article 12

The distributed quotas may be adjusted, should any of the following circumstances occur:

(1)

There is any major change in international market;

(2)

There is any major change in the situation of domestic resources;

(3)

The schedules of using the quotas by export enterprises are obviously not balanced; or

(4)

Other circumstances under which the quotas need to be adjusted.

Article 13

A coal export enterprise shall, upon the strength of the approval document for quota, and in accordance with the relevant administrative
provisions on export permit, apply to the permit issuance institution authorized by the Ministry of Commerce for the export permit,
and shall, upon the strength of the export permit, go through the formalities of customs declaration and release upon inspection
in the customs afterwards.

The coal export permits shall be administered in accordance with the relevant provisions of the Ministry of Commerce on permit administration.

Article 14

A coal export enterprise shall report the information on using quotas for coal export of the last month to the SDRC for archival purposes
by the fifth day of each month.

Chapter IV Legal Liabilities

Article 15

Where a coal exporter is punished by the customs, the taxation authority, the commodity authority, the foreign exchange administration,
or any other organ due to its violation of laws or rules, the SDRC may, in accordance with the actual circumstance, deduct the quotas
for coal export that the coal exporter has already obtained.

Article 16

Where a coal exporter forges or alters an approval document or permit for export quotas, or obtains an approval document or export
permit for export quotas by deceptive or other unfair means, it/he shall be punished in accordance with Articles 66 and 67 of the
Regulation on Import and Export of Goods. The SDRC may also nullify the quotas for coal export that the coal exporter has already
obtained.

Article 17

Whoever has any dissents over any decision on quota distribution or penalty may either initiate an administrative reconsideration
in accordance with the Administrative Reconsideration Law, or bring a lawsuit to the people’s court in accordance with the law.

Chapter V Supplementary Provisions

Article 18

The responsibility to interpret the present Measures shall remain with SDRC, the Ministry of Commerce and the Customs General Administration.

Article 19

The present Measures shall come into force on July 1, 2004.



 
State Development and Reform Commission, Ministry of Commerce, Customs General Administration
2004-01-07

 






ADMINISTRATIVE RULES OF FUTURES BROKERAGE COMPANY (FOR TRIAL IMPLEMENT)

China securities regulatory commission

Circular issued by China securities regulatory commission on administrative rules of futures Brokerage Company (for trial implement)

Every futures brokerage company:

For the purpose of moving forward the futures brokerage company to further improve administration for company, while promoting it
to operate in a safe, steady and highly efficient way, preserving legal rights and interests of shareholders, futures investors and
other persons with related interests, the said rules were formulated and promulgated by the commission, shall be followed and applied.

China securities regulatory commission

March 10, 2004

Administrative rules of futures Brokerage Company (for trial implement)

Chapter 1 General provisions

Article 1

for the purpose of advancing futures brokerage company to further improve the administration of company, establishing and improving
modern enterprise system, promoting futures brokerage company to operate in a normative, steady way according to law, preserve the
interests of investor and the public, further standardize the development of futures market, the rules are formulated in accordance
with company Law of the People’s Republic of China, the interim administration provisions for futures trade and related provisions
of other law and regulations.

Article 2

for the purpose of the rules, the term “company administration” refers to the organization structure that takes the board of shareholders,
board of directors, board of supervisors (or supervisor), and manager levels as main body, as well the system arrange that ensure
effected operation and mutual check and balance of the inner organs, and related decision-making, motivation and restraint system.

Article 3

the futures brokerage company shall, while improving the company administration, observe the following basic principles:

(1)

To strengthen check-balance system. The futures brokerage company shall further improve the consultation system and decision-making
procedure of the board of shareholders, board of directors, board of supervisors (or supervisor), and manager levels, make it more
definite, detailed and workable, and ensure that the above- mentioned organs could fulfill respectful function and duty completely

(2)

To augment the risk control with the futures brokerage business. The futures brokerage company shall, on the basis of following the
basic request of law of company, revolve around the futures brokerage business, make it reasonable to define clearly the function
and powers of the board of shareholders, board of directors, board of supervisors (or supervisor), and manager levels, improve inner
administration system, to strengthen capacity of the company on inner control and risk prevention.

(3)

To preserve all shareholders with equal status and rights, emphasize the credit duty of shareholders. The futures brokerage company
shall ensure legitimate rights and interests of non-holding shareholders in system, emphasize the credit duty of all shareholders,
restrain the holding shareholders to damage the interests of the futures brokerage company and other shareholders; and

(4)

To improve the motivation and restraint system. The futures Brokerage Company shall establish more reasonable motivation and restraint
system, create the company culture with normative business operation and positive progress, promote the futures brokerage company
to operate in a highly efficient and steady way.

Article 4

the futures brokerage company established in accordance with law within the territory of china shall be governed by this rule. The
futures Brokerage Company shall, in accordance with the request of this rules, revise the constitution of company, improve the establishment
of inner organs in company, formulate, revise and practice related administration system, further improve the administrative levels
for company.

Chapter 2 shareholder and board of shareholders

Article 5

the futures brokerage company shall, in order to avoid excessive centralization and dispersal of share rights, establish balanced
shares structure relatively and the structure of ultimate holder with rights and interests.

The shareholder of the futures brokerage company conform to the qualification prescribed by china security regulatory commission and
get ratification from china security regulatory commission and its agency according to regulations; the futures brokerage company
shall be encouraged to introduce, upon assignment of share rights and increase of capital, the shareholders who have good finances,
operate normative business and administration, possess fine credit and are capable of support the company to make normative development.

Article 6

the constitution and rules of discussion of he futures Brokerage Company shall ensure that the shareholders and board of shareholders
possess the rights and duty, which are granted by the company law.

Article 7

all shareholders of the futures brokerage company shall be treated as equality. The legal status and rights of middle and minor shareholders
shall be valued and protected. No major shareholders take advantage of the special status to damage the legitimate rights and interests
of company and other shareholders

Article 8

the futures brokerage company may stipulate in company constitution that some important matters shall make decisions from the board
of shareholders and be passed by shareholders representing two-thirds or more of the voting rights. For instance, in the case of
related trade in excess of definite trade amount, foreign investment or purchase in excess of definite trade amount, etc. No such
shareholders as relate with the discussed matters shall participate in discussion.

Article 9

the shareholder shall share the knowing-information rights and participation rights for the important matters of company. The board
of shareholders shall list the supervisory and administrative suggestion, notice on regulation and reform and penalized measures
for the company prescribed by china security regulatory commission as matters for announcement. The regime of regulation and reform
for the board of directors and manager levels shall be included in the scope of examination and discussion.

Article 10

the constitution of futures Brokerage Company shall stipulated that the shareholder, who possesses by himself or merger 10 percent
of the voting rights, shall be enpost_titled to propose the matters for examination and discussion to the board of shareholders. The board
of shareholders shall make examination, discussion and votes for the proposed matters.

Article 11

credit duty for the company and other shareholders shall rests with the shareholder, and the shareholder shall fulfils the duty of
making investment strictly. No futures brokerage company shall provide the shareholder’s investment with guaranty and funs circulation
directly of indirectly; no shareholders shall occupy and transfer the assets of the company in any form, the shareholders, especially
holding shareholders and its related party, shall not damage the legitimate rights and interests of the company, other shareholders
and futures investors upon the form of related trade and assets reorganization.

Article 12

the futures brokerage company shall not, while provide the shareholders and the related party with futures brokerage service, relax
the request on risk control and report related information on providing service at the fixed term to the board of shareholder, board
of directors and board of supervisors (or supervisor).

Article 13

the administration structure of futures Brokerage Company shall ensure the company’s independence. The shareholders and ultimate holder
with rights and interests shall not make any approval formalities for election decision of the board of shareholders on personnel
matters and engagement decision of the board of directors on personnel matters; the said persons shall not overstep the board of
shareholders and the board of directors directly to appoint and relieve the senior administrative personnel of the futures brokerage
company of the post, or directly intervene such business and administration matters as trade, settlement, risk control, finance and
account, administration for security money and branches administration, etc. there is not subordinate relation between the mentioned
above functional departments of the futures brokerage company and the shareholders, the ultimate holders with rights and interests,
as well its subordinate functional departments. The persons in charge of the mentioned above functional departments shall not hold
concurrent office at the shareholder’s units.

Article 14

the futures brokerage company shall strictly make assets and finance independent of the shareholders. The security money paid by the
futures investor shall be administrated close in accordance with the request of china security supervisory commission.

Article 15

the shareholders shall be liable for offer the shares structure and related information of the ultimate holders with rights and interests
in accordance with the request of china security supervisory commission.

Article 16

if the shareholder is under the following circumstances, it shall inform the board of directors of the futures brokerage company timely:

(1)

Where the shares rights form the futures brokerage company are subject to compulsory implementation or litigation preservation measures

(2)

Where the shareholders pledge the shares rights form the futures brokerage company

(3)

Where the shareholders prepare assignment of the shares rights form the futures brokerage company

(4)

Where the merger, separation or making major assets and liabilities reorganization arise

(5)

Where the shareholders enter into liquidation procedure or be taken over; and

(6)

Other circumstances possibly lead to transfer of the shares rights and the shareholder’s rights from the futures brokerage company.

The futures brokerage company shall report the related information to the agency of china security supervisory commission at company’s
domicile within the three working days form the date of knowing the mentioned above information.

Article 17

where the shareholder and director have relations with the existent or planned contract, trade and arrangement of the futures brokerage
company directly or indirectly, in any case, whether relate matters need approving by the board of shareholders and board of directors,
the shareholder and director shall inform the nature and degree of relations revolved to the board of directors and board of supervisors
(or supervisor).

Article 18

the board of directors shall, in accordance with the rules of discussion, organize and arrange the meeting of shareholders scientifically
and reasonably, and ensure that the shareholders possess enough time to participate in discussion, making proposal and decisions.
The original record and minutes of meeting shall be integrated and authentic, and shall be reserved properly by the board of directors.

Article 19

these matters, if the major decision-making is unable to be made by virtue of default by the board of directors or the board of shareholders
is unable to be convened, the shareholder holding definite proportion of shares by himself or merger be enpost_titled to convene the general
meeting of shareholders, shall be defined in the constitution of the futures brokerage company.

Chapter 3 the director and the board of directors

Article 20

the board of the futures brokerage company shall seriously perform the functions and powers of the board of directors prescribed by
company law. Except the matters, the functions and powers performed by the board of directors shall be prescribed in the constitution
of the futures brokerage company:

(1)

To review and decide on administration system for cover cost drafted by the manager levels, to ensure that administration for cover
cost of the futures brokerage company shall conform to various requests of the close administration for cover cost from china security
supervisory commission;

(2)

To review and decide on whether performing the plan on related business innovation, ensure validity of business innovation activities
and establishment of risk prevention system; and

(3)

To review and decide on the risk control system of the futures brokerage company.

Article 21

where the board of directors authorizes the chairman of board to exercise the part powers of the board of directors, the authorization
principle and authorization content from the board of directors shall also be specified clearly in company constitution. All these
matters involving the major interests of the company shall be submitted to the board of directors or the board of shareholders for
examination and decision-making. For the purpose of control the decision-making risk of the company effectively, the board of directors
shall also specify such matters as the authorization scope and limit for the manager levels.

Article 22

the public and fair procedure for election and engagement of the director shall be designated in the company constitution. The members
of board of directors shall possess the essential knowledge, skill and qualification for performing the duties, as well participate
in positively related trains. The director shall ensure enough time and energy to perform his due duties.

Article 23

the meeting of board of directors shall be held once every year at least and shall produce the meeting record. The board of directors
shall formulate normative and specified rules of discussion. The meeting of board of directors shall produce integrated and authentic
meeting record, and the attending directors shall sign on it. The original record and meeting minutes shall be reserved properly.

Article 24

where the decision-making of the board of directors violates the law, regulations and provisions of the company constitution, which
results in the loss of the company, the directors who participate in making decision shall be investigated. While, upon making proof,
the directors who state the objection in vote and voted against the decision, which have been recorded in the meeting record, shall
not be included.

Article 25

the board of directors may establish under it such institution as the specialty commission, etc, and formulate specified working rules
and working duties, so as to provide the board of directors with reference suggestion in making decision, ensure functions of the
board of directors being brought into full play. The related institutions of board of directors may engage intermediary institution
to assist in work performance, the relate charges shall be paid by the company.

The futures brokerage company shall be encouraged to establish such major institutions engaging in special consultation and supervision
as audit, risk control institution, etc, intensify risk supervision for business operation and making decision of the company and
urge the company to operate business in a legal and steady way.

Article 26

the futures brokerage company shall be encouraged to establish the independent director system. The independent director of futures
Brokerage Company shall concentrate on and protect the interests of middle-minor shareholders and futures investors.

