UAE is recognised as the International Trading Hub and classed as the Financial Centre of the Middle East.

More and more companies both multinationals and small businesses have moved their located operations to the UAE to take advantage of the huge potential markets, tax free status and prestige of Dubai. The UAE government stems across the 7 Emirates and has created a safe and secure business environment. In addition they have made it easier for foreign investors to succeed in the UAE.

There are various forms of investment entities available to suit different
business objectives and operations in UAE:

1. Free Zone Establishment (FZE) for individual applicants.
A FZE as the name suggests - is 100% foreign owned and could be a manufacturing fze, consulting fze, trading fze etc. It will allow you greater management control and flexibility.

2. Free Zone Company (FZC) for partnerships.
A FZC as the name suggests - is 100% foreign owned and could be a manufacturing FZC, consulting FZC, trading FZC etc. It will allow you greater management control and flexibility. FZC has exactly the same structure as an FZE but it allows for more than one owner. The documentation required is also different.

3. Local Branch
A local branch can be 100% foreign owned providing the parent company details can be verified. Local Branch does not require capital. A Free Zone local company will appoint the Free Zone as their sponsor but for main stream local branch they will need to appoint a local agent.

4. Limited Liability Company (LLC)
If your investment involves a UAE partner you can set up any type of activity and will be granted local company status. The UAE partner will hold 51% of the company for an annual fee, however the POA will remain with the investor. The UAE partner will not interfere with the business and the investor can be further protected through side agreements.

5. International Company (IC)
UAE International Company provides many benefits. It allows for direct investment into the UAE, its completely 100% tax free and provides complete privacy. An IC can not trade directly into the UAE market but can trade internationally. An IC can also hold a UAE bank account. The UAE offshore jurisdiction is granted OECD white list status and the UAE has 47 DTT (Double Tax Treaties) in place.

ADVANTAGES OF REPRESENTATIVE OFFICE
The simplicity and short time required for establishing a RO is the main reason for its popularity in the China market. Unlike foreign investment enterprises ("FIEs"), representative offices are not required to meet stringent requirements for items such as capital contribution. The strong points to establish a RO are as follows:
- Least capital injection required (currently around RMB100,000).
- Can handle market research, sourcing, project investigation for Mother Company, who in turn to execute trading function.
- Can hire local staff to work from labor market..
- The parent company should be established least 1 year before.
DISADVANTAGES OF RO
RO is not considered to be a separate legal entity. So it only works as liaison purpose,
The restrictions are as follows:
- Limitation in activity. No trading or invoicing is allowed.
- Local staff should be hired via government admitted agents.
- Although not profits, cost expenses still attract tax liability

HOW LONG TO FORMATE
To establish a RO is therefore largely a matter of complying with the prescribed application procedures. Once all the necessary documents for application are ready for submission, government approval can be as long as 25-45 working days.

TERM AND TERMINATION
In China, the maximum duration approved for a representative office is three years (five years for insurance companies and six years for banks.) The duration date is calculated from the date on which the approval document is issued by the authority. If the representative office wishes to continue its operations after the expiry of the registration certificate, it must renew its registration by submitting an annual report of its business operations and its application for renewal 30 days prior to the expiry of the existing registration certificate.

TAXATION
In General a RO is subject to foreign enterprise income tax (FEIT) and Business Tax (BT) under the PR China FEIT Law and the PR China Provisional Regulations of BT. There are different ways in which a representative office may be taxed but the most common basis is the cost-plus-basis. As at April 2005, the total tax burden under this assessment method is approximately 5-10% of the operating expenses incurred by the representative office. The FEIT and BT for a RO should be filed on a quarterly basis within 15 days after the end of each quarter.
Although a RO is not to conduct business, it attracts tax as stated below:
- Chief Representative and local staff’s Individual Income Tax (IIT) ,rating from 5% to 45%, IIT depends on salary amount. Presently starting point is RMB1500.
- Cost Expense Taxes base on monthly operational expenses (CET) ,rating from 5% to 10%,
In accordance with the relevant Chinese tax regulations, a RO may claim for tax exemption if it satisfies certain criteria stipulated in the regulations. Suppose the head office takes responsibility of all the expenses incurred from the representative office, no tax is levied.

DOCUMENTS REQUIRED
1. Investors’ business licenses & certificates of incorporation;
2. Bank reference letter for the foreign investors, stating a 7-digits (or USD300, 000) bank balances, issued within 6 months & in both English and Chinese language and certified by the Chinese Embassy or Consulate in your country.
3. Copies of passport and China entry permit of all the legal representatives and 4 photos of the chief representative; Appointment letters and resume of the chief representative
4. Copies of lease agreement and title deed sealed by Housing Authorities.
5. Documents evidencing the details of shareholders and directors for investors (e.g. annual return for a HK company);
6. Certified true copied of incorporation of applicant’s company certified by the Chinese Embassy or Consulate or rotary agency in your country.
7. Minutes of Board Meeting to authorize Chief Representative, Minutes of Board Meeting to setup RO
8. Last annual return to Company Registry and to Tax Department
Charge and payment terms:

USEFUL TIPS ABOUT RO
- Takes around 1 month to apply.
- A Chief Representative (CR) is to be appointed
- Company applying for setting up RO has to be at least 1 year old.
- Company should be able to present bank reference letter showing 6 digit average balance in past 6 months (in HK$ terms).
- An office premise rental agreement (or ownership document) which is valid for foreign investor use. The term should be at least 12 months long.
- In case the rental agreement is not signed by the Chief Representative, this can be ratified by a Letter of Authorization
-RO license has to be applied again once permit is expired. Maximum 3 years approval will be granted and depends on rental lease terms.
-The tax filing has to be done on monthly, quarterly and annual basis. Moreover, there are statutory audit on the expenses account and foreign currency bank account.

-A budget around RMB1, 000 should be made for those accounting, tax filing and audit work for a single staff RO.

No. 44

The Decision of the Standing Committee of the National People's Congress on Amending the Individual Income Tax Law of the People's Republic of China, adopted at the 18th Meeting of the Standing Committee of the Tenth National People's Congress of the People's Republic of China on October 27, 2005, is hereby promulgated and shall go into effect as of January 1, 2006.

Hu Jintao

President of the People's Republic of China

October 27, 2005

Decision of the Standing Committee of the National People's Congress on Amending the Individual Income Tax Law of the People's Republic of China

(Adopted at the 18th Meeting of the Standing Committee of the Tenth National People's Congress on October 27, 2005)

At its 18th Meeting, the Standing Committee of the Tenth National People's Congress decides to amend the Individual Income Tax Law of the People's Republic of China as follows:

1.Subparagraph (1) in the first paragraph of Article 6 is revised to read, “For income from wages and salaries, the amount of taxable income shall be the part remaining after deduction of 1,600 yuan for expenses from a monthly income.” At the same time, the Note attached to Schedule 1 on Individual Income Tax Rates shall be revised accordingly.

2.Article 8 is revised to read, “For individual income tax, the income earner shall be the taxpayer, and the paying unit or individual shall be the withholding agent. If a taxpayer’s individual income exceeds the amount specified by the State Council, or a taxpayer receives wages or salaries from two or more sources, or there is no withholding agent, or under other circumstances specified by the State Council, the taxpayer shall file returns and pay tax in accordance with State regulations. The withholding agent shall, in accordance with State regulations, file the returns of all the taxpayers and the full amount of the tax withheld.”

This Decision shall go into effect as of January 1, 2006.

The Individual Income Tax Law of the People's Republic of China shall be amended correspondingly in accordance with this Decision and promulgated anew.

Law of the People's Republic of China on Individual Income Tax

(Adopted at the Third Session of the Fifth National People's Congress on September 10, 1980, revised for the first time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 4th Meeting of the Standing Committee of the Eighth National People's Congress on October 31, 1993, revised for the second time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 11th Meeting of the Standing Committee of the Ninth National People's Congress on August 30, 1999, and revised for the third time in accordance with the Decision on Amending the Individual Income Tax Law of the People's Republic of China adopted at the 18th Meeting of the Standing Committee of the Tenth National People's Congress on October 27, 2005 )

Article 1 Individual income tax shall be paid in accordance with the provisions of this Law by individuals who have domiciles in the People's Republic of China, or who have no domicile in China but have resided in the country for one year or more on their income gained within or outside China.

Individuals who have no domiciles and do not reside in the People's Republic of China or who have no domiciles but have resided in China for less than one year shall, in accordance with the provisions of this Law, pay individual income tax on their income gained within China.

Article 2 Individual income tax shall be paid on the following categories of individual income:

(1) income from wages and salaries;

(2) income from production or business operation conducted by self-employed industrial and commercial households;

(3) income from contracted or leased operation of enterprises or institutions;

(4) income from remuneration for personal services;

(5) income from author's remuneration;

(6) income from royalties;

(7) income from interest, dividends and bonuses;

(8) income from the lease of property;

(9) income from the transfer of property;

(10) incidental income; and

(11) income from other sources specified as taxable by the department of finance under the State Council.

Article 3 Individual income tax rates:

(1) For income from wages and salaries in excess of the specified amounts, the progressive rates ranging from 5 percent to 45 percent shall apply (see the appended schedule of tax rates).

(2) For income of self-employed industrial and commercial households from production or business operation and income of enterprises or institutions from contracted or leased operation that are in excess of the specified amounts, the progressive rates ranging from 5 percent to 35 percent shall apply (see the appended schedule of tax rates).

(3) For income from author's remuneration, a flat rate, which is 20 percent, shall apply, and the amount of tax payable shall, however, be reduced by 30 percent.

(4) For income from remuneration for personal services, a flat rate, which is 20 percent, shall apply. Where income gained at one time from remuneration for personal services is extremely high, an additive tax may be levied. The specific measures in this regard shall be prescribed by the State Council.

(5) For income from royalties, interest, dividends, bonuses, lease of property or transfer of property, incidental income or income from other sources, a flat rate, which is 20 percent, shall apply.

Article 4 The following categories of individual income shall be exempted from individual income tax:

(1) awards for achievements in such fields as science, education, technology, culture, public health, sports and environmental protection granted by people's governments at the provincial level, ministries and commissions under the State Council, units of the Chinese People's Liberation Army at or above the corps level, or by foreign or international organizations;

(2) interest on national debts and financial debentures issued by the State;

(3) subsidies and allowances given according to the uniform regulations of the State;

(4) welfare benefits, pensions for the family of the deceased and relief payments;

(5) insurance indemnities;

(6) military severance pay and demobilization pay for army men;

(7) settlement pay, severance pay, retirement pay, as well as full-pay retirement pension for veteran cadres and their living allowances, received by cadres, staff and workers according to the uniform regulations of the State;

(8) income, exempted from tax according to the provisions of the relevant laws of China, of diplomatic representatives and consular officers and other personnel of foreign embassies and consulates in China;

(9) income exempted from tax as stipulated in the international conventions to which the Chinese Government has acceded or in agreements it has signed; and

(10) income exempted from tax with the approval of the department of finance under the State Council.

Article 5 In one of the following circumstances, individual income tax may be reduced upon approval:

(1) income of the disabled, the aged without families, or family members of martyrs;

(2) suffering great losses from serious natural disasters; or

(3) other cases where tax is reduced upon approval by the department of finance under the State Council.

Article 6 The amount of taxable income shall be computed as follows:

(1) For income from wages and salaries, the amount of taxable income shall be the part remaining after deduction of 1,600 yuan for expenses from a monthly income;

(2) For income from production or business operation gained by self-employed industrial and commercial households, the amount of taxable income shall be the part remaining after deduction of the costs, expenses and losses from the gross income in a tax year;

(3) For income from contracted or leased operation of enterprises or institutions, the amount of taxable income shall be the part remaining after deduction of the necessary expenses from the gross income in a tax year;

(4) For income from remuneration for personal services, author's remuneration, royalties and lease of property, the amount of taxable income shall be the part remaining after deduction of 800 yuan for expenses from the amount received in a single payment not exceeding 4,000 yuan; or after deduction of 20 percent from the amount for a single payment of 4,000 yuan or more;

(5) For income from the transfer of property, the amount of taxable income shall be the part remaining after deduction of the original value of the property and the reasonable expenses from the income gained from such transfer; and

(6) For interest, dividends, bonuses, incidental income and income from other sources, the amount of taxable income shall be the full amount received in each payment.

The part of individual income donated to educational and other public welfare undertakings shall be deducted from the amount of taxable income in accordance with the relevant regulations of the State Council.

For taxpayers who have no domiciles in China but obtain wages or salaries within China, or who have domiciles in China but obtain wages or salaries outside China, an additional deduction of expenses may be determined on the basis of the average income level, living standard and the changes in exchange rates. The applicable scope and standard of the additional deduction of expenses shall be prescribed by the State Council.