Article 27

where the futures brokerage company is under one of the following circumstances, the independent director system shall be established:

(1)

Where the registered capital is more than 50,000,000 Yuan (50,000,000 Yuan included);

(2)

Where a single shareholder or the ultimate holder with rights and interests hold 50 percent of the shares directly or indirectly from
the futures brokerage company;

(3)

Where a single person assume office as the chairman director and general manager simultaneously;

(4)

Where the financial institution invest shares directly or indirectly; and

(5)

Other circumstances the china security supervisory commission prescribe

Article 28

such relations as influence the independent judgment shall exist between the independent director and the futures brokerage company,
principal shareholders, as well the ultimate holders with rights and interests, the following personnel shall be assumed office as
the independent director:

(1)

Where such personnel as hold the office in the futures brokerage company or its subordinate company, and directly-related relatives
and main relatives and friends the said personnel is included;

(2)

Where such personnel as hold the office in the units that hold more that 5 percent of shares rights from the futures brokerage company
directly or indirectly, or the shareholders units that rank the top 5 of amount of the shares in the futures brokerage company, the
directly-related relatives of the said personnel is included;

(3)

Where such personnel as serve the futures brokerage company with service on finance, law and consultation;

(4)

Where such personnel as is under the mentioned above circumstances in a recent year;

(5)

Where other personnel specified by the company constitution; and

(6)

Where other personnel designated by china security supervisory commission.

Article 29

the shareholder, the board of directors and board of supervisors (or supervisor) of the futures brokerage company may propose the
candidate for the independent director, and which shall be decided upon a vote by the board of shareholders. The one that nominate
for the independent director shall be made by the consent of the nominee before nomination. The tenure of the independent director
is identical with other directors.

Article 30

the futures brokerage company shall, within 10 days after the date of decision on election for the independent director being made
by the board of shareholders, report the information on the election and appointment for the independent director to china security
supervisory commission. Where the independent director lay down the office or is removed from office in his tenure of office, the
independent director in person and the futures Brokerage Company shall propose the explanation in writing to the board of shareholders
and its agency of china security supervisory commission and the board of shareholders.

Article 31

except the functions and powers of the director granted by company law and other law and regulations, the independent director exercise
the following functions and powers prescribed in the constitution of the futures brokerage company:

(1)

To propose for convening the board of director;

(2)

To submit to the board of directors or the board of supervisors (or supervisor) to convene the interim meeting of shareholders

(3)

To propose that the board of directors shall conduct an audit while leaving his post for the administrative staff of company who is
suspected of violating law and regulations; to submit to the board of shareholders to conduct a audit for the director and supervisor
who is suspected of violating the law and regulations.

(4)

To express the objective and fair independent opinion as far as the following matters prescribed by the futures brokerage company;

1.

The investment, conducting finance and business operation activities other than the futures brokerage business;

2.

The amount of major related transaction is more than 1,000,000 Yuan;

3.

The information on risk control and the price paid by virtue of providing the shareholders and related party with service by the futures
brokerage company;

4.

The business innovation activities of the futures brokerage company;

5.

The distribution scheme of profit;

6.

The appointment and dismissal of manage levels members;

7.

The matters that cause probably the heavy losses of the futures Brokerage Company;

8.

The matters that damage probably the rights and interests of middle-minor shareholders;

9.

The matters that damage probably the rights and interests of the futures investors;

10.

The plan on salaries and motivation of the director, supervisor and manager levels member; and

11.

Other circumstances designated by the company constitution.

The suggestions expressed by the independent directors shall be clearly stated in the meeting record. Where the above mentioned proposals
or independent opinions of the independent director shall be accepted by the futures brokerage company, the independent director
shall report detailed information on related independent opinions to the agency of china security supervisory commission on the domicile
of company for record.

Article 32

the standard of salary and allowances of the independent director shall be prescribed by the board of directors, then examined and
approved by the board of shareholders.

Article 33

the futures brokerage company that established the independent director system shall reasonably stipulates related system on the independent
director in the constitution, which contains the nomination, election procedure, functions and powers and allowances of the independent
director, to guarantee that the independent director can play a proper role.

Chapter 4 the supervisors and board of supervisors

Article 34

the futures brokerage company shall establish the board of supervisors and supervisor in accordance with the request by company law.
The board of supervisors and supervisor exercise carefully the functions and powers prescribed by company law, examine finance of
the company, and exercise supervision for the offence against the law and regulations of the directors and managers. Besides this,
the board of supervisors or board of supervisors shall also exercise emphasized supervision for the futures brokerage company on
the legitimacy of administration for security money and business innovation activities.

Article 35

the public and fair procedure for election and engagement of the supervisor and the complete rules of discussion of the board shall
be designated in the company constitution. The meeting of board of supervisors shall be held once every year at least and shall produce
the meeting record. The original record, meeting minutes and the specialized report and suggestion documents submitted by the supervisors
shall be reserved properly

Article 36

the futures brokerage company shall stipulate clearly in the constitution the limit of numbers and scale of the supervisors elected
by the holding shareholders, in the case that the numbers of directors elected by the holding shareholders are more than definite
proportion of the members of board of directors,

Article 37

the supervisors shall possess some specialized knowledge and working experience on finance, audit, law and financial affairs, etc.
with a view to fulfill effectively the duty, the board of supervisors or the supervisors may employ or engage temporarily related
specialized personnel to assist in work performance, the charges for engagement shall be paid by the futures brokerage company.

Article 38

the futures brokerage company shall ensure that the board of supervisors and supervisors know information on the business operation
of the company. The supervisor may be present at meetings of the board of directors and office meetings of managers to be informed
of the course of major decision-making and ensure the timeliness, fullness and convenience on getting information.

Before no major decision-making is published, the supervisor shall be responsible for keeping the information acquired confidential.

Article 39

where the board of supervisors or supervisor observes the director, general manager and other senior administrative personnel in violation
against the rules, it shall request the said personnel to correct immediately the offence and report to the agency of china security
supervisory commission at company’s domicile.

Article 40

where the supervisor is informed of the director and manager levels of the company in violation against the company constitution and
other information on damaging the interests of the company, shareholder and the investor, if without fulfilling the duty, the responsibility
shall rest with the supervisor correspondingly.

Chapter 5 the manager levels

Article 41

For the term “the manager levels” of the provisions, it shall consist of the general manager and vice-general manager whose qualification
for holding office shall be examined and approved by china security supervisory commission.

Article 42

the manager levels shall fulfill carefully the duty prescribed by company law.

Article 43

the members of the manager levels shall observe the principle of good faith, and shall, in accordance with the law and regulations,
exercise carefully and conscientiously the functions and powers within the limit of powers; the said personnel shall not seek such
commercial opportunity as belong to the future brokerage company and hold concurrent post in other economic organizations.

Article 44

the manager levels devote themselves to their duty conscientiously, upon the basis of business operation in accordance with the law
and regulations, as well no damage to social interests, pursue continuously the maximal interests of the futures brokerage company
and seek great investment gains for the shareholders.

Article 45

the business operation and administration activities conducted by the manager levels, within the limit of powers, in accordance with
the law, shall be intervened. The futures brokerage company shall defined the information in the company constitution that the manager
levels is enpost_titled to resist the board of shareholders and board of directors (shareholder or director) in violation against administration
system on security money and risk control system, as well the request of withdrawing the registered capital, and shall report related
information to he agency of china security supervisory commission at company’s domicile.

Article 46

the reasonable functions shall be established between the members of manager levels, the members of manager levels in charge of the
market development and transaction business shall be put in charge of such businesses as settlement-making or risk control business
concurrently.

Article 47

the manager levels shall report such information as the operating performance, material contract, financial position, safety position
of security money, risk position, operating prospects and business innovation of the futures brokerage company to the board of directors,
the board of supervisors or the supervisor in the fixed time

Article 48

the manager levels shall be subject to the supervision form the board of supervisors or the supervisor, and shall not obstruct and
prevent the supervisor from checking and auditing in accordance with the functions and powers.

Article 49

the manager levels shall establish and improve various meetings system. The manager levels shall make meetings record in holding meetings,
the meetings record shall be submitted to the board of supervisors or the supervisor in the fixed time.

Article 50

the futures brokerage company stipulates clearly the emergency measures when the emergency circumstances result in no members of manager
levels can fulfill the duty in the company constitution maintain the steady operation of the futures brokerage company.

Chapter 6 the performance evaluation and system of motivation and restraint

Article 51

the futures brokerage company shall establish the motivation system that salaries relate with company benefit and personal performance.

Article 52

the futures brokerage company shall establish the fair and public standard and procedure of performance evaluation for the director,
supervisor and the members of manager levels.

Article 53

the form of evaluation, salaries and motivation for manager levels members shall be prescribed by the board of directors or subordinate
salaries commission. The board of directors shall take the performance evaluation for the manager levels members as the basis on
which the salaries and motivation for the manager levels members shall be arranged. The results and standards of performance evaluation
shall be reported to the board of shareholders. No directors, supervisors and manager levels members shall participate in the decision
course in which the salaries and performance evaluation of the said personnel shall be decided.

Article 54

where the directors, supervisors and manager levels members violate the law, regulations, rules and constitution of the futures brokerage
company, and cause the losses to the futures brokerage company, the shareholders and futures investors and bear the direct responsibility,
the said personnel shall be investigated.

Article 55

the interpretation: the terms “the related party and related transaction”-disclosure of relation and transaction of the related party
in this provisions refers to the related party and related transaction defined in the Accounting Criteria for Enterprises by ministry
of finance.

Article 56

China Security Supervisory Commission shall be in charge of interpreting the provisions.



 
China securities regulatory commission
2004-03-15

 






MEASURES FOR THE ADMINISTRATION OF ENTERPRISE GROUP FINANCE COMPANIES






e02417

China Banking Regulatory Commission

Order of China Banking Regulatory Commission

No. 5

The “Measures for the Administration of Enterprise Group Finance Companies”, which were discussed and adopted at the 23rd chairman
meeting of China Banking Regulatory Commission, are hereby printed and distributed, and shall go into effect as of September 1, 2004.

Liu Mingkang, the Chairman of China Banking Regulatory Commission

July 27, 2004

Measures for the Administration of Enterprise Group Finance Companies

Chapter I General Provisions

Article 1

For the purpose of regulating the acts of enterprise group finance companies (hereinafter referred to as finance companies), preventing
financial risks and promoting the stable operation and healthy development of finance companies, the present Measures are formulated
according to the “Company Law of the People’s Republic of China”, the “Banking Regulatory Law of the People’s Republic of China”
and other relevant laws and administrative regulations.

Article 2

The “finance companies”as mentioned in the present Measures refers to non-bank financial institutions which provide financial management
services for the enterprise group member entities (hereinafter referred to as member entities) for the purpose of strengthening the
centralized management of enterprise group funds and improving the efficiency of using the funds.

A finance company established by a foreign-funded investment company for providing its investment enterprises in China with financial
management services shall be governed by the relevant provisions of the present Measures.

Article 3

The “enterprise group”as mentioned in the present Measures refers to an association of enterprise artificial persons, which is lawfully
registered within the territory of the People’s Republic of China, and is composed of parent companies, subsidiary companies, share-participating
companies and other member enterprises or businesses, which are bonded by means of capital, with the parent and subsidiary companies
as the principal part, and with the articles of association of the group as the common behavior criteria.

The “member entities”as mentioned in the present Measures include the parent company, its subsidiary companies with not less than
51% of shares held by the parent company (hereinafter referred to as subsidiary companies), companies with not less than 20% of their
shares solely or jointly held by the parent company or its subsidiary companies or companies with less than 20% of shares but in
a status as the largest shareholder; and public institution juridical persons or social organization juridical persons subordinate
to the parent company or the subsidiary companies.

The “foreign-funded investment companies”as mentioned in the present Measures refers to a company established within the territory
of China with the sole investment of a foreign investor to directly undertake investment activities. The “investment enterprises”include
the foreign-funded investment companies, and the enterprise which is registered within the territory of China and whose more than
25% of shares is held by the foreign-funded investment company either solely or jointly with its investors but 10% of shares is held
by the foreign-funded investment company. Foreign-funded investment companies shall be subject to the relevant provisions of the
present Measures on parent companies, while investment enterprises shall be subject to the relevant provisions of the present Measures
on member entities.

Article 4

The finance company shall operate its business according to the laws, regulations and rules, and may not damage the interests of the
state or the public.

Article 5

The finance companies shall accept the supervision and administration of China Banking Regulatory Commission according to law.

Chapter II Establishment and Modification of Institutions

Article 6

The establishment of a finance company shall be reported to China Banking Regulatory Commission for examination and approval.

The name of a finance company shall be approved by the industrial and commercial registration organ, and be marked with the words
of “Finance Limited Company” or “Finance Limited Liability Company”, and the name of the enterprise group either in a full form or
in a shortened form. Without the approval of China Banking Regulatory Commission, no entity may use the words of “Finance Company”
in its name.

Article 7

An enterprise group applying for the establishment of a finance company shall meet the following conditions:

(1)

According with the industrial policies of the state;

(2)

In the year prior to its application, the registered capital of its parent company is not less than RMB 800 million Yuan;

(3)

In the year prior to its application, the total amount of the assets of its member entities consolidated into statements for accounting
as required is not less than RMB 5 billion Yuan, the ratio of return on equity not lower than 30%;

(4)

In the two consecutive years prior to its application, the total amount in each year of the business income of its member entities
consolidated into statements for accounting as required is not less than RMB 4 billion Yuan, the total amount of pre-tax profits
in each year not less than RMB 200 million Yuan;

(5)

Its cash flow is stable and large;

(6)

Its parent company has been established for 2 years or more, and has experiences in internal financial management and fund management
in enterprise group;

(7)

Its parent company has a sound corporate governance structure, and has neither any act in violation of laws or rules nor any ill credibility
record in the latest 3 years;

(8)

Its parent company has core business; and

(9)

Its parent company has no inappropriate related party transactions.

The foreign-funded investment company shall, in addition to being subject to the provisions of Items (1), (2), (5), (6), (7), (8)
and (9) of this Article, have no less than RMB 2 billion Yuan of net assets in the year prior to its application and no less than
RMB 200 million Yuan of pre-tax profits each year in the two consecutive years prior to its application.

Article 8

When applying for the establishment of a finance company, the board of directors of the parent company shall make a written commitment
to, in the case of an urgent situation of payment difficulties, increase capital accordingly pursuant to the actual needs in resolving
the payment difficulties, and state such increase in the articles of association of the finance company.

Article 9

Whoever plans to establish a finance company shall satisfy the following conditions:

(1)

Its enterprise group funds are really in need of centralized management, and are reasonably forecasted to achieve a certain business
scale;

(2)

It has the articles of association is in line with the “Company Law of the People’s Republic of China” and the present Measures;

(3)

It has the minimum registered capital as required by the present Measures;

(4)

It has qualified directors and senior managers as required by China Banking Regulatory Commission, a prescribed proportion of employees
in this field as well as qualified professionals competent for such key posts as risk management, intensive fund management, etc.;

(5)

It has sound systems in respect of corporate governance, internal control, business operation, risk prevention, etc.;

(6)

It has the business place, safety prevention measures and other facilities, which meet relevant requirements; and

(7)

Other conditions as provided for by China Banking Regulatory Commission.

Article 10

The minimum registered capital for the establishment of a finance company shall be RMB 100 million Yuan. And the registered capital
shall be the paid-up capital in Renminbi or an equivalent amount of convertible currency.

The registered capital of a finance company undertaking foreign exchange business shall include no less than 5 million USD or an equivalent
amount of convertible currency.

China Banking Regulatory Commission may, in light of the development of finance companies and needs of prudent supervision, adjust
the minimum limit of the registered capital of finance companies.

Article 11

The finance company’s registered capital shall be mainly raised from its member entities, and may also absorb the shares of qualified
institutional investors other than those of the member entities.

The “qualified institutional investor”as mentioned in this Article refers to an external strategic investor who will not transfer
the finance company’s shares it holds within 5 years in principle and has rich management experiences in the industry.

The qualifications of the shareholders of the finance company shall comply with the relevant provisions of China Banking Regulatory
Commission.

Article 12

The registered capital for the establishment of a finance company by a foreign-funded investment company may be contributed by the
foreign-funded investment company either solely or jointly with its investors.

Article 13

Among the employees of a finance company, those who have engaged in banking or financial work for 3 years or more may not be lower
than two thirds of all the employees, and those who have engaged in banking or financial work for 5 years or more may not be lower
than one third of all the employees.

Where an auditor of an world famous accounting firm, a program designer or system analyst of a computer company, or a professional
who has held the relevant business or management post for 2 years or more in an world famous asset management company, a fund company,
an investment bank or a securities company, and has participated in the relevant domestic business and policy training, he shall
be considered to have engaged in banking or financial work for 3 years or more.

Article 14

The establishment of a finance company shall undergo two stages, namely, preparation and opening business. To apply for preparation
prior to the establishment of a finance company, the parent company shall file an application to China Banking Regulatory Commission,
and submit the following documents and materials:

1.

The application letter, which covers the name, locus, registered capital, shareholders, equity structure, business scope, etc. of
the finance company to be established;

2.

The feasibility study report, which shall contains:

(1)

The overall production and management situation of the parent company and other member entities, their cash flow analysis, their position
in the industry involved, and their mid and long-term development plan;

(2)

The purpose and functions of establishing the finance company and the business forecast;

(3)

The consolidated balance sheets, statements of profits and losses and the statements of cash flow of the latest 2 years, which have
been audited by an eligible accounting firm.

3.

A name list of the member entities, and the relevant certification materials as issued by relevant authorities;

4.

The “Enterprise Group Registration Certificate”, photocopies of the Business Licenses of the applicant and other investors, and their
guaranty for capital contribution;

5.

In the case of the establishment of a foreign-funded finance company, the Approval Certificates of the Foreign-Funded Enterprise
of the foreign-funded investment company and its investment enterprises.

6.

Testimonials signed by the juridical representative of the parent company to confirm the authenticity of the abovementioned documents;
and

7.

Other documents as required by China Banking Regulatory Commission.

Article 15

Where the application for preparation prior to the establishment of a finance company is approved by China Banking Regulatory Commission
after examination, the applicant shall, within 3 months as of receipt of the approval document, complete the preparatory work for
the establishment of the finance company, and file an application to China Banking Regulatory Commission for opening business and
submit the following documents in the meantime:

(1)

A draft of the articles of association of the finance company;

(2)

Operation guidelines and plans of the finance company;

(3)

A name list of the shareholders of the finance company, and their respective amounts and proportions of investment contributed;

(4)

A capital verification certificate issued by a legal capital verification institution on the capital contributions of the shareholders
of the finance company;

(5)

A name list of the candidates of directors and officers, detailed resumes thereof, and testimonials on their competence for such posts;

(6)

A name list of the candidates of employees for the job of risk management and centralized fund management, and their detailed resumes;

(7)

Testimonials of the relevant personnel certifying that they have engaged in banking or financial work for 5 years or more;

(8)

The finance company’s business rules and risk prevention systems;

(9)

Documents on the finance company’s business place and other related facilities; and

(10)

Other documents as required by China Banking Regulatory Commission

Article 16

After China Banking Regulatory Commission approves an application of a finance company for opening business, it shall issue the “Financial
Business Permit” and make an announcement. The finance company may not open business until it has registered with the administrative
department for industry and commerce upon the strength of the “Financial Business Permit”, and has obtained the “Business License
of Enterprise Juridical Person”.

Article 17

The finance company may, in light of the needs of its business and upon the examination and approval from China Banking Regulatory
Commission, establish a branch in an area where it has many member entities and large amount of businesses.

The branches of a finance company don￿￿t have the status of a legal person, and shall carry out their business activities upon authorization
of the finance company according to the present Measures, with the civil liabilities borne by the finance company.

Article 18

The finance company may, in light of the needs of its business management, establish a representative office in the area where its
member entities are densely located, and report it to China Banking Regulatory Commission for archival purposes.

No representative office of the finance company may operate business, except for undertaking such work as business recommendation,
customer services, pressing for payment of debts, information collection and feedback and etc.

Article 19

The finance company applying for the establishment of a branch shall satisfy the following conditions:

(1)

It really needs to develop its business and provide financial management services to its member entities;

(2)

It has been established for 2 years or more, and its registered capital is not less than RMB 300 million Yuan and its capital adequacy
ratio not lower than 10%;

(3)

There shall be not less than 10 member entities which the to-be-established branch will serve, and the total assets of such member
entities may not be lower than RMB 1 billion Yuan; or if there are less than 10 member entities, the total assets of such member
entities may not be lower than RMB 2 billion Yuan;

(4)

It is in good operation status, and has no records of irregular operations;

Article 20

The branch of a finance company shall satisfy the following conditions:

(1)

Having the minimum amount of working capital as provided for in the present Measures;

(2)

Having senior managers with qualifications to hold their posts as stipulated by China Banking Regulatory Commission;

(3)

Having sound systems on business operation, internal control, risk management, and assumption of liabilities;

(4)

Having the business place, preventive measures for safety, and other facilities related to the business, which conform to the relevant
requirements; and

(5)

Other conditions as provided for by China Banking Regulatory Commission.

Article 21

The working capital of the branch of a finance company may not be less than RMB 50 million Yuan. And the total amount of the working
capital allotted by a finance company to all its branches may not be more than 50% of its registered capital.

Article 22

When a finance company applies for the establishment of a branch, it shall submit the following documents and materials to China Banking
Regulatory Commission:

(1)

An application letter containing the name, locus, working capital, business scope, the objects of service and etc. of the branch to
be established,;

(2)

The feasibility study report including the forecasted amount of business of the branch to be established, the conditions of production
and operation of the member entities at the locality, the fund flow analysis, as well as the mid and long-term development plans,
etc.;

(3)

Relevant testimonials conforming to the provisions of Article 20 ;

(4)

The resolution of the finance company’s board of directors on applying for the establishment of the branch, and the resolution draft
on authorization of the business scope of the branch to be established; and

(5)

Other documents as required by China Banking Regulatory Commission.

Article 23

For a finance company’s branch that is approved to be established, China Banking Regulatory Commission shall issue the “Financial
Business Permit” to it and shall make an announcement. The branch may not open its business until it has gone through the registration
formalities in the administrative department for industry and commerce upon the strength of the “Financial Business Permit” and has
obtained the Business License.

Article 24

Where a finance company or its branch that is approved to be established does not open its business within 6 months as of the date
of obtaining the Business License without justifiable reasons, or suspends its business for 6 consecutive months as of the date of
opening its business without justifiable reasons, its “Financial Business Permit” shall be revoked by China Banking Regulatory Commission,
and such revocation shall be announced to the public.

Article 25

The finance company shall use the “Financial Business Permit” according to the laws, administrative regulations and the provisions
of China Banking Regulatory Commission, and is prohibited from counterfeiting, altering, transferring, leasing or lending the “Financial
Business Permit”.

Article 26

The nature, organizational form and organizational structure of a finance company shall comply with the “Company Law of the People’s
Republic of China” and other relevant laws and regulations, and shall be stated in the company’s articles of association.

Article 27

If a finance company plans to modify any of the following items, it shall report to China Banking Regulatory Commission for approval:

(1)

Its name;

(2)

Its business scope;

(3)

Its registered capital;

(4)

Its shareholder(s) or equity structure;

(5)

Its articles of association;

(6)

Its director(s) or senior manager(s);

(7)

Its business place; or

(8)

Other matters as prescribed by China Banking Regulatory Commission.

Where a finance company’s branch intends to modify its name, working capital, business place or to replace any of the senior managers,
the finance company shall report it to China Banking Regulatory Commission for approval.

Chapter III Business Scope

Article 28

The finance company may operate the whole or part of the following businesses:

(1)

Providing its member entities with financial and financing advise, credit authentication, as well as related consultation and agency
services;

(2)

Assisting its member entities in collection and payment of money for transactions;

(3)

Providing approved insurance agency services;

(4)

Providing guarantee to its member entities;

(5)

Handling entrusted loans and entrusted investments between member entities;

(6)

Handling acceptance and discount of bills for member entities;

(7)

Handling internal transfer settlement between member entities, and designing programs for settlement and clearance accordingly;

(8)

Absorbing deposits from its member entities;

(9)

Granting loans to and handling financial lease for the member entities;

(10)

Engaging in inter-bank borrowing; and

(11)

Other businesses as approved by China Banking Regulatory Commission.

Article 29

The finance company which satisfies the prescribed conditions may apply to China Banking Regulatory Commission for undertaking the
following businesses:

(1)

Issuing finance company bonds upon approval;

(2)

Underwriting enterprise bonds of the member entities;

(3)

Contributing share right investments to financial institutions;

(4)

Securities investment; and

(5)

Undertaking consumption credit, buyer’s credit and financial lease of the products of the member entities.

Article 30

The finance company must, when engaging in the businesses as listed in Article 29 of the present Measures, strictly comply with the
relevant provisions of the state and the relevant requirements of China Banking Regulatory Commission on prudent supervision, and
shall also meet the following conditions:

(1)

It has been established for not less than 1 year, and is in good management condition;

(2)

Its registered capital is not less than RMB 300 million Yuan; and if it engages in consumption credit, buyer’s credit and financial
lease of the products of its member entities, its registered capital is not less than RMB 500 million Yuan;

(3)

It has been approved by the shareholders’ meeting and authorized by the board of directors;

(4)

It has sound investment decision-making mechanism, risk control system, working regulations and corresponding management information
system;

(5)

It has corresponding qualified professionals; and

(6)

Other conditions as prescribed by China Banking Regulatory Commission.