Article 7 For income gained by taxpayers from outside China, the amount of individual income tax paid outside China shall be permitted to be deducted from the amount of tax payable. The amount to be deducted, however, shall not exceed the amount of tax payable as calculated according to the provisions of this Law on income gained by the taxpayers from outside China.

Article 8 For individual income tax, the income earner shall be the taxpayer, and the paying unit or individual shall be the withholding agent. If a taxpayer’s individual income exceeds the amount specified by the State Council, or a taxpayer receives wages or salaries from two or more sources, or there is no withholding agent, or under other circumstances specified by the State Council, the taxpayer shall file returns and pay tax in accordance with State regulations. The withholding agent shall, in accordance with State regulations, file the returns of all the taxpayers and the full amount of the tax withheld.

Article 9 The tax withheld each month by a withholding agent and the tax paid each month by a taxpayer personally filing tax returns shall be turned in to the State Treasury within the first seven days of the following month and the tax returns submitted to the tax authorities.

The tax payable on income from wages and salaries shall be computed on a monthly basis and turned in by the withholding agents or by the taxpayers to the State Treasury within the first seven days of the following month and the tax returns submitted to the tax authorities. The tax payable on income from wages and salaries for specified trades may be computed on an annual basis and paid in advance in monthly installments, and the specific measures therefor shall be formulated by the State Council.

The tax payable on income gained by self-employed industrial and commercial households from production or business operation shall be computed on an annual basis and paid in advance in monthly installments. Such payment shall be made in advance by taxpayers within the first seven days of the following month, and final settlement shall be made within three months after the end of each year; any excess payment shall be refunded and any deficiency repaid.

The tax payable on income of enterprises and institutions from contracted or leased operation shall be computed on an annual basis and turned in by taxpayers to the State Treasury within 30 days after the end of each year and the tax returns submitted to the tax authorities. Taxpayers who gain income from contracted or leased operation in installments during a year shall pay tax in advance within the first seven days after each installment, and final settlement shall be made within three months after the end of each year; any excess payment shall be refunded and any deficiency repaid.

Taxpayers who earn income outside China shall pay tax to the State Treasury within 30 days after the end of each year and submit the tax returns to the tax authorities.

Article 10 All categories of income shall be computed in terms of Renminbi (RMB). Income in foreign currency shall be taxed on the equivalent amount converted into Renminbi according to the foreign exchange rate quoted by the State exchange control authorities.

Article 11 A service fee at the rate of 2 percent of the amount of tax withheld shall be paid to the withholding agent.

Article 12 The time to start the collection of individual income tax on interest income from savings deposit and the measures therefor shall be prescribed by the State Council.

Article 13 The administration of individual income tax collection shall be governed by the provisions of the Law of the People's Republic of China on the Administration of Tax Collection.

Article 14 The State Council shall, in accordance with this Law, formulate regulations for its implementation.

Article 15 This Law shall go into effect as of the date of its promulgation.

Schedule 1

Individual Income Tax Rates

(Applicable to income from wages and salaries)

Grade  Monthly Taxable Income                                Tax Rate(%)

1   Income of 500 yuan or less                                5

2   That part of income in excess of 500 to 2,000 yuan        10

3   That part of income in excess of 2,000 to 5,000 yuan      15

4   That part of income in excess of 5,000 to 20,000 yuan     20

5   That part of income in excess of 20,000 to 40,000 yuan    25

6   That part of income in excess of 40,000 to 60,000 yuan    30

7   That part of income in excess of 60,000 to 80,000 yuan    35

8   That part of income in excess of 80,000 to 100,000 yuan   40

9   That part of income in excess of 100,000 yuan             45

(Note: "Monthly taxable income" mentioned in this schedule refers to the amount remaining after deduction of 1,600 yuan for expenses or an additional deduction of expenses from monthly income in accordance with the provisions of Article 6 of this Law.)

Schedule 2

Individual Income Tax Rates

(Applicable to income gained by self-employed industrial and commercial households from production or business operation and income gained by enterprises and institutions from contracted or leased operation)

Grade  Monthly Taxable Income                                 Tax Rate(%)

1    Income of 5,000 yuan or less                            5

2    That part of income in excess of 5,000 to 10,000 yuan   10

3    That part of income in excess of 10,000 to 30,000 yuan  20

4    That part of income in excess of 30,000 to 50,000 yuan  30

5    That part of income in excess of 50,000 yuan            35

(Note: "Annual taxable income" mentioned in this schedule refers to the amount remaining after deduction of the costs, expenses and losses from the gross income in a tax year in accordance with the provisions of Article 6 of this Law.)

Our Team

Our Logo

Our Concepts

a. mission

we are committed to offering investment and trading business consultancy service, and minimizing business cost for our customers both at home and abroad.

b. vision

to be one of the leading consultants companies in China.

c. corporate spirit

everything can be better.

d. corporate culture

we attach importance to the power of both the teamwork and the individual, beliving that inovation and honesty are always the best policies.

Our Team

Steven Shi

Frank and easygoing, Steven is quite experienced in communicating with government officials and customers, and masters a wide range of clients resources.

Dong Huiping

Taking things seriously,Dong deals with accounting. she has a good mastery of internatinal trade business.

Yao Yunfei

Always devoting himself to work, Yao is experienced in industry predicting and public relations handling.

Zhou Fen

As a master degree holder, Zhou is proficient at accounting and writing reports on market analysis.

Yang Ying

With a master degree of science,Yang is adept at building mathematical models and writing reports on market analysis as well as industry analysis.

Lin Ling

with an open horizon, Lin engages herself in business letters writing , documents filing and customers contacting.

Yan Yuhui

Experienced in negociating with foreign clients and translating business contracts and law documents, Yan has a good command of foreign investment policies and chinese corporation laws and regulations.

Pan Yuhang

Genuine and serious, Pan is good at busniess letters correspondence and negotiating with foreign customers.

Our Logo

As the core symbol of our corporate culture, our logo represents a perfect combination of traditional culture and our spirits.

To start with, the logo bears resemblance to the chinese character"马"(pronounced "Ma") suggesting a progressive spirit of hard struggle in the backgound of the chinese culture. It also happens to be the right initial character of the full chinese name of our corporation.

In addition, the design of our logo is indicative of a sailing boat bulging with wind in the company of a seagull. The boat symbolizes our newly-born company heading for a promising destination with opportunities and challanges on the course. Just like the boat setting sail, we cherish a hope to expand our business into overseas market.

In the company,every staffmember is proud of the logo, not only for the connotations hidden, but for the corporate spirits enlightened. In the spirit of forging ahead like the horse and the boat, We believe, we can win!

been examined and approved at the sixth excutive meeting of the Ministry of Commerce of the People''s Republic of China and shall be promulgated. It shall be

implemented as of June 1,2004. Bo Xilai, Minister

April 16, 2004

Measures for the Administration on Foreign Investment in Commercial Fields

Article 1 In order to further expand the open-up to the outside world and improve the construction of market circulation system. The present Measures are

hereby formulated in accordance with the Law of the People''s Republic of China on Sino-foreign Equity JointVentures, the Law of the People''s Republic of

China on Sino-foreign Contractual Joint Ventures, Law of the People''s Republic of China on Wholly Foreign-owned Enterprises, and the Company Law, and other

relevant laws and administrative regulations.

Article 2 Where a foreign company, enterprise and other economic organization or individual (hereinafter referred to as "foreign investors") establishes

foreign-funded commercial enterprises within the China territory and undertakes business activities, the presentMeasures shall be observed.

Article 3 The "foreign-funded commercial enterprises" shall refer to the enterprises with foreign investment which undertake the following business

activities:

1. Commission agency: selling agents, brokers, auctioneers or other wholesalers for goods, who sell goods of other people and provide relevant attaching

services through collecting fees on the basis of contract;

2. Wholesale: Selling goods to retailers, customers of industry, commerce and organizations, or to other wholesalers or providing relevant attaching

services;

3. Retail: providing goods for consumption and use of individuals or groups or offering relevant attaching services in the fixed places or through

television, telephone, mail order, internet, and automats; or

4. Franchising: authorizing other people with using its trademark, trade firm, or mode of management through signing contract for gaining remunerations or

franchising fees.

Foreign companies, enterprises, and other economic organs or individuals shall carry out the business activities as prescribed in items 1, 2, 3, and 4 of the

preceding paragraph through foreign-funded enterprises established within China.

Article 4 Foreign-funded commercial enterprises shall abide by laws, administrative regulations and the relevant rules of the People''s Republic of China.

Their proper business activities and legal rights and interests shall be subject to the protection of the Chinese laws.

Article 5 The competent commerce departments of the state shall make supervision over and administration on foreign investment in commercial fields and the

business activities of foreign-funded commercial enterprises according to law.

Article 6 The foreign investors of the foreign-funded commercial enterprises shall have good credit standing, and have no acts in violation of Chinese laws,

administrative regulations and the relevant rules. Foreign investors who have stronger economic power, advance experiences and marketing technology in

business management, and broad international marketing networks shall be encouraged to establish foreign-funded commercial enterprises.

Article 7 A foreign-funded commercial enterprise shall meet the following requirements:
1. The minimum registered capital shall conform to the relevant provisions of the Company Law.
2. Conforming to the relevant provisions on the registered capital and total investment of the enterprises with foreign investment. And
3. The term of operation of a foreign-funded commercial enterprise shall not exceed 30 years in general, and the term of operation of a foreign-funded

commercial enterprise that is established in the middle and western areas shall not exceed 40 years in general.

Article 8 A foreign-funded commercial enterprise shall meet the following requirements when opening a store:

1. Where it applies for establishing a store at the same time when applying for establishing a commercial enterprise, it shall follow the relevant provisions

on city development and urban commercial development.

2. Where a foreign-funded commercial enterprise whose establishment has been approved applies for establishing additional stores, it shall, in addition to

meeting the requirements of item 1, meet the following conditions:
(1) Taking part in the joint annual examination on enterprises with foreign investment and having passed the annual examination; and
(2) The registered capital of the enterprise has been fully paid.

Article 9 Foreign-funded enterprises may operate the following business upon approval:

1. For the foreign-funded commercial enterprises that undertake retailing business:
(1) Retailing of commodities;
(2) Importing of self-managed commodities;
(3) Purchasing domestic products for export; and
(4) Other relevant matching businesses. And

2. For the foreign-funded commercial enterprises that undertake wholesaling business:
(1) Wholesaling of commodities;
(2) Commission agency (excluding auction);
(3) Importing and exporting of goods; and
(4) Other relevant matching businesses.
　　A foreign-funded commercial enterprise may authorize others to open stores by way of franchising.
　　A foreign-funded commercial enterprise may, upon approval, undertake one kind or several kinds of sales businesses. The kinds of commodities it manages

shall be specified in the contents regarding business scope as prescribed in the contract or articles of association.

Article 10 The following procedures shall be followed when handling the establishment and opening of stores by a foreign-funded commercial enterprise:

1. The project initiation, feasibility study report of the foreign-funded enterprise, and the report and verification on the establishment of the enterprises

once altogether.

2. Except the provisions in items (3) and (4) of paragraph one of the present Article, the investors of the foreign-funded commercial enterprises to be

established and the already established foreign-funded commercial enterprises that apply for opening stores shall submit respectively the application

documents as prescribed in Article 12 and Article 13 to the competent commerce department at the level of the province where the foreign-funded commercial

enterprise makes registration. The said competent commerce department at the provincial level shall, after making preliminary examination on the document

ssubmitted, report to the Ministry of Commerce within one month from the date of receiving all the application documents.　　The Ministry of Commerce shall

make decision on whether to approve the application within 3 months from the date of receiving all the application documents. If it approves the

establishment, the Certificate of Approval for Foreign-funded Enterprises shall be issued; if it does not approve it, the reasons thereof shall be explained.
The Ministry of Commerce may authorize the competent commerce departments at the provincial level to examine and approve the foregoing applications in

accordance with the present Measures.

3. Where a foreign-funded commercial enterprise, which undertakes the retail business opens stores within the administrative region at the level of the

province of its locality, and meets the following conditions and its business scope does not concern the sale of television, telephone, mail order, internet,

or automats, and the commodities as enumerated in Articles 17 and 18 of the present Measures, the said competent commercedepartment of the province shall

examine and approve it within the power of its examination and approval and report it to and put it on records at the Ministry of Commerce.
(1) The business area of a single store does not exceed 3,000 square meters, and the number of stores does not exceed 3, and the total number of the similar

stores established by foreign investors of the stores within China through the foreign-funded commercial enterprises they have established does not exceed

30; and
(2) The business area of a single store does not exceed 300 square meters, and the number of stores does not exceed 30, the total number of similar stores

opened in China by foreign investors of these stores through the foreign-funded commercial enterprises they have established does not exceed 300. And

4. Where the owners of the trademark or business name of a Sino-foreign equity joint venture or cooperative commercial enterprise are Chinese-funded

enterprises or Chinese natural persons, and the Chinese investors have the controlling shares in the foreign-funded commercial enterprise, and the business

scope of the foreign-funded commercial enterprise does not concern the commodities as enumerated in Articles 17 and 18 of the present Measures, its

applications for establishment and opening stores shall be examined and approved by the competent commercedepartment at the level of the province where the

enterprise is located.　　If a store is opened in a different province, the opinions of the competent commerce department at the level of the province where

the planned store is located shall also be consulted.　　The competent commerce department at the provincial level shall not transfer the power for

examination and approval as prescribed in items (3) and (4) of paragraph 1 of the present Article by itself to a lower level without the authorization of the

Ministry of Commerce.

Article 11 The investors shall, within one month after receiving the certificate of approval, go through the registration formalities at the administrative

department for industry and commerce upon the strength of the Certificate of Approval for Foreign-funded Enterprises.

Article 12 The following documents shall be submitted when applying for establishing a foreign-funded commercial enterprise:

1. Application letter;
2. Feasibility study report signed by all the investors together;
3. Contract, articles of association (for a foreign-funded commercial enterprise, only the articles of association should be submitted) and the attachment;
4. Bank credit certificates of all investors, registration certificate (photocopy), certificate of the legal representative (photocopy), if the foreign

investor is an individual, his/her identity certificate shall be provided;
5. The audit report of all investors in the recent one year, which is audited by accountant firms;
6. The evaluation report on state-owned assets invested into the Sino-equity joint venture or contractual joint venture commercial enterprises by Chinese

investors;
7. Catalogues of import and export commodities of the planned foreign-funded commercial enterprise;
8. Name list of the members of the board of directors of the planned foreign-funded commercial enterprise and the power of attorney for directors of each

investor;
9. Notice of pre-approval of the enterprise name as issued by the administrative department for industry and commerce;
10. The certificate documents (photocopy) of the use right of the land used for the planned store and (or) house lease agreement (photocopy), except when the

business area of the store to be opened is less than 3,000 square meters; and
11. The documents of statement in conformity with the requirements for city development and urban commercial development as issued by the competent commerce

department of the government at the locality of the store.

In case that the documents are signed by a person who is not the legal representative, the power of attorney of the legal representative shall be issued.

Article 13 Where an already established foreign-funded commercial enterprise applies for opening a store, it shall submit the following documents:
1. Application letter;
2. The revised contract or articles of association shall be submitted in case the amendments to the contract or articles of association are involved;
3. Feasibility study report on opening the store;
4. Resolutions of the board of directors on opening the store;
5. The audit report of the enterprise in the recent one year;
6. The capital verification report of the enterprise (photocopy);
7. Registration certificate (photocopy) of all the investors, and the certificate of the legal representative (photocopy);
8. Certificate documents of the use right of the land that is used for the store to be opened and (or) house lease agreement (photocopy), except when the

business area of the store opened is less than 3,000 square meters; and
9. The documents of statement in conformity with the requirements for city development and the commercial development of the city as issued by the government

where the planned store is located.

In case the document is signed by the person who is not the legal representative, the power of attorney of the legal representative shall be issued.

Article 14 The license contract for use of a trademark or a business name, technology transfer contract, management contract and service contract signed by a

foreign-funded commercial enterprise, and other legal documents shall be deemed as the attachment of the contract (for a foreign-funded commercial

enterprises, it shall be deemed as the attachment of the articles of association) and be submitted along with all the other documents.

Article 15 The foreign-funded commercial enterprises shall, when opening a store, obtain the land for commercial use by way of public invitation of bidding,

auction or listing in accordance with the provisions of the relevant laws and administrative regulations of the state on land management.

Article 16 Where a foreign-funded commercial enterprise manages the commodities on which the state has special provisions and the import and export goods

involving quota or license administration, it shall go through the formalities in accordance with the relevant state provisions.

Article 17 A foreign-funded commercial enterprise shall, when undertaking the following commodities, conform to the following prescriptions in addition to

the provisions of the present Measures:

Where a foreign-funded commercial enterprise undertakes books, newspapers orperiodicals, it shall conform to the Measures for the Administration of Foreign-

funded Distribution Enterprises of Books, Newspapers, or Periodicals;

Where a foreign-funded commercial enterprise undertakes gas station and deals with retail of refined oil, it shall have stable channel for supply of refined

oil, conform to the construction plan of the local oil station, with the business establishments thereof corresponding with the existing state standards and

the provisions on computation and checking procedures, and meet the requirements for fire control and environmental protection, etc. In addition, the

specific implementation measures shall be formulated by the Ministry of Commerce.

Where a foreign-funded commercial enterprise manages drugs, it shall conform to the relevant standards for the administration of the drug sale. In addition,

the specific implementation measures shall be formulated by the Ministry of Commerce.

Where a foreign-funded commercial enterprise manages automobiles, it shall manage within the approved business scope. In addition, the specific

implementation measures shall be formulated by the Ministry of Commerce.

Except the special provisions in Article 18 of the present Measures and the present Article, if foreign investors establish commercial enterprises of farm

products and by-products, and agricultural production materials, they shall not be restricted by the region, proportion of share, and the amount of

investment.

No wholesaling foreign-funded commercial enterprises may manage drugs, pesticides and agricultural films before December 11, 2004, nor shall they manage

fertilizers, refined oil and crude oil before February 11, 2006.

No retailing foreign-funded enterprises may manage drugs, pesticides, agricultural films and refined oil before December 11, 2004, nor shall they manage

fertilizers before December 11, 2006.

No wholesaling foreign-funded commercial enterprises may manage salt or tobacco, and no retailing foreign-funded commercial enterprises may manage tobacco.

Article 18 Under the circumstance that the same foreign investor opens more than 30 stores accumulatively within China, if the goods it manages include

books, newspapers, magazines, automobiles (this restriction shall be cancelled from December 11, 2006), drugs, pesticides, agricultural films, fertilizers,

refined oils, food, vegetable oil, sugar, cotton, and other commodities, and the above commodities are of different brands and come from different suppliers,

the proportion of capital contribution of the foreign investors shall not exceed 49%.

Article 19 Where a foreign-funded commercial enterprise authorizes others to open stores by way of franchising, it shall, in addition to observing the

provisions of the present Measures, observe the special provisions of the state on franchising if any.

Article 20 Where a foreign-funded commercial enterprise manages auction business, it shall accord with the Auction Law, Laws on Cultural Relics, and other

relevant laws, and shall be examined and approved by the Ministry of Commerce. The specific implementation measures shall be formulated additionally.

Article 21 The establishment of foreign-funded commercial enterprises shall be allowed from December 11, 2004.

Article 22 The regions where a foreign-funded retail commercial enterprise and its stores may be established shall be restricted to the provincial capital

cities, metropolis of autonomous regions, municipalities directly under the Central Government, cities directly under state planning, and special economic

zones before December 11, 2004, and the regional restrictions shall be cancelled after December 11, 2004.

Regional restrictions on foreign-funded wholesaling commercial enterprises shall be cancelled from the date of implementation of the present Measures.

Article 23 Where an enterprise with foreign investment invests in commercial fields within the territory of China, it shall accord with the Interim

Provisions on Investment of Foreign-funded Enterprises in China, and refer to the present Measures.

Article 24 Other foreign-funded enterprises undertaking the business activities as enumerated in Article 3 of the present Measures except the foreign-funded

commercial enterprises, shall conform to the provisions of the present Measures, and alter by law the business scope accordingly.

Article 25 Where investors from Hong Kong Special Administrative Region, Macao Special Administrative Region, and from Taiwan region, who invest to establish

commercial enterprises in other provinces, autonomous regions, and municipalities directly under the Central Government, shall refer to the present Measures

in addition to the following prescriptions:

1. From January 1, 2004, commercial service providers of Hong Kong and Macao may establish foreign-funded commercial enterprises in the Mainland.
2. The regional scope of retail enterprises established in the Mainland by Hong Kong and Macao commercial service providers shall be extended to cities at

the prefecture level, and the cities at the county level in Guangdong province.
3. From January 1, 2004, the commercial service providers of Hong Kong and Macao may apply according to the relevant articles of the present Measures to

establish commercial enterprises that undertake automobile retail business, but their average sales volume per annum in the past three years before

application shall be no less than one hundred million dollars; and the amount of capital in the previous year before application shall be no less than 10

million dollars; the minimum registered capital of an automobile retailing enterprise, which is established in the Mainland shall be RMB 10 million Yuan, and

the minimum registered capital of an automobile retailing enterprise, which is established in the middle and western districts shall be RMB 6 million Yuan.
4. The Chinese citizens among the Hong Kong and Macao permanent residents are allowed to establish individual business according to the relevant laws,

regulations and rules to undertake commercial retail activities (excluding franchising), the business areas thereof shall not exceed 300square meters.
5. The Hong Kong/Macao commercial service providers as mentioned in this Article shall conform to the definitions of and the relevant requirements for

"service providers" as prescribed in the "Mainland/Hong Kong Closer Economic Partnership Arrangements" and the "Mainland/Macao Closer Economic Partnership

Arrangements".

Article 26 The foreign-funded commercial enterprises shall be encouraged to join in the relevant trade associations to strengthen self-discipline of the

enterprises.

Article 27 The responsibility to interpret the present Measures shall be remained with the Ministry of Commerce.

Article 28 The present Measures shall be implemented as of June 1, 2004.

Article 29 The Measures for Trial Implementation of the Foreign-funded Commercial Enterprises as promulgated jointly by the former State Economic and Trade

Commission and the Ministry of Foreign Trade and Economic Cooperation shall be abolished as of the date of the implementation of the present Measures.

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Firstly, in many hot spots of the proper city, retail sailors are extremely gathered, leading to the problem of over-competition in the retailing industry. In other less-populated areas in the city, the problem appears less serious.

Secondly, it tends to take investors a long period of time before they get all documents of approval prepared. For some reason, in china, a serious of complicated and trifling procedures of administrative approval has to be covered with dozens of administrative offices involved.

Thirdly, the problem of the irregular or illegal operation of approval is likely to exist. Therefore, this will lead to some risk of legality of the investor's position, which will bring much unnecessary trouble to investors.

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CHAPTER 1 GENERAL PROVISIONS 
Article 1

This Law has been formulated in order to improve the employment contract system, to specify the rights and obligations of the parties to employment

contracts, to protect the lawful rights and interests of Employees and to build and develop harmonious and stable employment relationships.

Article 2
This Law governs the establishment of employment relationships between, and the conclusion, performance, amendment, termination and ending of employment

contracts by, organizations such as enterprises, individual economic organizations and private non-enterprise units in the People's Republic of China

(“Employers”) on the one hand and Employees in the People's Republic of China on the other hand.

The conclusion, performance, amendment, termination and ending of employment contracts by state authorities, institutions or social organizations on the one

hand and Employees with whom they establish employment relationships on the other hand, shall be handled pursuant to this Law.

Article 3
The conclusion of employment contracts shall comply with the principles of lawfulness, fairness, equality, free will, negotiated consensus and good faith.
A lawfully concluded employment contract is binding, and both the Employer and the Employee shall perform their respective obligations stipulated therein.

Article 4
Employers shall establish and improve internal rules and regulations, so as to ensure that Employees enjoy their labor rights and perform their labor

obligations.

When an Employer formulates, revises or decides on rules and regulations, or material matters, that have a direct bearing on the immediate interests of its

Employees, such as those concerning compensation, work hours, rest, leave, work safety and hygiene, insurance, benefits, employee training, work discipline

or work quota management, the same shall be discussed by the employee representative congress or all the employees. The employee representative congress or

all the employees, as the case may be, shall put forward a proposal and comments, whereupon the matter shall be determined through consultations with the

Trade union or employee representatives conducted on a basis of equality.

If, during the implementation of an Employer's rule or regulation or decision on a crucial matter, the Trade union or an employee is of the opinion that the

same is inappropriate, it or he is entitled to communicate such opinion to the Employer, and the rule, regulation or decision shall be improved by making

amendments after consultations.

Rules and regulations, and decisions on material matters, that have a direct bearing on the immediate interests of Employees shall be made public or be

communicated to the Employees by the Employer.

Article 5
The labor administration authorities of People's Governments at the county level and above, together with the Trade union and enterprise representatives,

shall establish a comprehensive tri-partite mechanism for the coordination of employment relationships, in order to jointly study and resolve major issues

concerning employment relationships.