Article 31

The finance company may not engage in any offshore business, nor may it engage in any form of cross-border fund business except those
as provided for in Paragraph 2 of Article 28 of the present Measures.

Article 32

The business scope of a finance company shall, after approved by China Banking Regulatory Commission, be stated in the finance company’s
articles of association. The finance company may not undertake any non-financial businesses such as industrial investment and trade.

The finance company shall, when classifying its business into detailed types within the approved business scope, report to China Banking
Regulatory Commission for archival purposes, with an exception of the intermediary businesses involving no credits or debts.

Article 33

The business scope of a finance company’s branch shall be authorized by the finance company within its business scope in light of
the principle of prudent operation, and shall be reported to China Banking Regulatory Commission for archival purposes. No branch
of a finance company may provide guarantee, undertake the inter-bank borrowing (lending) and the businesses as prescribed in Article
29 of the present Measures.

Chapter IV Supervision, Administration and Risk Control

Article 34

The finance company shall, when running its business, accord with the following requirements on asset-liability ratio:

(1)

Its capital adequacy ratio may not be lower than 10%;

(2)

The amount of the capital borrowed may not be more than the total amount of its capital;

(3)

The guarantee balance may not be more than the total amount of its capital;

(4)

The ratio of its short-term securities investments to the total amount of its capital may not be higher than 40%;

(5)

The ratio of its long-term investments to the total amount of its capital may not be higher than 30%; and

(6)

The ratio of its own fixed assets to the total amount of its capital may not be higher than 20%.

China Banking Regulatory Commission may, in light of business development of finance companies or the needs of prudent supervision,
make adjustments to the above-mentioned ratios.

Article 35

The finance company shall, according to the principle of prudent operation, set down its business rules and procedures, establish
and perfect its internal control system.

Article 36

The finance company shall establish respectively a risk management department and an auditing department which are responsible to
the board of directors, and shall formulate risk control and auditing systems for various types of business, which shall be regularly
reported to the board of directors each year and to China Banking Regulatory Commission.

Article 37

The board of directors of a finance company shall entrust a qualified intermediary institution each year to audit the company’s business
activities of the last year, and shall, before April 15 of each year, submit to China Banking Regulatory Commission the annual audit
report which has been signed and confirmed by the chairman of the board.

Article 38

The finance company shall establish and improve its financial and accounting systems according to the relevant provisions of the state.

The finance company shall comply with the principle of prudent accounting, faithfully record and entirely reflect its business activities
and financial situation.

Article 39

The finance company shall, according to the provisions, submit to China Banking Regulatory Commission its balance sheet, statement
of profits and losses, statement of cash flow, statement of examination on its non-on-site supervision indicators, and other statements
as required by China Banking Regulatory Commission, and shall, within 1 month as of the end of each fiscal year, submit the financial
statements and documents of the last year.

The legal representative of the finance company shall be responsible for the authenticity of the above-mentioned statements submitted
bearing his signature.

Article 40

The finance company shall, by the end of April each year, submit to China Banking Regulatory Commission the directory of the member
entities under the enterprise group to which it belongs, and shall provide the information on the operating situation in the last
year of the foresaid enterprise group and relevant data, as well.

The finance company shall, before starting business with a new member entity, be filed timely with China Banking Regulatory Commission
for archival purposes, and shall provide the relevant information on the member entity. Where a member entity having business contacts
with the finance company is separated from the enterprise group due to the change of equity, the finance company shall timely report
it to China Banking Regulatory Commission for archival purposes; and if there is any remaining business, it shall meanwhile submit
a solution to the remaining business.

Article 41

China Banking Regulatory Commission has the power to require a finance company at any time to submit reports and information on the
relevant business and financial situation.

Article 42

When a finance company meets with bank run, failure to discharge debts due, large amount of overdue loans, advancement of money for
providing guarantee, or serious computer breakdown, the case where it is robbed or deceived, or the involvement of any of its directors
or senior mangers in such major events as serious violation of disciplines or criminal case and etc., it shall immediately take emergency
measures and timely report to China Banking Regulatory Commission.

When an enterprise group or any of its member entities meets with a major organization change, a equity transaction or an operation
risk, or other matters, which might impair the normal operation of the finance company, the finance company shall timely report to
China Banking Regulatory Commission.

Article 43

The finance company shall pay deposit reserve and draw loss reserve according to the provisions of the People’s Bank of China, and
write off its losses according to the relevant provisions.

Article 44

The finance company shall comply with the relevant provisions of the People’s Bank of China on interest rate management; those operating
foreign exchange business shall comply with the relevant provisions of the state on foreign exchange control.

Article 45

China Banking Regulatory Commission has the power to take the following measures according to the relevant procedures and provisions
to make on-site inspections on finance companies pursuant to the requirements of prudent supervision:

(1)

Entering a finance company for inspection;

(2)

Enquiring of employees of a finance company, and requiring them to explain the particulars related to inspection;

(3)

Consulting and reproducing documents of a finance company, which are related to the inspection, and sealing up the documents that
might be transferred, concealed or damaged; and

(4)

Conducting an inspection of a finance company’s management data computer system.

Article 46

Where a finance company provides to a single shareholder a loan with the balance exceeding 50% of the finance company’s registered
capital or exceeding the shareholder’s capital contribution to the finance company, the provision of the loan shall be timely reported
to China Banking Regulatory Commission.

Article 47

Where the liabilities of a finance company’s shareholder to the finance company remains overdue fo

MEASURES FOR THE ADMINISTRATION OF PRELIMINARY EXAMINATION OF THE LAND USED FOR CONSTRUCTION PROJECTS (REVISED IN 2004)

the Ministry of Land and Resources

Order of the Ministry of Land and Resources of the People’s Republic of China

No. 27

The “Measures for the Administration of Preliminary Examination of the Land Used for Construction Projects” were revised and adopted
at the 9th ministerial meeting of the Ministry of Land and Resources on October 29, 2004. The revised “Measures for the Administration
of Preliminary Examination of the Land Used for Construction Projects” are hereby promulgated and shall come into force as of December
1, 2004.

Minister of the Ministry of Land and Resources Sun Wensheng

November 1, 2004

Measures for the Administration of Preliminary Examination of the Land Used for Construction Projects (Revised in 2004)

Article 1

For the purpose of guaranteeing the implementation of the overall planning on land utilization, bringing into full play the macro-control
function of land supply and controlling the total amount of the land used for construction, the present Measures are formulated in
accordance with the Land Administration Law of the People’s Republic of China, the Regulation on Implementation of the Land Administration
Law of the People’s Republic of China and the Decision of the State Council on Deepening the Reform and Rigidly Enforcing Land Administration.

Article 2

The preliminary examination of the land used for construction projects, as referred to in the present Measures, shall mean the examination
lawfully conducted by the administrative department of land and resources on land utilization matters involved in construction projects
at the stages of examination, ratification and archiving of construction projects.

Article 3

The preliminary examination shall abide by the following principles:

(1)

according with the overall planning on land utilization;

(2)

protecting cultivated land, especially basic farmland;

(3)

utilizing land rationally and intensively; and

(4)

complying with the land supply policies of the state.

Article 4

The land used for construction projects shall be subject to preliminary examination at different levels.

The construction projects, which need to be examined and approved by the people’s government or by the development and reform department
and etc. of the people’s government that has approval power, shall be preliminarily examined by the administrative department of
land and resources of the people’s government.

The construction projects, which need to be ratified and archived, shall be preliminarily examined by the administrative department
of land and resources at the same level with the ratification and archiving organ.

Article 5

For a construction project that needs to be examined and approved, the entity using the land for construction shall file an application
for preliminary examination at the stage of feasibility study.

For a construction project that needs to be ratified and archived, the entity using the land for construction shall file an application
for preliminary examination before applying for ratification and archiving.

Article 6

For a construction project that shall be preliminarily examined by the Ministry of Land and Resources as required by Article 4 of
the present Measures, the Ministry of Land and Resources shall entrust the administrative department of land and resources at the
provincial level at the locality of the project to accept the application. However, if the construction project occupies land within
the scope of urban land for construction use as determined in the planning, the administrative department of land and resources at
the city level shall be entrusted to accept the application. After acceptance of the application, the said administrative department
shall advance its opinions from preliminary examination, and transfer and submit them to the Ministry of Land and Resources.

As to the land used for secret-involving military projects or particular construction projects approved by the State Council, the
entity using the land for construction may directly file an application for preliminary examination to the Ministry of Land and Resources.

The small-size fragmentary land used for construction projects such as electrical wire tower bases, well drilling positions, communication
stations and etc., of which the preliminary examination ought to be finished responsibly by the Ministry of Land and Resources, shall
be preliminarily examined by the administrative department of land and resources at the provincial level and be reported to the Ministry
of Land and Resources for archival purposes.

Article 7

When applying for preliminary examination, any entity using the land for construction shall submit the following documents:

(1)

the application form for preliminary examination of the land used for the construction project;

(2)

the application report for preliminary examination including the basic information on the planned construction project, the planned
location, the planned total scale and type of land use and the initial plan on supplementing cultivated land; and

(3)

In the case of a construction project that needs to be examined and approved, the approval document of the project proposal and the
project feasibility study report shall be submitted. If the approval document of the project proposal and the project feasibility
study report are combined, only does the project feasibility study report need to be submitted.

The application form for preliminary examination as prescribed in Paragraph 1 of this Article, shall be uniformly formulated by the
Ministry of Land and Resources.

Article 8

When transferring and submitting the application for preliminary examination on use of land, the administrative department of land
and resources entrusted by the Ministry of Land and Resources to be responsible for preliminary examination shall provide the following
documents:

(1)

opinions from preliminary examination including whether the planned land use for the construction project accords with the overall
planning on land utilization, whether it accords with the policies of the state on land supply, whether the standard and the total
scale of the land to be used conform to the relevant provisions, and whether the initial plan on supplementing cultivated land is
feasible, and so on;

(2)

the drawing on overall planning at the county level or above on land utilization, which indicates the scope of land used for the project,
and other relevant drawings; and

(3)

Where, under the circumstances as prescribed in Article 26 of the Land Administration Law of the People’s Republic of China, the
land used for a construction project demands to amend the overall planning on land utilization, such materials shall be submitted
as the amended planning which has been demonstrated by the relevant departments and experts, the evaluation report on the impacts
of the construction project to the implementation of the planning and the minutes of the hearing on amending the planning.

Article 9

The administrative department of land and resources shall accept and take over the applications for preliminary examination that accord
with Article 7 of the present Measures, and the transferred and submitted documents from preliminary examination which accord with
Article 8 . Where any application or document falls short of the provisions, the administrative department of land and resources
shall either at the spot or within 5 days inform the applicant or the organ that has transferred and submitted the documents in written
form. If the department fails to inform, the application or document shall be deemed as having been accepted and taken over.

The administrative department of land and resources entrusted by the Ministry of Land and Resources to be responsible for the preliminary
examination shall, within 20 days as of acceptance of the application, finish preliminary examination, and transfer and submit the
application to the Ministry of Land and Resources.

Article 10

The preliminary examination shall mainly include:

(1)

Whether the selected locality of the land used for construction projects accords with the overall planning on land utilization; and
whether it confirms to the conditions prescribed in laws and regulations on land administration;

(2)

Whether the construction project accords with the policies of the state on land supply;

(3)

Whether the standard and total scale of the land used for the construction project accord with the relevant provisions;

(4)

Whether the initial plan on supplementing cultivated land is feasible and whether the funds are guaranteed if any cultivated land
is occupied; and

(5)

In the case of any land used for a construction project under the circumstances as prescribed in Article 26 of the Land Administration
Law of the People’s Republic of China, which demands to amend the overall planning on land utilization, whether the proposal on amending
the planning, the evaluation report on the impacts of the construction project to the implementation of the planning and etc. accord
with the laws and regulations.

Article 11

The administrative department of land and resources shall, within 20 days as of acceptance of the application for preliminary examination
or as of receipt of the transferred and submitted documents, finish the examination and issue its opinions from preliminary examination.
If it fails to issue its opinions from preliminary examination within 20 days, the period may be extended for ten days more with
approval of the responsible person of the administrative department of land and resources in charge of the preliminary examination.

Article 12

The opinions from preliminary examination shall include the conclusive opinions on the contents prescribed in Article 10 of the present
Measures, and the concrete requirements on the entity using the land for construction.