Article 6
A Trade union shall assist and guide Employees in the conclusion of employment contracts with their Employer and the performance thereof in accordance with

the law, and establish a collective bargaining mechanism with the Employer in order to safeguard the lawful rights and interests of Employees.

CHAPTER 2 CONCLUSION OF EMPLOYMENT CONTRACTS

Article 7
An Employer's employment relationship with a Employee is established on the date it starts using the Employee. An Employer shall keep a register of

employees, for reference purposes.

Article 8
When an Employer hires a Employee, it shall truthfully inform him as to the content of the work, the working conditions, the place of work, occupational

hazards, production safety conditions, labor compensation and other matters which the Employee requests to be informed about. The Employer has the right to

learn from the Employee basic information which directly relates to the employment contract, and the Employee shall truthfully provide the same.

Article 9
When hiring a Employee, an Employer may not retain the Employee's resident ID card or other papers, nor may it require him to provide security or collect

property from him under some other guise.

Article 10
To establish an employment relationship, a written employment contract shall be concluded.

In the event that no written employment contract was concluded at the time of establishment of an employment relationship, a written employment contract

shall be concluded within one month after the date on which the Employer starts using the Employee.

Where an Employer and a Employee conclude an employment contract before the Employer starts using the Employee, the employment relationship shall be

established on the date on which the Employer starts using the Employee.

Article 11
In the event that an Employer fails to conclude a written employment contract with a Employee at the time its starts to use him, and it is not clear what

labor compensation was agreed upon with the Employee, the labor compensation of the new Employee shall be decided pursuant to the rate specified in the

collective contract; where there is no collective contract or the collective contract is silent on the matter, equal pay shall be given for equal work.

Article 12
Employment contracts are divided into fixed-term employment contracts, open-ended employment contracts and employment contracts to expire upon completion of

a certain job.

Article 13
A “fixed-term employment contract” is an employment contract whose ending date is agreed upon by the Employer and the Employee.

An Employer and a Employee may conclude a fixed-term employment contract upon reaching a negotiated consensus.

Article 14
An “open-ended employment contract” is an employment contract for which the Employer and the Employee have agreed not to stipulate a definite ending date.
An Employer and a Employee may conclude an open-ended employment contract upon reaching a negotiated consensus. If a Employee proposes or agrees to renew his

employment contract or to conclude an employment contract in any of the following circumstances, an open-ended employment contract shall be concluded, unless

the Employee requests the conclusion of a fixed-term employment contract:

(1) The Employee has been working for the Employer for a consecutive period of not less than 10 years;

(2) when his Employer introduces the employment contract system or the state owned enterprise that employs him re-concludes its employment contracts as a

result of restructuring, the Employee has been working for the Employer for a consecutive period of not less than 10 years and is less than 10 years away

from his legal retirement age; or

(3) prior to the renewal, a fixed-term employment contract was concluded on two consecutive occasions and the Employee is not characterized by any of the

circumstances set forth in Article 39 and items (1) and (2) of Article 40 hereof.

If an Employer fails to conclude a written employment contract with a Employee within one year from the date on which it starts using the Employee, the

Employer and the Employee shall be deemed to have concluded an open-ended employment contract.

Article 15
An “employment contract with a term to expire upon completion of a certain job” is an employment contract in which the Employer and the Employee have

agreed that the completion of a certain job is the term of the contract.

An Employer and a Employee may, upon reaching a negotiated consensus, conclude an employment contract with a term to expire upon completion of a certain job.

Article 16
An employment contract shall become effective when the Employer and the Employee have reached a negotiated consensus thereon and each of them has signed or

sealed the text of such contract.

The Employer and the Employee shall each hold one copy of the employment contract.

Article 17
An employment contract shall specify the following matters:
(1) The name, domicile and legal representative or main person in charge of the Employer;
(2) The name, domicile and number of the resident ID card or other valid identity document of the Employee;
(3) The term of the employment contract;
(4) The job des cription and the place of work;
(5) Working hours, rest and leave;
(6) Labor compensation;
(7) Social insurance;
(8) Labor protection, working conditions and protection against occupational hazards; and
(9) Other matters which laws and statutes require to be included in employment contracts.

In addition to the requisite terms mentioned above, an Employer and a Employee may agree to stipulate other matters in the employment contract, such as

probation period, training, confidentiality, supplementary insurance and benefits, etc.

Article 18
If a dispute arises due to the fact that the rate or standards for labor compensation or working conditions, etc. are not explicitly specified in the

employment contract, the Employer and the Employee may renegotiate. If the negotiations are unsuccessful, the provisions of the collective contract shall

apply. If there is no collective contract or the collective contract is silent on the issue of labor compensation, equal pay shall be given for equal work;

if there is no collective contract or the collective contract is silent on the issue of working conditions, the relevant regulations of the state shall

apply.

Article 19
If an employment contract has a term of not less than three months but less than one year, the probation period may not exceed one month; if an employment

contract has a term of more than one year and less than three years, the probation period may not exceed two months; and if an employment contract has a term

of not less than three years or is open-ended, the probation period may not exceed six months.

An Employer may stipulate only one probation period with any given Employee.

No probation period may be specified in an employment contract with a term to expire upon completion of a certain job or an employment contract with a term

of less than three months.

The probation period shall be included in the term of the employment contract. If an employment contract provides for a probation period only, then there is

no probation period and the term concerned shall be the term of the employment contract.

Article 20
The wages of a Employee on probation may not be less than the lowest wage level for the same job with the Employer or less than 80 percent of the wage agreed

upon in the employment contract, and may not be less than the minimum wage rate in the place where the Employer is located.

Article 21
An Employer may not terminate an employment contract during the probation period unless the Employee is characterized by any of the circumstances set forth

in Article 39 and items (1) and (2) of Article 40 hereof. If an Employer terminates an employment contract during the probation period, it shall explain the

reasons to the Employee.

Article 22
If an Employer provides special funding for a Employee's training and gives him professional technical training, it may conclude an agreement specifying a

term of service with such Employee.

If the Employee breaches the agreement on the term of service, he shall pay liquidated damages to the Employer as agreed. The measure of the liquidated

damages may not exceed the training expenses paid by the Employer. The liquidated damages that the Employer requires the Employee to pay may not exceed the

portion of the training expenses allocable to the unperformed portion of the term of service.

The reaching of agreement on a term of service between the Employer and the Employee does not affect the raising of the Employee's labor compensation during

the term of service according to the normal wage adjustment mechanism.

Article 23
An Employer and a Employee may include in their employment contract provisions on confidentiality matters relating to maintaining the confidentiality of the

trade secrets of the Employer and to intellectual property.

If a Employee has a confidentiality obligation, the Employer may agree with the Employee on competition restriction provisions in the employment contract or

confidentiality agreement, and stipulate that the Employer shall pay financial compensation to the Employee on a monthly basis during the term of the

competition restriction after the termination or ending of the employment contract. If the Employee breaches the competition restriction provisions, he shall

pay liquidated damages to the Employer as stipulated.

Article 24
The personnel subject to competition restrictions shall be limited to the Employer's senior management, senior technicians and other personnel with a

confidentiality obligation. The scope, territory and term of the competition restrictions shall be agreed upon by the Employer and the Employee, and such

agreement shall not violate laws and regulations.

The term, counted from the termination or ending of the employment contract, for which a person as mentioned in the preceding paragraph is subject to

competition restrictions in terms of his working for a competing Employer that produces the same type of products or is engaged in the same type of business

as his current Employer, or in terms of his establishing his own business to produce the same type of products or engage in the same type of business, shall

not exceed two years.

Article 25
With the exception of the circumstances specified in Articles 22 and 23 hereof, an Employer may not stipulate with a Employee provisions on the bearing of

liquidated damages by the Employee.

Article 26
An employment contract shall be invalid or partially invalid if:
(1) A party uses such means as deception or coercion, or takes advantage of the other party's difficulties, to cause the other party to conclude an

employment contract, or to make an amendment thereto, that is contrary to that party's true intent;
(2) The Employer disclaims its legal liability or denies the Employee his rights; or
(3) Mandatory provisions of laws or administrative statutes are violated.
If the invalidity or partial invalidity of the employment contract is disputed, it shall be confirmed by a labor dispute arbitration institution or a

People's Court.
 
Article 27
If certain provisions of an employment contract are invalid and such invalidity does not affect the validity of the remaining provisions, the remaining

provisions shall remain valid.

Article 28
If an employment contract is confirmed as invalid and the Employee has already performed labor, the Employer shall pay the Employee labor compensation. The

amount of labor compensation shall be determined with reference to the labor compensation of Employees in the same or a similar position with the Employer.

CHAPTER 3 PERFORMANCE AND AMENDMENT OF EMPLOYMENT CONTRACTS

Article 29
The Employer and the Employee shall each fully perform its/his obligations in accordance with the employment contract.

Article 30
Employers shall pay their Employees labor compensation on time and in full in accordance with the employment contracts and state regulations.

If an Employer falls into arrears with the payment of labor compensation or fails to make payment in full, the Employee may, in accordance with the law,

apply to the local People's

Court for an order to pay; and the People's Court shall issue such order in accordance with the law.

Article 31
Employers shall strictly implement the work quota standards and may not compel or in a disguised manner compel Employees to work overtime. If an Employer

arranges for a Employee to work overtime, it shall pay him overtime pay in accordance with the relevant state regulations.

Article 32
Employees shall not be held in breach of their employment contracts if they refuse to perform dangerous operations that are instructed in violation of

regulations or peremptorily ordered by management staff of the Employer.

Employees have the right to criticize, report to the authorities or lodge accusations against their Employers in respect of working conditions that endanger

their lives or health.

Article 33
Changes such a change in the name, legal representative or main person in charge of, or an (the) investor(s) in, an Employer shall not affect the performance

of its employment contracts.

Article 34
If an Employer is merged or divided, etc., its existing employment contracts shall remain valid and continue to be performed by the Employer(s) which

succeeded to its rights and obligations

Article 35
An Employer and a Employee may amend the provisions of their employment contract if they so agree after consultations. Amendments to an employment contract

shall be made in writing.

The Employer and the Employee shall each hold one copy of the amended employment contract.

CHAPTER 4 TERMINATION AND ENDING OF EMPLOYMENT CONTRACTS

Article 36
An Employer and a Employee may terminate their employment contract if they so agree after consultations.

Article 37
A Employee may terminate his employment contract upon 30 days' prior written notice to his Employer. During his probation period, a Employee may terminate

his employment contract by giving his Employer three days' prior notice.

Article 38
A Employee may terminate his employment contract if his Employer:
(1) Fails to provide the labor protection or working conditions specified in the employment contract;
(2) Fails to pay labor compensation in full and on time;
(3) Fails to pay the social insurance premiums for the Employee in accordance with the law;
(4) Has rules and regulations that violate laws or regulations, thereby harming the Employee's rights and interests;
(5) causes the employment contract to be invalid due to a circumstance specified in the first paragraph of Article 26 hereof;
(6) Gives rise to another circumstance in which laws or administrative statutes permit a Employee to terminate his employment contract.
If an Employer uses violence, threats or unlawful restriction of personal freedom to compel a Employee to work, or if a Employee is instructed in violation

of rules and regulations or peremptorily ordered by his Employer to perform dangerous operations which threaten his personal safety, the Employee may

terminate his employment contract forthwith without giving prior notice to the Employer.

Article 39
An Employer may terminate an employment contract if the Employee:
(1) Is proved during the probation period not to satisfy the conditions for employment;
(2) Materially breaches the Employer's rules and regulations;
(3) Commits serious dereliction of duty or practices graft, causing substantial damage to the Employer;
(4) has additionally established an employment relationship with another Employer which materially affects the completion of his tasks with the first-

mentioned Employer, or he refuses to rectify the matter after the same is brought to his attention by the Employer;
(5) causes the employment contract to be invalid due to the circumstance specified in item (1) of the first paragraph of Article 26 hereof; or
(6) Has his criminal liability pursued in accordance with the law.

Article 40
An Employer may terminate an employment contract by giving the Employee himself 30 days' prior written notice, or one month's wage in lieu of notice, if:
(1) after the set period of medical care for an illness or non-work-related injury, the Employee can engage neither in his original work nor in other work

arranged for him by his Employer;
(2) The Employee is incompetent and remains incompetent after training or adjustment of his position; or
(3) A major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it unperformable and, after

consultations, the Employer and Employee are unable to reach agreement on amending the employment contract.