Article 13

The opinions from preliminary examination are the must documents for the approval and checkup of a construction project. The requirements
in the opinions from preliminary examination in such aspects as the standard and the total scale of the land to be used and etc.
shall be taken into full consideration at the stage of initial design of the construction project.

The entity using the land for construction shall carefully and earnestly implement the opinions from preliminary examination, and
shall, when applying for using the land according to law, issue a written document on earnestly carrying out the opinions from preliminary
examination.

Article 14

The period of validity of a preliminary examination document of the land use for a construction project shall be two years as of the
approval date. Where, in a preliminarily examined project, major adjustments need to be made such as the purpose of the land, the
locality of the construction project and etc., the party concerned shall apply for preliminary examination again.

Article 15

The preliminary examination shall be finished according to the present Measures prior to the ratification or examination and approval
of a construction project. If the construction project has not been preliminarily examined or fails to pass the preliminary examination,
the party concerned shall not be approved to convert the land for agricultural use into that for construction use or to have the
land requisitioned, nor shall it be permittedor to go through the land supply procedures.

Article 16

The present Measures shall come into force as of December 1, 2004.

 
the Ministry of Land and Resources
2004-11-01

 



ACCOUNTING STANDARDS FOR ENTERPRISES NO. 31 – CASH FLOW STATEMENTS

Accounting Standards for Enterprises No. 31 – Cash Flow Statements

Cai Kuai [2006] No. 3
Chapter I General Provisions

Article 1

These Standards are formulated in accordance with the Accounting Standards for Enterprises – Basic Standards for the purpose of regulating
the preparation and presentation of cash flow statements.

Article 2

The term “cash flow statement” refers to a statement which reflects the inflows and outflows of cash and cash equivalents of an enterprise
in a certain accounting period.

The term “cash” refers to cash on hand and deposits that are available for payment at any time.

The term “cash equivalents” refers to short-term and highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of change in value.

The cash as mentioned in these Standards shall include cash and cash equivalents unless the cash equivalents are mentioned simultaneously.

Article 3

The Accounting Standards for Enterprises No. 33 – Consolidated Financial Statements shall be applicable to the preparation and presentation
of consolidated cash flow statements.

Chapter II Basic Requirements

Article 4

Cash flows statements shall be reported for operating activities, investing activities and financing activities, respectively.

Article 5

Cash flows shall be presented respectively according to the total amounts of inflows and outflows of cash.

However, the following items shall be presented according to the net amounts:

(1)

Cash received or paid on behalf of customers;

(2)

Cash inflows and outflows on items which are quick in circulation, large in amounts, and short in maturity; and

(3)

Items relating to financial enterprises, including short-term loans granted and repayment of principal of such loans, the acceptance
of current deposits and the repayment of the principal of such deposits, financial institution deposits and deposits from or to other
financial institutions, funds borrowed from or lent to other financial institutions, purchase and sale of securities, etc.

Article 6

Some extraordinary items, such as a loss from a natural disaster or an insurance claim shall be classified into the cash flow of
operating activities, investing activities or financing activities respectively according to their features and shall be presented
separately.

Article 7

The exchange rate used for the translation of cash flows in a foreign currency and the cash flows of an overseas subsidiary shall
be the spot exchange rate on the date of the cash flows or shall be the rate which is determined through a systematic and reasonable
method and which is approximate to the spot exchange rate. The effect of a change in exchange rate on cash shall, as an adjustment
item, separately presented in the cash flow statement.

Chapter III Cash Flows Arising from Operating Activities

Article 8

An enterprise shall adopt the direct method to present the cash flows arising from operating activities.

The term “operating activities” refers to all transactions and events except the investing and financing activities of an enterprise.

The term “direct method” refers to a method whereby major classes of cash receipts and cash payments are presented for the cash flows
arising from operating activities.

Article 9

The relevant information about the cash flows arising from the operating activities may be acquired through either of the following
ways:

(1)

The accounting records of the enterprise.

(2)

Making adjustment on the business revenue, business costs and other items in the income statement according to the following items:

(a) The changes of inventory of current period and the changes of items of operating receivables and payables. ;

(b) The depreciation of fixed assets, amortization of intangible assets, provision for asset impairment, and other non-cash projects;
and

(c) Other non-cash items falling into the scope of cash flows arising from investing activities or financing activities.

Article 10

The items to reflect the following information for cash flows arising from operating activities shall be presented separately at
least. :

(1)

Cash received from the sale of goods and the rendering of services;

(2)

Tax refunds received;

(3)

Cash received relating to other operating activities;

(4)

Cash paid for goods purchased and labor services received;

(5)

Cash paid to employee and for employee.

(6)

Payments of all types of taxes; and

(7)

Cash payments relating to other operating activities.

Article 11

The financial enterprises may, according to the industrial features and the actual situation of cash flows, reasonably determine
the categories of cash flows arising from operating activities.

Chapter IV Cash Flows Arising from Investing Activities

Article 12

The term “investing activities” refers to those activities of an enterprise, such as the purchase and construction of long-term assets
and the investments and disposal activity that are not considered to be cash equivalents

Article 13

At least, the items reflecting the following information for the cash flows arising from investing activities shall be presented
separately :

(1)

Cash received from returns of investments;

(2)

Cash received from returns on investments;

(3)

Net cash received from the disposal of fixed assets, intangible assets and other long term assets;

(4)

Net cash received from the disposal of subsidiaries and other business entities;

(5)

Other cash received relating to investing activities;

(6)

Cash paid for the purchase and construction of fixed assets, intangible assets and other long term assets;

(7)

Cash paid for investments;

(8)

Net cash paid for the acquisition of subsidiaries and other business entities; and

(9)

Other cash payments relating to investing activities.

Chapter V Cash Flows Arising from Financing Activities

Article 14

The term “financing activities” refers to those activities that result in changes in the scale and composition of the capital and
debts of an enterprise.

Article 15

At least, the items reflecting the following information for the cash flows arising from financing activities shall be presented
separately:

(1)

Cash received by absorbing investments;

(2)

Cash received from debts;

(3)

Cash received relating to other financing activities.

(4)

Cash paid for repayments of debts;

(5)

Cash paid for distribution of dividends or profits, or cash payments for interests; and

(6)

Cash payments relating to other financing activities.

Chapter VI Disclosure

Article 16

An enterprise shall, in its notes, disclose the information about the reconciliation of net profits to cash flows arising from operating
activities. It shall at least disclose the following items separately for the reconciliation of net profits to cash flows arising
from operating activities:

(1)

The provision for impairment losses of assets;

(2)

The depreciation of fixed assets;

(3)

The amortization of intangible assets;

(4)

The amortization of long-term deferred expenses;

(5)

The deferred expenses;

(6)

The accrued expenses;

(7)

The profit or losses on the disposal of fixed assets, intangible assets and other long-term assets;

(8)

The losses on the discard of fixed assets;

(9)

The profit and losses on the changes in fair value;

(10)

The financial expenses;

(11)

The profit or losses arising from investments;

(12)

The deferred income tax assets and the deferred income tax liabilities;

(13)

The inventories;

(14)

The item of operating receivables; and

(15)

The item of operating payables;

Article 17

An enterprise shall, in its notes, disclose the following information about the total amounts of acquisition or disposal of subsidiaries
and other business entities in the current period:

(1)

The price for acquisition or disposal;

(2)

The portion of cash paid for the acquisition or disposal;

(3)

The portion of cash received for the acquisition or disposal of subsidiaries and other business entities; and

(4)

The non-cash assets and liabilities classified according to the major categories arising from the acquisition or disposal of subsidiaries
and other business entities.

Article 18

An enterprise shall, in its notes, disclose the significant activities on investment and financing, which do not concern the cash
receipts and payments of the current period but affect its financial status or will possibly affect its future cash flows.

Article 19

An enterprise shall, in its notes, disclose the following information related to cash and cash equivalents:

(1)

The composition of cash and cash equivalents and the corresponding amounts thereof in the balance sheets; and

(2)

The large sums of cash and cash equivalents held by an enterprise that are not available for use by the parent company or by any other
subsidiary within the group.



 
Ministry of Finance
2006-02-15

 






ANNOUNCEMENT NO.36, 2006 OF GENERAL ADMINISTRATION OF CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA CONCERNING PROMULGATING ORIGIN STANDARDS OF ZERO-TARIFF COMMODITIES OF HONG KONG (MACAO) IN THE FIST HALF OF 2006

Announcement No.36, 2006 of General Administration of Customs of the People’s Republic of China concerning promulgating Origin Standards
of Zero-tariff Commodities of Hong Kong (Macao) in The Fist Half of 2006

No. 36 [2006]

In accordance with The Main Land and Hong Kong Scheme on Establishing Closer Economic and Trade Relations, The Main Land and Macao
Scheme on Establishing Closer Economic and Trade Relations as well as complementary agreements, related issues are now announced
as follows:

1.

Here release Origin Standards of Zero-tariff Commodities of Hong Kong in The Fist Half of 2006 and Origin Standards of Zero-tariff
Commodities of Macao in The Fist Half of 2006 (hereinafter referred to as “Origin Standards”, please refer to Appendix 1 and Appendix
2), which will take effect as from Jul 1, 2006. The commodities post_titles of “glass assembly of automobile skylight and circuit of automobile
skylight” are specific in the Origin Standards while others are simplified with their scopes consistent with commodities with same
tariff codes in Import and Export Tariff Regulations of the People’s Republic of China in 2006.

2.

With consultations to related departments of Hong Kong and Macao, the mainland decides to amend the origin standards of “instant
noodles” (tariff code: 19023030) listed in Origin Standards of Hong Kong Commodities Enjoying Preferential Trade Measures and Origin
Standards of Macao Commodities Enjoying Preferential Trade Measures. After the amendment, the origin standards shall be:

(1)

. Be made of cereals or flour. Mixing, boiling and shaping shall be the major producing procedures. In case baking and roast are involved,
the said producing procedures shall be carried out in Hong Kong;

(2)

. Be made of dried noodles, meats and vegetables. The major producing procedures shall be boiling, seasoning, mixing and refrigeration.

The said standard will take effect as from Jul 1, 2006.

3.

In accordance with regulations of Announcement No.54, 2005 of General Administration of Customs on confirmation of procedures of
watch list of “Hong Kong’s own brand”, the second batch of watch of Hong Kong’s own brand (please refer to Appendix No.3) has been
confirmed and is now released.

Appendix:

1.

Origin Standards of Zero-tariff Commodities of Hong Kong in The Fist Half of 2006

2.

Origin Standards of Zero-tariff Commodities of Macao in The Fist Half of 2006

3.

List of the Second Batch of Watch of Hong Kong’s Own Brand

General Administration of Customs of the People’s Republic of China

Jun 28, 2006



 
General Administration of Customs
2006-06-28

 






PROVISIONS ON INFORMATION CONSULTING AND DISCLOSURE OF INDUSTRIAL DAMAGE INVESTIGATION

Order of the Ministry of Commerce

No. 19

The Provisions on Information Consulting and Disclosure of Industrial Damage Investigation, which were adopted at the 5th ministerial
meeting on May 17, 2006, are hereby promulgated and shall go into effect after 30 days as of promulgation.
Bo Xilai, the Minister

August 4, 2006

Provisions on Information Consulting and Disclosure of Industrial Damage Investigation
Chapter 1 General Provisions

Article 1

With a view to guaranteeing the industrial damage investigation to be carried out in an open, fair and impartial manner, and safeguarding
the legitimate rights and interests of the interested parties concerned, these Provisions are hereby formulated in accordance with
the Regulation of the People’s Republic of China on Anti-dumping and the Countervailing Regulation of the People’s Republic of China.

Article 2

The information consulting and disclosure of industrial damage investigation in anti-dumping and countervailing activities shall
be subject to these Provisions.

Article 3

The power to interpret these Provisions shall remain with the Ministry of Commerce of the People’s Republic of China.

Article 4

The interested parties concerned as referred to in these Provisions include:

(a)

the producer, export operator and domestic import operator of the investigated products in a foreign country (region), or the industrial
organization or any other organization of the producer, export operator and import operator of the investigated products;

(b)

the government of the export country (region) of the investigated products;

(c)

the producer of domestic identical products or the industrial organization or any other organization of the investigated products;
and

(d)

others.

Article 5

The term “information consulting” as mentioned in these Provisions refers to activities that all the interested parties concerned
in a case go to the public information consulting office of the trade relief measures of the Ministry of Commerce (hereinafter referred
to as the consulting office) to look up, read, extract and copy the relative public information related to industrial damage investigation.

Article 6

The term “information disclosure” as mentioned in these Provisions refers to the basic facts based on which the ruling on a case
in relation to industrial damage is made and which shall be informed to the interested parties concerned by the Ministry of Commerce
in a reasonable time before the final decision is made.