Article 41
If any of the following circumstances makes it necessary to reduce the workforce by 20 persons or more or by a number of persons that is less than 20 but

accounts for 10 percent or more of the total number of the enterprise's employees, the Employer may reduce the workforce after it has explained the

circumstances to its Trade union or to all of its employees 30 days in advance, has considered the opinions of the Trade union or the employees and has

subsequently reported the workforce reduction plan to the labor administration department:
(1) Restructuring pursuant to the Enterprise Bankruptcy Law;
(2) Serious difficulties in production and/or business operations;
(3) The enterprise switches production, introduces a major technological innovation or revises its business method, and, after amendment of employment

contracts, still needs to reduce its workforce; or
(4) Another major change in the objective economic circumstances relied upon at the time of conclusion of the employment contracts, rendering them

unperformable.
When reducing the workforce, the Employer shall retain with priority persons:
(1) Who have concluded with the Employer fixed-term employment contracts with a relatively long term;
(2) Who have concluded open-ended employment contracts with the Employer; or
(3) Who are the only ones in their families to be employed and whose families have an elderly person or a minor for whom they need to provide.
If an Employer that has reduced its workforce pursuant to the first paragraph hereof hires again within six months, it shall give notice to the persons

dismissed at the time of the reduction and, all things being equal, hire them on a preferential basis.

Article 42
An Employer may not terminate an employment contract pursuant to Article
40 or Article 41 hereof if the Employee:
(1) is engaged in operations exposing him to occupational disease hazards and has not undergone a pre-departure occupational health check-up, or is suspected

of having contracted an occupational disease and is being diagnosed or under medical observation;
(2) Has been confirmed as having lost or partially lost his capacity to work due to an occupational disease contracted or a work-related injury sustained

with the Employer;
(3) Has contracted an illness or sustained a non-work-related injury, and the set period of medical care therefore has not expired;
(4) Is a female employee in her pregnancy, confinement or nursing period;
(5) Has been working for the Employer continuously for not less than 15 years and is less than 5 years away from his legal retirement age;
(6) Finds himself in other circumstances stipulated in laws or administrative statutes.

Article 43
When an Employer is to terminate an employment contract unilaterally, it shall give the Trade union advance notice of the reason therefore. If the Employer

violates laws, administrative statutes or the employment contract, the Trade union has the right to demand that the Employer rectify the matter. The Employer

shall study the Trade union's opinions and notify the Trade union in writing as to the outcome of its handling of the matter.

Article 44
An employment contract shall end if:
(1) Its term expires;
(2) The Employee has commenced drawing his basic old age insurance pension in accordance with the law;
(3) The Employee dies, or is declared dead or missing by a People's Court;
(4) The Employer is declared bankrupt;
(5) The Employer has its business license revoked, is ordered to close or is closed down, or the Employer decides on early liquidation; or
(6) Another circumstance specified in laws or administrative statutes arises.

Article 45
If an employment contract expires and any of the circumstances specified in
Article 42 hereof applies, the term of the employment contract shall be extended until the relevant circumstance ceases to exist, at which point the contract

shall end. However, matters relating to the ending of the employment contract of a Employee who has lost or partially lost his capacity to work as specified

in item (2) of Article 42 hereof shall be handled in accordance with state regulations on work-related injury insurance.

Article 46
In any of the following circumstances, the Employer shall pay the Employee severance pay:
(1) The employment contract is terminated by the Employee pursuant to Article 38 hereof;
(2) The employment contract is terminated after such termination was proposed to the Employee by the Employer pursuant to Article 36 hereof and the parties

reached agreement thereon after consultations;
(3) The employment contract is terminated by the Employer pursuant to Article 40 hereof;
(4) The employment contract is terminated by the Employer pursuant to the first paragraph of Article 41 hereof;
(5) The employment contract is a fixed–term contract that ends pursuant to item (1) of
Article 44 hereof, unless the Employee does not agree to renew the contract even though the conditions offered by the Employer are the same as or better than

those stipulated in the current contract;
(6) The employment contract ends pursuant to item (4) or (5) of Article 44 hereof;
(7) Other circumstances specified in laws or administrative statutes.

Article 47
A Employee shall be paid severance pay based on the number of years worked with the Employer at the rate of one month's wage for each full year worked. Any

period of not less than six months but less than one year shall be counted as one year. The severance pay payable to a Employee for any period of less than

six months shall be one-half of his monthly wages.

If the monthly wage of a Employee is greater than three times the average monthly wage of employees in the Employer's area as published by the People's

Government at the level of municipality directly under the central government or municipality divided into districts of the area1 where the Employer is

located, the rate for the severance pay paid to him shall be three times the average monthly wage of employees and shall be for not more than 12 years of

work.

For the purposes of this Article, the term “monthly wage” means the Employee's average monthly wage for the 12 months prior to the termination or ending of

his employment contract.

Article 48
If an Employer terminates or ends an employment contract in violation of this
Law and the Employee demands continued performance of such contract, the Employer shall continue performing the same. If the Employee does not demand

continued performance of the employment contract or if continued performance of the employment contract has become impossible, the Employer shall pay damages

pursuant to Article 87 hereof.

Article 49
The state will take measures to establish a comprehensive system that enables Employees' social insurance accounts to be transferred from one region to

another and to be continued in such other region.

Article 50
At the time of termination or ending of an employment contract, the Employer shall issue a proof of termination or ending of the employment contract and,

within 15 days, carry out the procedures for the transfer of the Employee's file and social insurance account.

The Employee shall carry out the procedures for the handover of his work as agreed by the parties. If relevant provisions of this Law require the Employer to

pay severance pay, it shall pay the same upon completion of the procedures for the handover of the work.

The Employer shall keep terminated or ended employment contracts on file for not less than two years, for reference purposes.

CHAPTER 5 SPECIAL PROVISIONS

SECTION 1 COLLECTIVE CONTRACT

Article 51
After bargaining on an equal basis, enterprise employees, as one party, and their Employer may conclude a collective contract on such matters as labor

compensation, working hours, rest, leave, work safety and hygiene, insurance, benefits, etc. The draft of the collective contract shall be presented to the

employee representative congress or all the employees for discussion and approval.

A collective contract shall be concluded by the Trade union, on behalf of the enterprise's employees, and the Employer. If the Employer does not yet have a

Trade union, it shall
1 Translator's note: The phrase “of the area” does not appear in the Chinese text. It has been added by us in view of the context.
Conclude the collective contract with a representative put forward by the Employees under the guidance of the Trade union at the next higher level.

Article 52
Enterprise employees, as one party, and their Employer may enter into specialized collective contracts addressing labor safety and hygiene, protection of the

rights and interests of female employees, the wage adjustment mechanism, etc.

Article 53
Industry-wide or area-wide collective contracts may be concluded between the Trade union on the one hand and representatives on the side of the enterprises

on the other hand in industries such as construction, mining, catering services, etc. within areas below the county level.

Article 54
After a collective contract has been concluded, it shall be submitted to the labor administration authority. The collective contract shall become effective

upon the lapse of 15 days from the date of receipt thereof by the labor administration authority, unless the said authority raises any objections to the

contract.

A collective contract that has been concluded in accordance with the law is binding on the Employer and the Employees. An industry-wide or area-wide

collective contract is binding on Employers and Employees in the industry or in the area in the locality concerned.

Article 55
The rates for labor compensation, standards for working conditions, etc. stipulated in a collective contract may not be lower than the minimum rates and

standards prescribed by the local People's Government. The rates for labor compensation, standards for working conditions, etc. stipulated in the employment

contract between an Employer and a Employee may not be lower than those stipulated in the collective contract.

Article 56
If an Employer's breach of the collective contract infringes upon the labor rights and interests of the employees, the Trade union may, in accordance with

the law, demand that the Employer assume liability. If a dispute arising from the performance of the collective contract is not resolved following

consultations, the Trade union may apply for arbitration and institute an action according to law.

SECTION 2  Placement

Article 57
Staffing firms shall be established in accordance with the relevant provisions
of the Company Law and have registered capital of not less than RMB￥500,000.

Article 58
Staffing firms are Employers as mentioned in this Law and shall perform an Employer's obligations toward its Employees. The employment contract between a

staffing firm and a Employee to be placed shall, in addition to the matters specified in Article 17 hereof, specify matters such as the unit with which the

Employee will be placed, the term of his placement, his position, etc.

The employment contracts between staffing firms and the Employees to be placed shall be fixed term employment contracts with a term of not less than two

years. Staffing firms shall pay labor compensation on a monthly basis. During periods when there is no work for Employees to be placed, the staffing firm

shall pay such Employees compensation on a monthly basis at the minimum wage rate prescribed by the People's Government of the place where the staffing firm

is located.

Article 59
When placing Employees, staffing firms shall enter into staffing agreements with the units that accept the Employees under the placement arrangements

(“Accepting Units”). The staffing agreements shall stipulate the job positions in which Employees are placed, the number of persons placed, the term of

placement, the amounts and methods of payments of labor compensation and social insurance premiums, and the liability for breach of the agreement.
An Accepting Unit shall decide with the staffing firm on the term of placement based on the actual requirements of the job position, and it may not conclude

several short-term placement agreements to cover a continuous term of labor use.

Article 60
Staffing firms shall inform the Employees placed of the content of the placement agreements.
Staffing firms may not pocket part of the labor compensation that the Accepting Units pay to the Employees in accordance with the placement agreement.
Staffing firms and the Accepting Units may not charge fees from the Employees placed.

Article 61
If a staffing firm places a Employee with an Accepting Unit in another region, the Employee's labor compensation and working conditions shall be in line with

the rates and standards of the place where the Accepting Unit is located.

Article 62
Accepting Units shall perform the following obligations:
(1) Implement state labor standards and provide the corresponding working conditions and labor protection;
(2) communicate the job requirements and labor compensation of the Employees placed;
(3) Pay overtime pay and performance bonuses and provide benefits appropriate for the job positions;
(4) Provide the placed Employees who are on the job with the training necessary for their job positions; and
(5) In case of continuous placement, implement a normal wage adjustment system.
Accepting Units may not in turn place the Employees with other Employers.

Article 63
Placed Employees shall have the right to receive the same pay as that received by Employees of the Accepting Unit for the same work. If an Accepting Unit has

no Employee in the same position, the labor compensation shall be determined with reference to the labor compensation paid in the place where the Accepting

Unit is located to Employees in the same or a similar position.

Article 64
Placed Employees have the right to lawfully join the Trade union of their staffing firm or the Accepting Unit or to organize such unions, so as to protect

their own lawful rights and interests.

Article 65
Placed Employees may terminate their employment contracts with their staffing firms pursuant to Article 36 or 38 hereof.
If any of the circumstances provided for in Article 39 and items (1) and (2) of Article 40 hereof applies to a placed Employee, his Accepting Unit may return

him to the staffing firm, which may terminate its employment contract with him in accordance with the relevant provisions of this Law.

Article 66
The placement of Employees shall generally be practiced for temporary, auxiliary or substitute job positions.

Article 67
Employers may not establish staffing firms to place Employees with themselves or their subordinate units.

Section 3 Part-Time Labor

Article 68
The term “part-time labor” means a form of labor for which the compensation is chiefly calculated by the hour and where the Employee generally averages not

more than 4 hours of work per day and not more than an aggregate 24 hours of work per week for the same Employer.

Article 69
The two parties to part-time labor may conclude an oral agreement.

A Employee who engages in part-time labor may conclude an employment contract with one or more Employers, but a subsequently concluded employment contract

may not prejudice the performance of a previously concluded employment contract.

Article 70
The two parties to part-time labor may not stipulate a probation period.

Article 71
Either of the two parties to part-time labor may terminate the use of the labor by notice to the other party at any time. No severance pay shall be payable

by the Employer to the Employee upon termination of the use of the labor.

Article 72
The hourly compensation rate for part-time labor may not be lower than the minimum hourly wage rate prescribed by the People's Government of the place where

the Employer is located.

The labor compensation settlement and payment cycle for part-time labor may not exceed 15 days.

CHAPTER 6 MONITORING INSPECTIONS

Article 73
The State Council's labor administration authority shall be responsible for overseeing the implementation of the employment contract system nationwide. The

labor administration authorities of local People's Governments at the county level and above shall be responsible for overseeing the implementation of the

employment contract system in their respective jurisdictions.

In the course of overseeing the implementation of the employment contract system, the labor administration authorities of People's Governments at the county

level and above shall consider the opinions of the Trade unions, the representatives on the side of the enterprises and the authorities in charge of the

industries concerned.

Article 74
The labor administration authorities of local People's Governments at the county level and above shall conduct monitoring inspections of the implementation

of the following aspects of the employment contract system, in accordance with the law:
(1) Employers' formulation of rules and regulations that have a direct bearing on the immediate interests of Employees, and the implementation thereof;
(2) The conclusion and termination of employment contracts by Employers and Employees;
(3) Compliance with relevant regulations on placement by staffing firms and Accepting Units;
(4) Employers' compliance with state regulations on Employees' working hours, rest and leave;
(5) Employers' payment of labor compensation as specified in the employment contracts and compliance with minimum wage rates;
(6) Employers' enrollment in the various types of social insurance and payment of social insurance premiums; and
(7) Other labor matters requiring monitoring inspections, as specified in laws and administrative statutes.

Article 75
When the labor administration authority of a local People's Government at the county level or above conducts a monitoring inspection, it has the authority to

review materials relating to the employment contracts and collective contracts and conduct an on the-spot inspection of the work premises. Both the Employer

and the Employees shall truthfully provide relevant information and materials.
When working personnel of a labor administration authority conduct a monitoring inspection, they shall show their IDs, exercise their functions and powers

according to law and enforce the law in a well-disciplined manner.

Article 76
Such competent authorities as construction authorities, health authorities, production safety regulators, etc. of People's Governments at the county level

and above shall, to the extent of their respective purviews, oversee the implementation of the employment contract system by Employers.

Article 77
A Employee whose lawful rights and interests have been infringed upon shall have the right to request that the relevant authority deal with the infringement

according to law, or to apply for arbitration and institute an action according to law.

Article 78
Trade unions shall safeguard the lawful rights and interests of Employees in accordance with the law and monitor the performance of the employment contracts

and collective contracts by Employers. If an Employer violates labor laws or statutes or breaches an employment contract or collective contract, the Trade

union has the right to voice its opinion or require that the matter be rectified. If a Employee applies for arbitration or institutes an action, the Trade

union shall provide support and assistance in accordance with the law.

Article 79
All organizations and individuals are entitled to report violations of this Law.
The labor administration authorities of People's Governments at the county level and above shall timely check and handle the violations reported and reward

those persons whose reports are valuable.

CHAPTER 7 LEGAL LIABILITY

Article 80
If an Employer's rule or regulation with a direct bearing on the immediate interests of Employees violates laws or administrative statutes, the labor

administration authority shall order rectification and give a warning. If the said rule or regulation caused a Employee to suffer harm, the Employer will be

liable for damages.

Article 81
If the text of an employment contract provided by an Employer lacks any of the mandatory clauses which this Law requires to be included in such contracts or

if an Employer fails to deliver the text of the employment contract to the Employee, the labor administration authority shall order rectification; if the

Employee suffered harm as a result thereof, the Employer will be liable for damages.

Article 82
If an Employer concludes a written employment contract with a Employee more than one month but less than one year after the date on which it started using

him, it shall each month pay to the Employee twice his wage.
If an Employer fails, in violation of this Law, to conclude an open-ended employment contract with a Employee, it shall each month pay to the Employee twice

his wage, starting from the date on which an open-ended employment contract should have been concluded.

Article 83
If the probation period stipulated by an Employer with a Employee violates this Law, the labor administration authority shall order rectification. If the

illegally stipulated probation has been performed, the Employer shall pay compensation to the Employee according to the time worked on probation beyond the

statutory probation period, at the rate of the Employee's monthly wage following the completion of his probation.

Article 84
If an Employer violates this Law by retaining a Employee's resident ID card or other papers, the labor administration authority shall order the same returned

to the Employee within a specified period of time and impose a penalty in accordance with the provisions of relevant laws.

If an Employer violates this Law by collection property from Employees as security or under some other guise, the labor administration authority shall order

the same returned to the Employees within a specified period of time and impose a fine on the Employer of not less than RMB￥500 and not more than RMB￥2,000

for each person; If the Employees suffered harm as a result of the said conduct on the part of the Employer, the Employer will be liable for damages. If an

Employer retains a Employee's file or other Article after the Employee has terminated or ended his employment contract in accordance with the law, a penalty

shall be imposed in accordance with the preceding paragraph.

Article 85
If an Employer:
(1) Fails to pay a Employee his labor compensation in full and on time as stipulated in his employment contract or prescribed by the state;
(2) Pays labor compensation below the local minimum wage rate;
(3) Arranges overtime without paying overtime pay; or
(4) Terminates or ends an employment contract without paying the Employee severance pay pursuant to this Law; then the labor administration authority shall

order it to pay the labor compensation, overtime pay or severance pay within a specified period of time; if the labor compensation is lower than the local

minimum wage rate, the Employer shall pay the shortfall. If payment is not made within the time limit, the Employer shall be ordered to additionally pay

damages to the Employee at a rate of not less than 50 percent and not more than 100 percent of the amount payable.

Article 86
If an employment contract is confirmed as being invalid in accordance with Article 26 hereof and the other party suffers harm as a result thereof, the party

at fault shall be liable for damages.

Article 87
If an Employer terminates or ends an employment contract in violation of this Law, it shall pay damages to the Employee at twice the rate of the severance

pay provided for in Article 47 hereof.

Article 88
If an Employer:
(1) uses violence, threats or unlawful restriction of personal freedom to compel a Employee to work;
(2) Instructs in violation of rules and regulations, or peremptorily orders, a Employee to perform dangerous operations which threaten his personal safety;
(3) Insults, corporally punishes, beats, illegally searches or detains a Employee; or
(4) provides odious working conditions or a severely polluted environment, resulting in serious harm to the physical or mental health of Employees; it shall

be subjected to administrative punishment; if the said conduct constitutes a criminal offense, criminal liability shall be pursued according to law; if the

Employee suffers harm as a result of the said conduct on the part of the Employer, the Employer will be liable for damages.

Article 89
If an Employer fails, in violation of this Law, to issue to a Employee a certificate evidencing the termination or ending of his employment contract, the

labor administration authority shall order rectification. If the Employee suffers harm as a result of such failure, the Employer will be liable for damages.

Article 90
If a Employee terminates his employment contract in violation of this Law or breaches the confidentiality obligations or competition restrictions stipulated

in his employment contract, and if such violation or breach causes his Employer to suffer loss, he will be liable for damages.

Article 91
If an Employer hires a Employee whose employment contract with another Employer has not yet been terminated or ended, causing the other Employer to suffer a

loss, it shall be jointly and severally liable with the Employee for damages.

Article 92
If a staffing firm violates this Law, the labor administration authority and other relevant competent authorities shall order it to rectify the situation. If

the circumstances are serious, it shall impose a fine of not less than RMB￥1,000 and not more than RMB￥5,000 for each person, and the administration for

industry and commerce shall revoke the business license. If the Employee(s) placed suffer(s) harm, the staffing firm and the Accepting Unit shall be jointly

and severally liable for damages.

Article 93
An Employer that carries on business without the legal qualifications therefore will be pursued according to law for its legal liability for its illegal and

criminal acts. If its Employees have already performed labor, the Employer or its investor(s) shall pay them labor compensation, severance pays and damages

in accordance with the relevant provisions of this Law. If the Employees suffer harm as a result thereof, the said unit shall be liable for damages.

Article 94
If an individual that contracts for the operation of a business hires Employees in violation of this Law and a Employee suffers harm as a result thereof, the

organization that employed such contractor shall be jointly and severally liable with the contractor for damages.

Article 95
If a labor administration authority, another competent authority or a member of its working personnel neglects its/his duties, fails to perform its/his

statutory duties or exercises its/his authority in violation of the law, thereby causing harm to a Employee or an
Employer, liability for damages shall be borne and the leading official directly in charge and the other persons directly responsible shall be subjected to

administrative penalties in accordance with the law; if a criminal offense is constituted, criminal liability shall be pursued in accordance with the law.

CHAPTER 8 SUPPLEMENTARY PROVISIONS

Article 96
Where laws or administrative statutes contain, or the State Council has formulated, separate regulations concerning the conclusion, performance, amendment,

termination or ending of employment contracts by and between institutions and those of their working personnel that are subject to the employment system,

matters shall be handled in accordance with such regulations; in the absence of such regulations, matters shall be handled in accordance with this Law.

Article 97
Employment contracts concluded in accordance with the law before the implementation of this Law and continuing to exist on the implementation date of this

Law shall continue to be performed. For the purposes of item (3) of the second paragraph of Article 14 hereof, the number of consecutive occasions on which a

fixed-term employment contract is concluded shall be counted from the first renewal of such contract to occur after the implementation of this Law.
If an employment relationship was established prior to the implementation of this Law without the conclusion of a written employment contract, such contract

shall be concluded within one month from the implementation date of this Law.

If an employment contract existing on the implementation date of this Law is terminated or ends after the implementation of this Law and, pursuant to Article

46 hereof, severance pay is payable, the number of years for which severance pay is payable shall be counted from the implementation date of this Law. If,

under relevant regulations in effect prior to the implementation of this Law, the Employee is entitled to severance pay from the Employer in respect of a

period preceding the implementation of this Law, the matter shall be handled in accordance with the relevant regulations that were in effect at that time.

Article 98
This Law shall be implemented from January 1, 2008.

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Article 1 Enterprises with foreign investment in the People's Republic of China shall pay income tax on their income from production, business operations and other sources in accordance with the provisions of this Law. 　
Foreign enterprises shall pay income tax on their income from production, business operations and other sources within the territory of the People's Republic of China in accordance with the provisions of this Law.

Article 2 "Enterprises with foreign investment" mentioned in this Law refer to Chinese-foreign equity joint ventures, Chinese-foreign cooperative enterprises and foreign-funded enterprises set up within the territory of China.　　
 "Foreign enterprises" mentioned in this Law refer to those foreign companies, enterprises and other economic organizations which have set up establishments and sites engaged in production or business operations in China, and which, though without establishments and sites set up in China, have income from sources in China.

Article 3 Enterprises with foreign investment with head offices set up in China shall pay income tax on their income from sources in and outside China. Foreign enterprises shall pay income tax on income from sources in China.

Article 4 The taxable income of an enterprise with foreign investment or a foreign enterprise with establishments or sites set up and engaged in production or business operations in China shall be the remaining amount out of its gross income in a tax year after the costs, expenses and losses have been deducted.

Article 5 The enterprise income tax to be paid by an enterprise with foreign investment and the enterprise income tax to be paid by a foreign enterprise on the income of its establishments or sites set up and engaged in production or business operations in China shall be assessed on the taxable income at the rate of 30% and a local income tax shall be assessed on the taxable income at the rate of 3%.

Article 6 Pursuant to China's industrial policies, the State shall give guidance to foreign investors on their investment orientation and encourage foreign invested enterprises that adopt advanced technology and equipment and export all or the greater part of their products out of China.
　
Article 7 Those enterprises with foreign investment in special economic zones, those foreign enterprises with establishments and sites set up and engaged in production or business operations in special economic zones and those foreign-invested manufacturing enterprises in economic and technological development zones shall pay enterprise income tax at the reduced tax rate of 15%.
　
Those foreign-invested manufacturing enterprises set up in open coastal economic zones, and in the old urban districts of cities with special economic zones and cities with economic and technological development zones shall pay enterprise income tax at the reduced tax rate of 24%.
Those enterprises with foreign investment set up in open coastal economic zones, and in the old urban districts of cities with special economic zones and cities with economic and technological development zones or in other districts prescribed by the State Council and engaged in energy, transportation, ports, docks and other undertakings, which are encouraged by the State, shall pay enterprise income tax at the reduced tax rate of 15%, and the concrete procedure thereof shall be defined by the State Council.

Article 8 A foreign-invested manufacturing enterprise scheduled to operate for at least 10 years shall be exempted from income tax in the first two years beginning from the year when it begins making profit and shall pay income tax at a 50% discount in the third year through the fifth year, but for those exploiting petroleum, natural gas, rare metals, precious metals and other similar natural resources, the specific provisions on the collection of enterprise income tax shall be formulated by the State Council separately. If an enterprise with foreign investment fails to operate for a full 10 years, it shall repay the amount of income tax already reduced or exempted.

Those regulations promulgated by the State Council prior to the implementation of this Law, that provide preferential treatment of longer period of income tax reduction or exemption than the provisions in the previous paragraph of this Law to projects of energy, transportation, ports, docks and other important manufacturing projects or preferential treatment of enterprise income tax reduction or exemption to major non-manufacturing projects shall continue to be implemented after this Law comes into effect. 　
　
After the term for tax reduction or exemption provided in the previous two paragraphs has expired, those enterprises with foreign investment engaged in agriculture, forestry and animal husbandry and those set up in remote and economically underdeveloped regions may continue to enjoy a 15% to 30% reduction of the enterprise income tax in the succeeding 10 years provided that their applications are approved by competent tax authorities under the State Council.　　
In case any alteration of the provisions regarding reduction and exemption of enterprise income tax in the previous three paragraphs is required following the implementation of this Law, it shall be reported by the State Council to the Standing Committee of the National People's Congress to determine.

Article 9 The people's governments of the provinces, autonomous regions and municipalities directly under the State Council may decide in light of the local reality on reduction and exemption of local income tax on those industries and items in which foreign investors are encouraged to make investment.