Chapter 2 Information Consulting

Article 7

All the interested parties concerned may consult the public information related to industrial damage investigation, with the exception
of the information as prescribed in Article 9 of these Provisions.

Article 8

The public information as prescribed in Article 7 of these Provisions shall include:

(a)

the open text or non-confidential summary of an application and the attachment(s) thereof,

(b)

the open text or non-confidential summary of the application materials for the registration of the interested parties concerned in
industrial damage investigation,

(c)

the open text or non-confidential summary of the questionnaires and supplementary questionnaires on industrial damage investigation
as offered by the interested parties concerned;

(d)

the open text or non-confidential summary of the other application materials as provided by the interested parties concerned to the
Ministry of Commerce during the process of industrial damage investigation, including the application materials on the hearing of
industrial damage investigation, relative answer sheets as delivered in delay, adjustment on the product scope, exclusion of domestic
producers and etc.; the open text or non-confidential summary of the opinions or comments put forward by the other interested parties
concerned on the relative application,

(e)

the comments and opinions of the relative interested parties concerned on the application for confidential information and the open
text or non-confidential summary of confidential information as provided by one interested party concerned;

(f)

the open text or non-confidential summary of the cahier or summary of such meetings as the hearing of industrial damage investigation;

(g)

announcements and circulars as issued by the Ministry of Commerce, including the announcements on case fling, preliminary ruling
and terminal ruling; circulars of decisions on the registration of application for industrial damage investigation, distribution
of investigation questionnaires, on-spot investigation, hearing and sampling investigation;

(h)

the open text or non-confidential summary of the disclosure materials of the basic facts based on which the Ministry of Commerce
has made the final decision on industrial damage; and

(i)

other materials that the Ministry of Commerce have acquired or formulated during the process of industrial damage investigation.

Article 9

Where any information cannot be obtained through open channels, and if the publication of it will make other competitors obtain material
gains or impose any material negative influence over the information provider or information source, or bring about any other negative
influence, the information shall be deemed as confidential information.

As regards any information that is confidential in nature or is requested by the interested party concerned as confidential, if the
relative interested party concerned can give justifiable reasons, the Ministry of Commerce shall take the aforesaid information as
confidential.

Article 10

Any relative information to the Ministry of Commerce provided by any interested party concerned shall be indicated as open or confidential.
Where otherwise, the Ministry of Commerce may regard it as open information.

Article 11

When providing confidential information, any interested party concerned shall give its application ground in written form and the
open text or non-confidential summary of identical information. If any interested party concerned requires to make modification or
supplementation to any content of the materials as have been provided, it shall provide the open text or non-confidential summary
of the relative modified or supplementary content meanwhile, and attach the explanations of modification as well.

In the open text or non-confidential summary, the material content thereof shall be illustrated in a reasonable manner. Under special
circumstances, the interested party concerned shall not be required to provide any open text or non-confidential summary upon the
approval of the Ministry of Commerce, but shall give enough reasons in written form for the failure of providing the relative open
text or non-confidential summary.

Article 12

Where an interest party concerned fails to provide any open text or non-confidential summary, or the open text or non-confidential
summary is not enough to reasonably illustrate the material content of confidential information, or any interested party concerned
fails to provide sufficient grounds for not providing the open text or non-confidential summary, the Ministry of Commerce may request
it to withdraw its application. In case an interested party concerned refuses to do so, the Ministry of Commerce may ignore the information
as has been provided, unless the Ministry of Commerce can employ other proper sources to fully prove that the said information is
accurate.

Article 13

Where the Ministry of Commerce considers that the grounds for the application for confidentiality filed by an interested party concerned
do not accord with the requirements of these Provisions, it shall, within 7 days as of the receipt of the relative open text or non-confidential
summary, give explanations to the interested party concerned and allow a reasonable time limit for comments. Where the Ministry of
Commerce determines to ignore the information as provided by an interested party concerned, it shall notify the interested party
concerned in written form, unless the Ministry of Commerce can apply other proper sources to fully prove that the information is
accurate.

Article 14

The Ministry of Commerce shall submit one copy of the open text or non-confidential summary of the aforesaid materials to the public
information consulting office for reference within 7 days as of the day when the relative materials as provided by the interested
party concerned and mentioned in Article 8 of these Provisions are received.

The open text or non-confidential summary of the relative information as formulated or acquired by the Ministry of Commerce and prescribed
in Article 8 of these Provisions shall, under no special circumstance, be delivered to the consulting office within 10 days as of
formulation.

Article 15

During the process of industrial damage investigation, the interested parties concerned may go to the consulting office to look up
any of the public information related to industrial damage investigation within the working hours.

The relative interested parties concerned may also consult the relative public information within 6 months after the final ruling
is announced.

Article 16

When looking up public information, an interested party concerned shall show the relative papers that can prove its identity, and
shall be subject to registration as well.

Article 17

An interested party concerned may look up, read, extract and copy the relative public information, but shall not be allowed to take
any original of public information out of the consulting office.

Chapter 3 Information Disclosure

Article 18

The Ministry of Commerce shall, within a reasonable time limit before the final ruling on a case is made, notify the interested parties
concerned and domestic applicants that have been registered to participate in industrial damage investigation of the basic facts
based on which the final ruling is made, and notify any other interested party concerned that has not been registered that it may
go to the consulting office for the relative materials of information disclosure, on the premise that the parties and applicants
herein comply with the requirements for protecting the confidential information .

Article 19

In general, the basic facts as prescribed in Article 18 of these Provisions include:

(a)

the term and formalities for industrial damage investigation;

(b)

the factors or data based on which the domestic products of the same kind are confirmed;

(c)

the factors or data based on which the domestic industrial confirmation is made;

(d)

the facts or date based on which the cumulative appraisal is made;

(e)

the data on the import quantity (absolute quantity or comparative quantity) of the dumping or subsidized products as well as the
import prices;

(f)

the relative economic factors or data on appraising whether the domestic industry is damaged;

(g)

the factors or data that have further impact on the domestic industry in the relative investigated state (region);

(h)

the acceptance of the relative information as provided by an interested party concerned, including the utilization and grounds of
the most useful information acquired; and

(i)

any other information that may have substantial impact on ruling.

Article 20

The Ministry of Commerce shall make an information disclosure before 30 days as of the day when the final ruling is made. Under special
circumstances, in case any fact cannot be disclosed within the aforesaid time limit, the Ministry of Commerce shall make a disclosure
within a reasonable time limit before the final ruling is made.

Article 21

An information disclosure shall be made in written form, which may be made to all the relative interested parties concerned or the
representatives thereof.

Article 22

After the disclosure of information, an interested party concerned may put forward its comments to the Ministry of Commerce in written
form within 10 days.

Article 23

As regards the comments as put forward by the interested parties concerned within the prescribed time limit, the Ministry of Commerce
shall take them into account, and accept whatever is reasonable in its final ruling. Where any basic fact is therefore different
in making the final ruling, the Ministry of Commerce shall, as long as the normal formalities for case investigation are not disturbed,
disclose the information, upon which the relative interested parties concerned may make comments.

Chapter 4 Supplementary Provisions

Article 24

The information consulting and disclosure on industrial investigation damage in respect of case review shall be performed by referring
to these Provisions.

Article 25

The power to interpret these Provisions shall remain with the Ministry of Commerce.

Article 26

These Provisions shall go into effect after 30 days as of promulgation.



 
Ministry of Commerce
2006-08-04

 






MEASURES CONCERNING THE ADMINISTRATION OF WHOLESALE, RETAIL AND LEASE OF AUDIO AND VIDEO PRODUCTS






Decree of the Ministry of Culture

No.40

After the deliberation and adoption at the ministerial meeting of the Ministry of Culture on October 25, 2006, the Measures concerning
the Administration of Wholesale, Retail and Lease of Audio and Video Products are hereby released, and shall enter into force as
of December 1, 2006.
The Ministry of Culture

November 6, 2006

Measures concerning the Administration of Wholesale, Retail and Lease of Audio and Video Products
Chapter I General Rules

Article 1

In order to enhance the administration of wholesale, retail and lease of audio and video products, promote the development and flourish
of the audio and video industry, enrich the cultural life of the masses and promote the construction of socialist material civilization
and spiritual civilization, these Measures are made according to the related provisions of the Regulation concerning the Administration
of Audio and Video Products.

Article 2

These Measures shall be applicable to such activities as the wholesale, retail, and lease, etc. of such audio and video products
as audio tapes, video tapes, gramophone records, compact discs and laser discs, etc. with recorded contents.

Article 3

People conducting the wholesale, retail and lease of audio and video products shall comply with the Constitution and the related
laws and regulations, insist in the orientation of serving people, socialism, and disseminate ideas, morals, scientific and technical
and cultural knowledge beneficial to economic development and social progress.

Article 4

The operation of the audio and video products are prohibited by the state if recorded with any of the following content:

(1)

the content which defies the basic principles determined in the Constitution;

(2)

the content which hurts the national unity, sovereignty or territorial integrity;

(3)

the content which divulges the state secrets, hurts national security or damages the honor or benefits of the state;

(4)

the content which incites the hatred or discrimination of the nationality, damages the solidarity of nationalities, or infringes upon
nationality customs and habits;

(5)

the content which propagates evil cult or feudalistic superstition;

(6)

the content which disturbs the public order or destroys the public stability;

(7)

the content which propagates obscenity, gambling, violence or instigates crimes;

(8)

the content which insults or slanders others, or infringes upon the lawful rights and interests of others;

(9)

the content which endangers public ethics or the excellent national cultural traditions;

(10)

any other content prohibited by any law, administrative regulation, or provision of the state.

Article 5

The Ministry of Culture shall be responsible to supervise and administrate the wholesale, retail and lease of audio and video products
nation-wide.

The cultural affairs administrative department under the local people’s government at or above the county level shall be responsible
to supervise and administrate the wholesale, retail and lease of audio and video products within its own jurisdiction.

Article 6

The state shall apply a license system in aspect of the wholesale, retail and lease of audio and video products. No entity or individual
shall get into the wholesale, retail and lease of audio and video products without permission.

The licenses or approval documents distributed according to these Measures may not be altered, resold, leased, lent, or illegally
transferred in any other form.

Article 7

The Ministry of Culture shall institute the development programming concerning the nationwide market of audio and video products,
and exert macro control over the nationwide market of audio and video products.

The cultural affairs administrative department under the people’s government of the province, autonomous region, or municipality directly
under the Central Government shall, in accordance with the development programming concerning the nationwide market of audio and
video products and the economic and social development of its own region, institute development programs concerning the market of
audio and video products of its own region, and lead healthy development of such a market.

Article 8

The entities conducting the audio and video business are encouraged and supported by the state to circulate domestic audio and video
products and to build up the issuing network and sell audio and video products in the rural areas.

Article 9

Both the cultural affairs administrative department and its functionaries must not, directly or in a disguised form, undertake the
business activities in aspect of the wholesale, retail and lease of audio and video products, or take part in the business activities
of the entities engaged in the wholesale, retail or lease of audio and video products.

Chapter II Operating Entities

Article 10

In order to apply for the establishment of an audio and video product wholesaling entity, the applicant shall report to the cultural
affairs administrative department of the people’s government of the province, autonomous region or the municipality directly under
the central government where it is located to examine and approve, and shall submit the materials as follows:

(1)

an application form including the name, address of the audio and video product wholesaling entity, the name and address of its legal
representative or the chief person in charge, and the major matters on the application;

(2)

a circular concerning the prior approval of the name, and the rules ;

(3)

the registered capital amount and its evidential documents;

(4)

certificate of the property right of the business premise or letter of leasing intent;

(5)

evidential materials concerning the identity of the legal representative or the chief person in charge;

(6)

evidential materials concerning the institutions and personnel proper to the needs of its business scope; and

(7)

other materials as stipulated by laws and administrative regulations.

The cultural affairs administrative department shall, within 30 days from receiving the application, make a decision concerning approving
the application or not. If the application is approved, a License for Operating Audio and Video Products shall be released to the
applicant, and be submitted to the Ministry of Culture for record. The applicant shall obtain the business license according to the
law in the administrative department of industry and commerce with the License for Operating Audio and Video Products; if the application
is disapproved, the reason thereof shall be stated.

Article 11

In order to apply for the establishment of an audio and video product retailing or leasing entity or where an individual applies
for the engagement of the audio and video product retailing or leasing business, the applicant shall report to the cultural affairs
administrative department of the local people’s government at the county level for examination and approval, and shall submit the
materials as follows:

(1)

an application form including the name of the retailing or leasing entity or the business name of the individual and the address,
the name and address of its legal representative or the chief person in charge, and the major matters on the application;

(2)

a circular concerning the prior approval of the name, and the rules;

(3)

certificate of the property right of the business premise or letter of leasing intent;

(4)

evidential materials concerning the identity of the legal representative or the chief person in charge; and

(5)

other materials as stipulated by laws and administrative regulations.