Article 10 When a foreign investor of an enterprise with foreign investment makes direct reinvestment in the enterprise with the profit obtained from the enterprise, thereby increasing the registered capital thereof or use the profits from the enterprise to establish another enterprise with foreign investment with a scheduled operational period of no less than five years, the foreign investor may get a refund of 40% of the income tax already paid on the reinvested portion of income upon approval of application by the tax authorities, or enjoy preferential treatment otherwise prescribed by the State Council. If the reinvestment is withdrawn in less than five years, the refunded tax payment shall be paid back to the tax authorities.

Article 11 Losses sustained by enterprises with foreign investment or the establishments and other setups in China of foreign enterprises engaged in production or business operation may be made up for from the income of the next tax year; and if the income of the next tax year is insufficient to make up for the loss, it may continue year by year for no more than five years.

Article 12 When an enterprise with foreign investment is allowed to pay on a consolidated basis the tax on an income from a source outside China of which the income tax has been paid outside China, that income tax shall be allowed to be deducted from the tax amount, but the deduction shall not exceed the tax amount assessed on his income from an overseas source in accordance with the provisions of this Law.

Article 13 When an enterprise with foreign investment or an establishment or setup in China of a foreign enterprise engaged in production or business operations makes or collects payments for sales of goods and charges in business exchanges with its associated enterprises, it shall conduct those dealings as though among independent enterprises. If such payments and collections are not done as those among independent enterprises thus causing a decrease in the taxable income thereof, the tax authorities shall have the power to make appropriate adjustments.

Article 14 An enterprise with foreign investment or an establishment or setup in China of a foreign enterprise engaged in production or business operations shall apply to the Administration of Industry and Commerce for registration, or alteration or cancellation thereof on account of the establishment, movement, merger, separation, termination or alteration of the principal items in the registration and then bring the relevant documents to the local tax authorities for tax registration or alteration or cancellation thereof.

Article 15 The enterprise income tax and local income tax shall be assessed on an yearly basis and quarterly advances thereof shall be paid within 15 days after the end of each quarter and settlement of the income tax shall be made with surplus returned and deficit made up within five months after the year-end.

Article 16 An enterprise with foreign investment or an establishment or setup in China of a foreign enterprise engaged in production or business operations shall file tax returns with the local tax authorities within the prescribed time limit for advance tax payment and file year-end tax returns and accounting statements of final settlement within four months after the year-end.

Article 17 An enterprise with foreign investment or an establishment or setup in China of a foreign enterprise engaged in production or business operations shall report its financial system and accounting system to the local tax authorities for the record and examination. The accounting records it provides should be complete and accurate and bookkeeping should be based on legitimate vouchers.
　　
If the financial and accounting basis of an enterprise with foreign investment or an establishment or setup in China of a foreign enterprise engaged in production or business operations is found at variance with the relevant taxation regulations of the State Council, income tax shall be assessed in accordance with the relevant taxation regulations of the State Council

Article 18 If the net asset or the remnant asset of an enterprise with foreign investment remaining exceeds the actually contributed capital after undivided profits, funds and expenses are deducted at the time of liquidation, the balance shall be the liquidation gain liable to income tax in accordance with the provisions of this Law.

Article 19 If a foreign enterprise with no establishment or other setup in China and has obtained profits, interests, rentals, royalties and other income from sources in China or it has establishments or other setups in China but has obtained the above cited income from sources without any connection with those establishments or setups, it shall pay an enterprise income tax at the rate of 20%.
　　
With regard to the income tax payable in accordance with the provisions in the previous paragraph, the actual beneficiary shall be the taxpayer and the payer of those payments shall be the tax withholder(s). The payer shall withhold tax from every payment made. Each withholder shall hand to the state treasury each withholding within five days and file a tax withholding statement to the local tax authorities.

Tax reduction or exemption shall be applicable to the incomes listed below:
1. Profits a foreign investor obtains from an enterprise with foreign investment are free from income tax,
2. Interests an international financial organization obtains from loans to the Chinese government or to Chinese national banks are free from income tax,
3. Interests a foreign bank obtains from loans of preferential interest rates to the Chinese national banks are free from income tax, and
4. The royalties from technical know-how used in scientific research, exploitation of energy, development of transportation, production of agriculture, forestry or animal husbandry or the development of major technologies shall be eligible for the reduced rate of 10% of income tax upon approval by the competent tax authorities under the State Council, and royalties from advanced technology or are obtained with special favor shall be exempt from income tax.
Besides those cited above, any tax reduction or exemption to be granted to income from profits, interests, rentals, royalties and other sources shall be determined by the State Council.

Article 20 Chinese tax authorities have the right to inspect the financial state, accounting and performance of tax payment of an enterprise with foreign investment or an establishment or setup in China of a foreign enterprise engaged in production or business operations and to inspect the situation of tax withholdings by tax withholders. The institutions or individuals being inspected shall provide the necessary information and shall not refuse the inspection or conceal information.

Tax inspectors sent by the tax authorities shall display identification and shall be responsible for the confidentiality of the information they have come in touch of.

Article 21 Income tax shall be paid in RMB in accordance with the provisions of this Law. Payment of income tax on income in a foreign currency shall be converted into the local currency at the official exchange rate quoted by the state exchange control department.

Article 22 When a taxpayer fails to pay income tax in the prescribed time limit or a withholder fails to hand over to the state the withholding in the prescribed time limit, the tax authorities shall set a time limit for the payment thereof and levy a daily fine on the deferral at the rate of 2‰ from the day payment deferral begins.

Article 23 In the event of failure to make tax registration or alter or cancel tax registration with the tax authorities in the prescribed time limit, or failure to file tax returns, final accounting settlement statements or tax withholding statements to the tax authorities in the prescribed time limit, or failure to provide the tax authorities with the financial and accounting system of its enterprise for inspection, the tax authorities shall set a time limit to the procedure and impose a fine up to five thousand yuan.　　

Failure to make, alter or cancel tax registration with the tax authorities in the prescribed time limit, or to file tax returns, final accounting settlement statements or tax withholding statements to the tax authorities in the prescribed time limit despite the demand of the tax authorities for registration or submission of the documents within a prescribed time limit shall merit a fine up to 10,000 yuan imposed by the tax authorities, and if the case is grave, criminal responsibilities of the legal representative and the person with direct responsibility shall be sought with reference to Article 121 of the Criminal Law of China.

Article 24 In case a tax withholder fails to perform its obligation as provided in this Law and fails to withhold the tax payable or withholds only part of the tax payable, the tax authorities shall have it make up for the part of the tax not withheld within an imposed time limit and may in the meanwhile impose a fine no more than twice the amount of the tax not withheld.
　　
In case a tax withholder fails to hand over the withheld tax payment to the state treasury in the prescribed time limit, the tax authorities shall make it hand over the withholding within the prescribed time limit and may in the meanwhile impose a fine of up to 5,000 yuan; in case the withholder still fails to hand in the money in time, the tax authorities shall pursue the tax payment and impose a fine of up to 10,000 yuan; and if the case is grave enough, the criminal responsibility of its legal representative and the person with direct responsibility shall be sought with reference to the provisions of Article 121 of the Criminal Law of China.

Article 25 In the case of tax evasion by concealment or deception, or failure of paying tax within the prescribed time limit as provided in this Law, and payment is still refused within the time limit despite the urge by the tax authorities, the tax authorities shall pursue the payment of the tax payable and impose a fine up to five times the tax amount unpaid; and in a grave case, the criminal responsibility of the legal representative and the person with direct responsibility shall be sought in accordance with the provisions of Article 121 of the Criminal Law of China.

Article 26 In case of a dispute with the tax authorities over tax payment, an enterprise with foreign investment or a foreign enterprise or a tax withholder shall pay the tax in accordance with the relevant regulations before appealing to the higher tax authorities for reconsideration within 60 days after the reception of the tax invoice issued by the tax authorities. If the enterprise with foreign investment, foreign enterprise or tax withholder is not reconciled to the decision by the higher tax authorities, it may bring the case to a people's court within 15 days from the day the decision on reconsideration arrives.
If the party in question is not reconciled to the penalty imposed by the tax authorities, it may appeal to the higher tax authorities for reconsideration within 15 days on the day the notification of the penalty arrives. If the party concerned is still not reconciled to the decision of the reconsideration, it may bring the case to a people's court within 15 days from the day the notification of the decision of the reconsideration arrives. The party may directly bring the case to a people's court within 15 days from the day the decision on penalty is notified. If the party concerned fails to appeal for reconsideration or to bring the case to a people's court within the prescribed time limit and refuses to accept the penalty, the authorities that mete out the penalty shall request the people's court to enforce the penalty.

Article 27 Wherever an enterprise with foreign investment that has been founded before the promulgation of this Law finds the rate of income tax provided by this Law is higher or the preferential treatment to tax reduction or exemption poorer than that before the promulgation of this Law, the law and the relevant regulations of the State Council prior to the promulgation of this Law shall prevail in the term of operation already approved; if there is no approved term of operation, the law and the relevant regulations of the State Council prior to the promulgation of this Law shall prevail in the term prescribed by the State Council. The specific rules thereof shall be formulated by the State Council.

Article 28 Wherever the provisions of taxation agreements the government of the People's Republic of China has signed with foreign governments are found at variance with the provisions of this Law, the provisions of those agreements shall prevail.

Article 29 The State Council shall formulate the rules for the implementation of this Law.

Article 30 This Law shall come into force as of July 1, 1991. The "Income Tax Law of the People's Republic of China concerning Chinese-Foreign Equity Joint Ventures" and the "Income Tax Law of the People's Republic of China concerning Foreign Enterprises" shall be abrogated therefrom.

Investment Consultant

We Help You Make More Money from Your China Business
Structuring of a really efficient business in China should be top of the agenda for any international investor, yet curiously, in the rush to "get into the market", key component parts - worth literally hundreds of thousands of dollars - are often omitted or not even considered in the business structure. This may be partly due to lack of experience of your "on the ground" man - and also lack of experience from your China consultant. It pays to know what’s what. Here then, we provide an A to Z guide to structuring a profitable business - and get more bang for your buck out of China.

How profitable is investing in China?
On a whole, foreign investments in China are profitable. According to Morgan Stanley, US earnings in greater China have grown by a factor of 6 over the last 10 years, form $1.2 Billion in 1990 to almost $7.1 billion in 2000. This figure represents 40% of the earnings generated in non-Japan Asia.

Can your firm benefit from China?
China can be a profitable country for investment; however is it right for you? One of the first questions to be asked is fit; does China fit with your business model? The most common reasons for foreign companies to engage China are to relocate manufacturing to reduce costs and to sell into China to expand revenue. More recently, firms have been looking toward China to supplement their R & D efforts.

What are the common modes of entry?

There are four general modes of entry:
1. Agency or representative office – This is a traditional contracting relationship between a Foreign and a Chinese firm. The foreign firm may choose to set up a representative office in China to monitor and respond as needed.
2. Joint Venture (JV) - Joint ventures have been one of the most favored modes of entry. In a joint venture the foreign parties and Chinese companies contribute assets to a new entity and share ownership.
3. Wholly foreign owned enterprises (WFOE) – The option of entering as a WFOE has become increasingly viable with China’s entry into the WTO. A WFOE is usually created as a startup; however creating a WFOE through acquiring a Chinese company can have many benefits.
4. Mergers & acquisitions.
The mode of entry is determined by the nature of the transaction and the amount and type of risk you are willing to bear. Mergers and acquisitions can offer many of the benefits of a JV and a WFOE. M&A can provide enhanced speed to market, increased incentive alignment, local knowledge, expertise, and access to a strong network of relationships. The key to success in an M&A is finding a target company witch complements your firm and creates synergies.

How can AMAZING help you?
Consist of lawyers, CPAs, etc. Orient Horizons Investment & Trade, Inc. provides strategic investment guidance to small and medium sized enterprises (SMSEs) seeking to profit from investing and trading in China.
Finding the right partner and selecting the appropriate mode of entry are critical to success. With offices in China, a wide network of alliances, and expertise in business strategy, Orient Horizons is well positioned to assist SMSEs in optimizing their entry strategy, finding the right partner, and closing the deal.
Using our expertise in business strategy and experience in china, we match firms based on complementarities and their ability to create synergies. Concurrently we work with the client to determine the appropriate type of relationship based on their business model and risk tolerance.
We provide assistance and implementation with the following activities:
*JV
*Merger
*Acquisition
*WFOE
*Representative offices
*Trade matching and partner sourcing
We use our alliance network to bring additional specialized expertise to bear on a case by case basis. Our approach is results driven, tailored to the needs of the client, and focused on creating value.