The cultural affairs administrative department shall, within 30 days from receiving the application, make a decision on approving
the application or not. If the application is approved, a License for Operating Audio and Video Products shall be released to the
applicant, and be reported to the cultural affairs administrative department of the local people’s government at the next higher
level for record. The applicant shall obtain the business license according to the law in the administrative department of industry
and commerce with the License for Operating Audio and Video Products; if the application is disapproved, the reason thereof shall
be stated.

An audio and video product wholesaling entity established upon approval may conduct the audio and video retailing and leasing businesses
on the business premise formerly approved for the wholesaling business.

Article 12

In accordance with the related provisions of the state, an audio and video product publishing entity may wholesale and retail the
audio and video products published by itself. If it intends to get into the business of wholesaling or retailing audio and video
products not published by itself, it shall handle the formalities of examination, approval and registration according to Articles
10 and 11 of these Measures.

Article 13

For the purpose of establishing a chained operation entity of audio and video products, the applicant shall satisfy the conditions
as follows:

(1)

having a certain name and rules;

(2)

having a certain business scope;

(3)

having at least 1 million Yuan of registered capital, or at least 5 million Yuan of registered capital if conducting nationwide chained
operations;

(4)

planning to develop 5 or more direct-operation chained stores or 10 or more chained stores of audio and video products;

(5)

having an institution and personnel fit for the needs of its business scope;

(6)

having relevant management system and computer management conditions; and

(7)

other conditions stipulated by laws and administrative regulations.

Article 14

In order to apply for the establishment of a chained operation entity of audio and video products, the applicant shall report to
the cultural affairs administrative department of the people’s government of the province, autonomous region, or the municipality
directly under the central government where it is located; the application for establishing nationwide chained operation entities
of audio and video products shall be examined and approved by the cultural affairs administrative department under the people’s government
of the province, autonomous region or municipality directly under the Central Government where the applicant’s headquarters is located
before it is submitted to the Ministry of Culture for examination and approval.

The following materials hereby shall be submitted by the applicant entity:

(1)

an application form including the name, address of the applying entity, the name and address of its legal representative or the chief
person in charge, and the major matters on the application;

(2)

a circular concerning the prior approval of the name, and the rules;

(3)

amount of the registered capital and its evidential documents;

(4)

certificate of the property right of the business premise or letter of leasing intent;

(5)

evidential materials concerning the identity of the legal representative or the chief person in charge;

(6)

information concerning the institution, distributing departments and systems of distribution management of the chained operation entity
of audio and video products;

(7)

evidential materials concerning the related computer management conditions; and

(8)

other materials as stipulated by laws and administrative regulations.

The cultural affairs administrative department shall, within 30 days from receiving the application, make a decision on approving
the application or not. If the application is approved, a License for Operating Audio and Video Products shall be released to the
applicant, who shall obtain the business license according to the law in the administrative department of industry and commerce with
the License for Operating Audio and Video Products; if the application is disapproved, the reason thereof shall be stated.

Without approval and registration, the characters of “chained operation” must not be used by anyone in the name of an entity, and
anyone may not engage in the business activities of wholesale, retail and lease of audio and video products by ways of chained operation.

Article 15

A chained operation entity of audio and video products may adopt either the pattern of direct chained operation or that of franchise
chained operation, or may operate by both ways. It shall have at least one year of experience in direct chained operation and have
the approval of the original approving department if it chooses the franchise chained operation.

Direct chained operation refers to the uniform operation which is under the direct management of the headquarters, and under which
all the chained stores are opened by the headquarters in wholly-owned form or shareholding form.

Chained operation in the form of franchise shall refer to that the chained stores are established by the headquarters through participating
in shares or, have no asset contact with the headquarters but are authorized the franchise to use the trademark, name, operational
techniques of the headquarters and to sell commodities of headquarters through signing contracts with the headquarters.

The distributing center and the direct-operation chained stores of the chained operation entities of audio and video products shall
use the shop name of their headquarters in their own names. Franchised chained stores may, also use the shop name of their headquarters
upon consent by their headquarters.

Article 16

There is no need for an audio and video chained operation entity built up upon approval to obtain a separate License for Audio and
Video Products Operation to open direct-operation chained stores or build up chained operation counters, but may, after reporting
to the cultural affairs administrative department of the county people’s government of the place where the store is to be located,
obtain the business license at the administrative department of industry and commerce in accordance with law upon the strength of
the copy of the License for Audio and Video Products Operation released by the headquarters of the chained operation entity.

Where an audio and video chained operation entity built up upon approval opens a franchise chained store, it must transact the examination
and approval formalities according to the related provisions of Article 11 of these Measures; where it has already obtained the
License for Audio and Video Products Operation, it shall transact the modification formalities according to the related provisions.

Article 17

Whoever applies for the establishment of an entity conducting the business of operating audio and video products through information
network, it shall transact the examination and approval formalities with reference to the related provisions in Article 10 of these
Measures and report the information concerning its website name or the names of the websites linked to it, its address, its email
address and other materials to the cultural affairs administrative department of the people’s government of the province, autonomous
region, or the municipality where it is located for record.

Article 18

An audio and video product wholesaling or chained operation entity may get into the operation business of audio and video products
through the information network, but it shall, before starting its operations, prepare its License for Audio and Video Products Operation,
its website name or the names of the websites linked to it, its email address, and other materials to report to the cultural affairs
administrative department under the people’s government of the province, autonomous region, or municipality directly under the Central
Government where it is located for approval.

Article 19

An applicant who applies for conducting the wholesaling, retailing or leasing business of audio and video products shall hand in
the related materials to the administrative organ in accordance with the facts and shall be responsible for the authenticity of the
application materials.

Article 20

The cultural affairs administrative department shall publicize the approval documents concerning establishing the wholesaling, retailing,
leasing or chained operation entities, or establishing the entities that may conduct the audio and video products operation through
the information network, or the individuals that may involve in the wholesaling or leasing business of audio and video products,
the public has the right to consult these documents.

Chapter III Operation and Management

Article 21

The entities or individuals that conduct the business of the wholesale, retail and lease of audio and video products shall not operate
the audio and video products as follows:

(1)

those published by an entity that does not conduct the audio and video products publication or those illegally published by an entity
that conducts the audio and video products publication;

(2)

those reproduced by an entity that does not conduct the of audio and video products reproduction or those illegally reproduced by
an entity that conducts the audio and video products reproduction;

(3)

those imported without being approved by the Ministry of Culture;

(4)

those imported for reference in research or teaching or for exhibition or display;

(5)

those that infringe upon other’s copyright; and

(6)

other illegal audio and video products.

Article 22

The entities or individuals that conduct the business to retail and lease audio and video products shall purchase audio and video
products from the audio and video product publishing and wholesaling entities for operation.

As for an audio and video product publishing or wholesaling entity wholesales audio and video products, it shall supply the consignment
voucher according to the related provisions of the state. The consignor entity or the consignee entity shall keep the consignment
vouchers and the related documentary materials for 2 years since the date of the consignment for future inspection.

When selling audio and video products, an audio and video product retailing entity or an individual involving in the business of retailing
audio and video products shall, issue an invoice with the indication of the name, price and amount of the audio and video products.

An audio and video product leasing entity or an individual conducting the business of leasing audio and video products shall register
the time, name and quantity of the leased audio and video products, etc.

Article 23

The anti-forgery marks produced under the supervision of the Ministry of Culture shall be pasted on the audio and video products
published by audio and video product publishing entities and those imported by finished audio and video product import entities.

Article 24

An audio and video product wholesaling, retailing and leasing entity or an individual conducting the business of retailing and leasing
audio and video products shall place its/his License for Audio and Video Products on a marked position in its/his business site.

A direct-operation chained store or chained operation counter shall place the copy of its License for Audio and Video Products Operation
on a marked position in its/his business site.

Article 25

An entity involving in the business to operate audio and video products through the information network shall indicate the serial
number and issuance department of the License for Audio and Video Products Operation on its website or web page. For the audio and
video products in operation, the name, publishing entity, and the audio and video products code under Chinese standards shall be
indicated. If an audio and video product is an imported one, the document number of the approval certificate for import shall be
indicated simultaneously.

Article 26

An audio and video product wholesaling or chained entity shall report the concrete address of its warehouse or distributing center
of audio and video products, the management personnel and the related contact information to the cultural affairs administrative
department which approves it for registration and record within 30 days as of the issuance date of the License for Audio and Video
Products Operation. In case that there is any change concerning such information, it shall report it to the cultural affairs administrative
department which approves it for record within 15 days as of the change date.

Article 27

Any entity or individual must not consign, mail, transport or store the audio and video products prohibited by Article 4 or Article
21 of these Measures from operation, or provide such advantageous conditions as premise or agency for the audio and video products
operation prohibited by Article 4 or Article 21 of these Measures.

Article 28

The cultural affairs administrative department of the people’s government at or above the county level shall enhance the supervision
and management concerning the exhibition, fair, order-placing meeting and other exhibiting activities of audio and video products
according to the related state provisions.

Article 29

The cultural affairs administrative department in-charge of the local people’s government at or above the county level shall accept
the application for appraising whether the audio and video products are illegal or not.

At the time of application, the applicant shall file the application in written form to the cultural affairs administrative department
under the local people’s government at the county level at the place where the audio and video products are acquired, and shall,
hand in the samples of the audio and video products and the related documents and fill in an appraisal registration form of audio
and video products. The source, name, quantity, date and place of acquisition of the audio and video products and the appraisal purpose
and requirements shall be stated in the application letter.

An cultural affairs administrative department that accepts an application for appraising audio and video products shall appoint at
least 2 personnel who are accomplished in the appraisal business to undertake the appraising work, and shall make appraisal conclusion
and issue the written appraisal letter within 10 days since the application acceptance.

The name, vehicle, publishing entity, code under Chinese standards, laser digital storage chip source identification code, anti-forgery
mark and other major features of the audio and video products applied for appraisal, name and address valid certificate and contact
information of the applicant, and the appraisal results and so on shall be indicated in the appraisal letter of audio and video products.

In case the party concerned has any objection to the test results, he may request the cultural affairs administrative department at
a higher level for re-check within 15 days from the day of his receiving the written appraisal letter,, and the cultural affairs
administrative department at the higher level shall issue the written conclusion on re-check within 15 days from the day of its receiving
the application for re-check.

Article 30

In case an audio and video product wholesaling, retailing or leasing entity or a chained operation entity of audio and video products
wants to amend its name, business scope, or to merge another audio and video product wholesaling, retailing or leasing entity or
chained operation entity of audio and video products, or build up another audio and video product wholesaling, retailing or leasing
entity or chained operation entity of audio and video products due to merger or split-up, it shall, transact the formalities of approval
and registration according to the Regulation concerning the Audio and Video Products Administration, these Measures and the related
provisions concerning enterprise registration administration.

In case an audio and video product wholesaling, retailing or leasing entity or a chained operation entity of audio and video products
intends to amend its address, legal representative or principal person-in-charge or to stop its business activities, or in case an
individual involving in the business of retailing or leasing audio and video products wants to amend his business scope, address
or to stop his business activities, it/he shall go through the modification registration or cancellation registration in the administrative
department for industry and commerce that handled the original registration, and shall report to the administrative department of
cultural affairs that granted the original approval for record within 30 days since the registration date. However, if the modification
of the address exceeds the scope of jurisdiction of the original organ that released the license, it/he shall go through the formalities
of examination, approval and registration according to the former paragraph.

Article 31

The cultural affairs administrative department of the local people’s government at or above the county level shall enhance the training
of the employees of the audio and video product wholesaling, retailing or leasing entities for improving the employees’ ability for
understanding the regulations and policies concerning audio and video market and discerning the illegal audio and video products.

Chapter IV Legal Liabilities

Article 32

As for the cultural affairs administrative department or their functionary, by taking advantage of its/his office, accepts the properties
or benefits from others, and approves an audio and video product wholesaling, retailing or leasing entity which does not satisfy
the legal conditions for establishment, or does not conduct its/his duties for supervising, or does not investigate the illegal acts
it/he has found, thus resulting in serious consequences, the person in charge held responsible and other persons held to be directly
responsible shall be subject to criminal liabilities according to the provisions in the Criminal Law concerning the crime of bribes
acceptation, of power abuse, of duty neglector other crime; if the case is not serious enough for him to be imposed upon criminal
punishments, he shall be imposed upon an administrative sanction of demotion or dismissal from his post.

Article 33

In case that any functionary in the cultural affairs administrative department is involved in business activities of wholesaling,
retailing or leasing audio and video products directly or in a disguised form, or takes part in the business activities of an audio
and video product wholesaling, retailing and leasing entity directly or in a disguised form, he shall be imposed upon an administrative
sanction of dismissal from his post or dismissal according to the law.

In case that the cultural affairs administrative department has any of the acts enumerated in the preceding paragraph, the person
in charge held responsible and other persons held to be directly responsible shall be punished according to the preceding paragraph.

Article 34

In case an audio and video product wholesaling, retailing or leasing entity or individual knows perfectly or should know the fact
that the audio and video products it operates including any content prohibited by Article 4 of these Measures, the cultural affairs
administrative department or the law enforcement body authorized subject to law shall order it to terminate the business for internal
rectification and confiscate its audio and video products under illegal operation and its illegal proceeds. If the amount of illegal
operation fund exceeds 10,000, it shall be imposed upon a fine of more than 5 times but less than 10 times the amount of illegal
operation fund in addition; if the amount of illegal operation fund does not exceed 10,000 Yuan, it shall be imposed upon a fine
of at most 50,000 Yuan in addition. As for serious circumstances, its license shall, in addition, be revoked by the original organ
that released it. If he is suspected of a crime, he shall be sent to the judicial department and investigated of the criminal liabilities
according to the law.

Article 35

In case an audio and video product wholesaling, retailing or leasing entity or individual amends its name or business name, address,
legal representative or principal person-in-charge, business scope and so on Without transacting the formalities of examination,
approval and record according to these Measures, the cultural affairs administrative department or the law enforcement body authorized
subject to law shall order it to correct and impose a warning upon it, as for the serious circumstance, order it to stop its business
for rectification or revoke its license.

Article 36

In case any entity commits any of the following acts, the cultural affairs administrative department or the law enforcement body
authorized subject to law shall order it to cease the illegal act, give it a warning and confiscate its audio and video products
under illegal operation and its illegal proceeds. If the amount of illegal operation fund exceeds 10,000 Yuan, it shall be imposed
upon a fine of more than 5 times but less than 10 times the amount of illegal operation fund in addition; if the amount of illegal
operation fund does not exceed 10,000 Yuan, it shall be imposed upon a fine of more than 10,000 Yuan but less than 50,000 Yuan in
addition. As for serious circumstances, its license shall, in addition, be revoked by the original organ that released it. If it
is discredited of a crime, it shall be sent to the judicial department and investigated of the criminal liabilities according to
the law.

(1)

those published by an entity that does not get into the audio and video products publication or those illegally published by an entity
that get into the audio and video products publication;

(2)

those reproduced by an entity that does not get into the audio and video products reproduction or those illegally reproduced by an
entity that get into the audio and video products reproduction;

(3)

those imported without approval from the Ministry of Culture;

(4)

those imported for reference in research or teaching or for exhibition or display; or

(5)

other illegal audio and video products.

Article 37

Any of the following circumstances shall be considered as a “serious circumstance” as mentioned in Articles 34, 35 and 36 of these
Measures:

(1)

Going against the Regulation concerning the Audio and Video Products

PROVISIONS ON MINIMUM WAGES

Ministry of Labor and Social Security

Order of the Ministry of Labor and Social Security of the People’s Republic of China

No. 21

The Provisions on Minimum Wages, which were adopted at the 7th executive meeting of the Ministry of Labor and Social Security on December
30, 2003, are hereby promulgated and shall come into force as of March 1, 2004.

Zheng Silin, the Minister of the Ministry of Labor and Social Security

January 20, 2004

Provisions on Minimum Wages

Article 1

With a view to safeguarding the legitimate rights and interests of the laborers in getting labor remunerations, and ensuring the basic
necessities of laborers and their family members, the present Provisions are formulated according to the Labor Law and other relevant
regulations of the State Council.

Article 2

The present Provisions shall apply to the enterprises, private non-enterprise entities, individual industrial and commercial households
with employees (hereinafter collectively referred to as employing entities) and the laborers who have formed a labor relationship
with those employing entities.

The state organs, public institutions and social bodies and the laborers who have formed a labor relationship with them shall accord
with the present Provisions.

Article 3

The term ” standards on minimum wages” as mentioned in the present Provisions refers to the minimum labor remunerations that shall
be paid by the employing entities according to law under the precondition that the laborers have provided normal labor within the
promissory working hours or within the working hours as prescribed in the labor contracts concluded according to law.

The term “normal labor” as mentioned in the present Provisions refers to the labor undertaken by a laborer, pursuant to the contract
concluded according to law, within the promissory working hours or within the working hours as prescribed in the contract. A laborer’s
enjoying paid annual vocation, home leave, marriage or funeral leave, maternity leave and conception-control operation leave and
his (her) participating in any social activities during the promissory working hours shall be deemed as having offered normal labor.

Article 4

The administrative departments of labor and social security of the people’s governments at or above the county level shall be responsible
for the supervision and inspection over the employing entities’ fulfillment of the present Provisions within their respective administrative
areas.

The labor unions of all levels shall conduct supervision over the implementation of the present Provisions according to law. Where
a labor union finds that any employing entity pays employees wages in violation of the present Provisions, it shall have the power
to demand the local administrative department for labor and social security to deal with the case.

Article 5

In general, the standards of minimum wages appear in two forms, namely the monthly minimum wage standard and the hourly minimum wage
standard. The monthly minimum wage standard applies to full-time employees while the hourly minimum wage standard to non-fulltime
employees.

Article 6

When determining and regulating the monthly minimum wage standard, one should take into consideration factors such as the minimum
costs of living of the local employees and the people supported by them, the urban residents’ consumption price index, the social
insurance premiums and the public accumulation funds for housing paid by the employee themselves, the average wage of the employees,
the level of economic development, the status of employment and etc..

When determining and regulating the hourly minimum wage standard, one shall, on the basis of the announced monthly minimum wage standard,
take into consideration such factors as the basic pension insurance premiums and the basic medical insurance premiums that shall
be paid by the entity. In addition, one shall appropriately take into consideration the disparities between the non-fulltime laborers
and the fulltime laborers in the aspects of working stability, condition, intensity and welfare, etc ..

For the specific calculating methods for the monthly minimum wage standard and the hourly minimum wage standard, please read the Attachment.

Article 7

Different administrative areas within a province, autonomous region or municipality directly under the Central Government may adopt
different standards of minimum wages.

Article 8

The program for determining and regulating the standards on minimum wages shall be formulated by the administrative department of
labor and social security of the people’s government of a province, autonomous region or municipality directly under the Central
Government in consultation with the labor union, the league of enterprises (or the association of entrepreneurs) at the same level,
which shall be reported and submitted to the Ministry of Labor and Social Security. Such a program shall include the basis, applicable
scope, drawn-out standards and explanations on the determination and regulation of the minimum wages. The Ministry of Labor and Social
Security shall, after receiving the program, collect opinions of the China Labor Union and the China League of Enterprises (or the
China Association of Entrepreneurs).

The Ministry of Labor and Social Security may provide advice on the revision of the program. If it fails to provide any advice on
revision within 14 days from the day when it receives the program, it shall be deemed as having granted consent.

Article 9

The administrative department of a province, autonomous region or municipality directly under the Central Government shall report
its program on the standards on minimum wages applicable in their respective areas to the people’s government of this province, autonomous
region or municipality directly under the Central Government, and shall, within 7 days from the day when the program is approved,
announce it through the bulletin of the local government and at least one newspaper circulated widely in the area. The administrative
department of labor and social security shall report the standards on minimum wages to the Ministry of Labor and Social Security
within 10 days from the day when the program is announced by the administrative department of the province, autonomous region or
municipality directly under the Central Government.

Article 10

If the related factors as prescribed in Article 6 of the present Provisions change, after the standards on minimum wages have been
announced for implementation, they shall be regulated in good time. The standards on minimum wages shall be regulated at least once
every two years.

Article 11

The employing entities shall, within 10 days from the day when the standards on minimum wages are announced, announce the standards
to all their laborers thereof.

Article 12

In the event that a laborer has provided normal work, the wage paid by the employing entity shall, after being deducted of the following
items, not be less than the local standards on minimum wages:

(1)

wages paid for extra work done after the promissory working hours;

(2)

allowances given for the middle shift, night shift, and for working under special environmental conditions such as high temperature,
low temperature, downhole operation, venomousness and nocuousness;

(3)

the welfare treatments to laborers as prescribed in the laws, regulations and by the state.

On the basis of the scientific and reasonable labor quota, an employing entity that adopts the way of paying wages by piece or by
deducting a percentage, shall not pay the laborers less wages than the corresponding standard minimum wages.

In case a laborer, for his own reasons, fails to provide normal labor within the promissory working hours or within the working hours
as provided for in the lawfully concluded labor contract, this Article shall not apply

Article 13

Where an employing entity violates Article 11 of the present Provisions, it shall be ordered to make corrections by the administrative
department of labor and social security. If it violates Article 12 of the present Provisions, it shall be ordered to make up the
wages owing to the laborers by the administrative department of labor and social security, and may be ordered to pay laborers compensations
in the sum of one to fives times of the wages owed within a time limit.

Article 14

Where there arises any dispute over the standards on minimum wages between laborers and employing entities, it shall be coped with
according to the provisions on labor disputes.

Article 15

The present Provisions shall come into force as of March 1, 2004. The Provisions on Minimum Wages in Enterprises promulgated by the
former Ministry of Labor on November 24, 24, 1993 shall be repealed simultaneously.

Attachment:The Methods for Calculating Minimum Wages

1.

Factors to be taken into consideration when determining the standards on Minimum Wages

When determining the standards on minimum wages, one shall generally take into consideration the following factors as the living costs
of urban residents, the social insurance premiums and the public accumulation funds for housing paid by employee themselves, the
average wage of the employees, the rate of unemployment and the level of economic development. The formula may be:

M = f (C, S, A, U, E, a )

M: the standards on minimum wages

C: the average living costs of urban residents;

S: the social insurance premiums and the public accumulation funds for housing paid by employee themselves;

A: the average wage of the employees;

U: the rate of unemployment;

E: the level of economic development;

a: the factors.

2.

The universal methods for determining the standards of minimum wages

(1)

The proportion method, that is firstly to determine a certain proportion of families with the minimum average income as poverty families
in light of the investigation materials of the family livelihood of urban residents, then to calculate the average living cost of
the poverty families and multiply it by the coefficient of the people supported by each employee, and finally to make the result
plus an adjustment.

(2)

The Engel Coefficient method, that is to calculate the minimum expense standard for food pursuant to the annual standard cookbook
and the standard quantity of food taken by people as offered by the National Nutrition Academy as well as the market prices of the
standard food, then to divide the minimum expense standard for food by the Engel Coefficient, thus to work out the standards on minimum
living costs, to multiply the minimum living costs by the coefficient of people supported by each employee and finally to make the
result plus an adjustment.

After working out the standards on monthly minimum wage by the above-mentioned methods, one shall take into consideration the following
factors to make necessary amendment as the social insurance premiums paid by the employee themselves, the public accumulation funds
for housing paid by the employee themselves, the average wage of the employees, social assistance grants and the standards on unemployment
premiums, the status of employment and the level of economic development.

For example, if, in a certain region, the minimum monthly living cost of persons within the groups of minimum income is 210 yuan,
the coefficient of the people supported by each employer is 1.87, the minimum expense for food is 127 yuan, the Engel Coefficient
is 0.604, the average wage is 900 yuan.

a.

By the proportion method, the standard on monthly minimum wage worked out is:

The monthly minimum wage = 210￿￿.87￿￿a￿￿393￿￿a(yuan)(1)

b.

By the method of Engel Coefficient, The monthly minimum wage worked out is:

The monthly minimum wage = 127￿￿.604￿￿.87￿￿a￿￿393￿￿a(yuan)(2)

In the formulas (1) and (2) the adjustment “a” mainly involves the expenses for the pension, unemployment and medical insurance premiums
and the public accumulation funds for housing.

In addition, as it is universally considered that the monthly minimum wage is equivalent to 40-60% of the average monthly wage, the
monthly minimum wage of this region shall be ranged from 360 yuan to 540 yuan.

The standard of the hourly minimum wage = {(the standard of the monthly minimum wage ￿￿0.92￿￿)￿￿1￿￿ the summation of the basic
pension insurance premium and the basic medial insurance premium that shall be paid by their respective entities)}￿￿1￿￿the floating
coefficient)

The determination of the floating coefficient shall mainly take into consideration the disparities between the fulltime employees
and the non-fulltime employees in the aspects of working stability, conditions and intensity and welfares.

Every region may rationally determine the standards on monthly and hourly minimum wages by referring to the calculating methods mentioned
above and in light of the local actual circumstances.

 
Ministry of Labor and Social Security
2004-01-20

 



1...345...14Page 4 of 14

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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