Industry Analysis like a guide for you to start a new business in a new environment, it is the basis of intelligent strategic planning. It is based on real knowledge and information collected by our company rather than faulty assumptions. The contents cover economics, trends, social and political factors, and changes in technology, and the rate of changes. Having such comprehensive analysis, you get to know the existing and potential competitors. It defines what you consider to be competition, and it helps you determine key factors for success as you pursue various opportunities.

Before you invest in China, we will do the research and analysis for you and help you develop sustainable strategies. As we are a professional staff in this field, the information offered by us will assist you to recognize the forces that drive the market and recognize new opportunities and capitalize on them.
Having awareness of your company's weakness and strengths is also very crucial. We will work with you to develop a proactive means of identifying and responding to a dynamic industry, including a data about the markets, competition, customers, economic factors, regulatory considerations, and more.  Our process utilizes specific cognitive and statistical methods to achieve the best results.

We can offer the following services for you.

The trip arrangement and hotel booking:
We will design an individualized schedule for your trip in Hangzhou in accordance with your personal hobbies and requirements. It includes the sightseeing routine, the smart restaurant and hotel reservation. The routine covers ten most famous scenic sports of Hangzhou, like Three Pools Mirroring the Moon, Leifeng Pagoda Standing in the Sunset and Viewing Fish in Flowering Harbor etc, and the historic interest, like Six-harmony Prosody, Yuefei temple and Su xiaoxiao tomb etc. Meanwhile, we also will book the comfortable and economical hotel for you to have a good rest after entire day trip.

Interpreter offering and vehicle renting:
For the consideration of traveling convenience and better understanding of Chinese culture, we will provide an interpreter for you. He or she will accompany you along the trip, introducing the relevant stories, legends and explanations about each view. A car will be prepared for you.
 
Enterprises or governmental organ reservation for visiting:
If you are interested in some enterprises or have a need to get acquaintance to the relevant governmental organs, we can make appointments for you and help you get in touch with enterprises and governmental organs.
 
Enterprises recommended for visiting:
There are many enterprises investing in the same field as you in Hangzhou. Some of them have a very successful mode of operating the company or office. We can company you to visit to these enterprises.
Prior to traveling in Hangzhou, we will discuss the detailed plan with you, like the time for trip, car, hotel and the schedule enterprises for visiting etc. If you have any questions, please email or call us. Wish you have a good trip in Hangzhou.

Article 1
With a view to expanding economic cooperation and technical exchange with foreign countries and promoting the development of China's national economy, the

People's Republic of China permits foreign enterprises, other foreign economic organizations and individuals (hereinafter collectively referred to as foreign

investors") to set up enterprises with foreign capital in China and protects the lawful rights and interests of such enterprises.

Article 2
As mentioned in this Law, "enterprises with foreign capital" refers to those enterprises established in China by foreign investors, exclusively with their

own capital, in accordance with relevant Chinese laws. The term does not include branches set up in China by foreign enterprises and other foreign economic

organizations.

Article 3
Enterprises with foreign capital shall be established in such a manner as to help the development of China's national economy; they shall use advanced

technology and equipment or market all or most of their products outside China. Provisions shall be made by the State Council regarding the lines of business

which the state forbids enterprises with foreign capital to engage in or on which it places certain restrictions.

Article 4
The investments of a foreign investor in China, the profits it earns and its other lawful rights and interests are protected by Chinese law.Enterprises with

foreign capital must abide by Chinese laws and regulations and must not engage in any activities detrimental to China's public interest.

Article 5
The state shall not nationalize or requisition any enterprise with foreign capital. Under special circumstances, when public interest requires, enterprises

with foreign capital may be requisitioned by legal procedures and appropriate compensation shall be made.

Article 6
The application to establish an enterprise with foreign capital shall be submitted for examination and approval to the department under the State Council

which is in charge of foreign economic relations and trade, or to another agency authorized by the State Council. The authorities in charge of examination

and approval shall, within 90 days from the date they receive such application, decide whether or not to grant approval.

Article 7
After an application for the establishment of an enterprise with foreign capital has been approved, the foreign investor shall, within 30 days from the date

of receiving a certificate of approval, apply to the industry and commerce administration authorities for registration and obtain a business licence. The

date of issue of the business licence shall be the date of the establishment of the enterprise.

Article 8
An enterprise with foreign capital which meets the conditions for being considered a legal person under Chinese law shall acquire the status of a Chinese

legal person, in accordance with the law.

Article 9
An enterprise with foreign capital shall make investments in China within the period approved by the authorities in charge of examination and approval. If it

fails to do so, the industry and commerce administration authorities may cancel its business licence. The industry and commerce administration authorities

shall inspect and supervise the investment situation of an enterprise with foreign capital.

Article 10
In the event of a separation, merger or other major change, an enterprise with foreign capital shall report to and seek approval from the authorities in

charge of examination and approval, and register the change with the industry and commerce administration authorities.

Article 11
The production and operating plans of enterprises with foreign capital shall be reported to the competent authorities for the record.Enterprises with foreign

capital shall conduct their operations and management in accordance with the approved articles of association, and shall be free from any interference.

Article 12
When employing Chinese workers and staff, an enterprise with foreign capital shall conclude contracts with them according to law, in which matters concerning

employment, dismissal, remuneration, welfare benefits, labour protection and labour insurance shall be clearly prescribed.

Article 13
Workers and staff of enterprises with foreign capital may organize trade unions in accordance with the law, in order to conduct trade union activities and

protect their lawful rights and interests.The enterprises shall provide the necessary conditions for the activities of the trade unions in their respective

enterprises.

Article 14
An enterprise with foreign capital must set up account books in China, conduct independent accounting, submit the fiscal reports and statements as required

and accept supervision by the financial and tax authorities.

If an enterprise with foreign capital refuses to maintain account books in China, the financial and tax authorities may impose a fine on it, and the industry

and commerce administration authorities may order it to suspend operations or may revoke its business licence.

Article 15
Within the scope of the operations approved, enterprises with foreign capital may purchase, either in China or from the world market, raw and semi-processed

materials, fuels and other materials they need. When these materials are available from both sources on similar terms, first priority should be given to

purchases in China.

Article 16
Enterprises with foreign capital shall apply to insurance companies in China for such kinds of insurance coverage as are needed.

Article 17
Enterprises with foreign capital shall pay taxes in accordance with relevant state provisions for tax payment, and may enjoy preferential treatment for

reduction of or exemption from taxes.

An enterprise that reinvests its profits in China after paying the income tax, may, in accordance with relevant state provisions, apply for refund of a part

of the income tax already paid on the reinvested amount.

Article 18
Enterprises with foreign capital shall handle their foreign exchange transactions in accordance with the state provisions for foreign exchange control.

Enterprises with foreign capital shall open an account with the Bank of China or with a bank designated by the state agency exercising foreign exchange

control. Enterprises with foreign capital shall manage to balance their own foreign exchange receipts and payments. If, with the approval of the competent

authorities, the enterprises market their products in China and consequently experience an imbalance in foreign exchange, the said authorities shall help

them correct the imbalance.

Article 19
The foreign investor may remit abroad profits that are lawfully earned from an enterprise with foreign capital, as well as other lawful earnings and any

funds remaining after the enterprise is liquidated.Wages, salaries and other legitimate income earned by foreign employees in an enterprise with foreign

capital may be remitted abroad after the payment of individual income tax in accordance with the law.

Article 20
With respect to the period of operations of an enterprise with foreign capital, the foreign investor shall report to and secure approval from the authorities

in charge of examination and approval. For an extension of the period of operations, an application shall be submitted to the said authorities 180 days

before the expiration of the period. The authorities in charge of examination and approval shall, within 30 days from the date such application is received,

decide whether or not to grant the extension.

Article 21
When terminating its operations, an enterprise with foreign capital shall promptly issue a public notice and proceed with liquidation in accordance with

legal procedure. Pending the completion of liquidation, a foreign investor may not dispose of the assets of the enterprise except for the purpose of

liquidation.

Article 22
At the termination of operations, the enterprise with foreign capital shall nullify its registration with the industry and commerce administration

authorities and hand in its business licence for cancellation.

Article 23
The department under the State Council which is in charge of foreign economic relations and trade shall, in accordance with this Law, formulate rules for its

implementation, which shall go into effect after being submitted to and approved by the State Council.

Article 24
This Law shall go into effect on the day of its promulgation.

The revised Company Law of the People's Republic of China was adopted at the 1
8th Meeting of the Standing Committee of the Tenth National People's Congress
of the People's Republic of China on October 27, 2005, is hereby promulgated a
nd shall come into effect as of January 1, 2006.
 
 
The President of the People's Republic of China: Hu Jintao
October 27, 2005
 
  (Adopted at the fifth meeting of the standing committee of the eighth National
 People's Congress on December 29, 1993, revised for the first time in accorda
nce with the Decision on Amending the Company Law of the People's Republic of
China adopted at the 13th meeting of the Standing Committee of the 9th Nationa
l People's Congress on December 25, 1999; revised for the second time in accor
dance with the Decision on Amending the Company Law of the People's Republic o
f China adopted at the 11th Meeting of the Standing Committee of the tenth Nat
ional People's Congress on August 28, 2004; and revised for the third time in
accordance with the Decision on Amending the Company Law of the People's Repub
lic of China adopted at the 18th Meeting of the Standing Committee of the tent
h National People's Congress on October 27, 2005 )  
 
 
 
Chapter 1   General Provisions
 
 
Article 1  
This Law is enacted in order to standardize the organization and activities of
 companies, to protect the legitimate rights and interests of companies, share
holders and creditors, to maintain socio-economic order and to promote the dev
elopment of the socialist market economy. 
 
Article 2  
The Term "company" referred to in this Law shall mean a limited liability comp
any or a joint stock limited company incorporated within the territory of the
People's Republic of China in accordance with this Law. 
 
Article 3  
A company is an enterprise legal person, has independent property of legal per
son, and shall enjoy the right to the entire property of the legal person. A c
ompany shall be liable for its debts to the extent of all its assets.
 
In the case of a limited liability company, shareholders shall assume liabilit
y towards the company to the extent of the amount of the capital contribution
subscribed for by them respectively; in the case of a joint stock limited comp
any, shareholders shall assume liability towards the company to the extent of
the shares subscribed for by them respectively. 
 
Article 4  
The shareholders of a company shall, according to law, enjoy such rights of ow
ners as benefiting from assets of the company, making major decisions and sele
cting managerial personnel. 
 
Article 5  
A company must, when engaging in business activities, abide by the laws and ad
ministrative regulations, observe social morals and commercial ethics, be in i
ntegrity and good faith, accept supervision of the government and the public,
and undertake social liability.
 
The legitimate rights and interests of companies shall be protected by law and
 shall be inviolable. 
 
Article 6  
Application shall be made to the company registration authority for registrati
on of the incorporation of a company. Companies meeting the conditions on inco
rporation provided by this Law shall be registered as limited liability compan
ies or joint stock limited companies respectively; while companies failing to
meet the conditions on incorporation provided by this Law shall not be registe
red as limited liability companies or joint stock limited companies.
 
If the incorporation of a company must be reported for approval in accordance
with the provisions of laws or administrative regulations, the procedure for a
pproval shall be handled prior to the registration of the company according to
 law.
 
The public may apply to the company registration authority for enquiry of the
registered items of a company, and the company registration authority shall pr
ovide the service of such enquiry. 
 
Article 7  
The company registration authority shall issue a business license to a company
 incorporated according to law. The date of the issuance of the company's busi
ness license shall be the date of the incorporation of the company.
 
The business license of the company shall state such matters as the name, domi
cile, registered capital, business scope and the name of the legal representat
ive of the company.
 
In case of any change in any item recorded in the company's business license,
the company shall apply for registration of the change according to law, and t
he company registration authority shall reissue the business license. 
 
Article 8  
A limited liability company established according to this Law must clearly ind
icate the words "limited Liability company" in its name.
 
A joint stock limited company established according to this Law must clearly i
ndicate the words "joint limited company" in its name. 
 
Article 9  
If a limited liability company is to be converted into a joint stock limited c
ompany, it shall satisfy the requirements for a joint stock limited company st
ipulated by this Law. If a joint stock limited company is to be converted into
 a limited liability company, it shall satisfy the requirements for a limited
liability company stipulated by this Law.
 
Where a limited liability company is converted into a joint stock limited comp
any or a joint stock limited company is converted into a limited liability com
pany, the claims and debts of the original company shall be succeeded to the c
onverted company. 
 
Article 10  
A company's domicile shall be the place where its main administrative organiza
tion is located. 
 
Article 11
Articles of association must be formulated according to law when a company is
incorporated. A company's articles of association shall have binding force on
the company, its shareholders, directors, supervisors and senior executives. 

 
Article 12  
A company's scope of business shall be defined in its articles of association
and registered according to law. The company may revise its articles of associ
ation and change its business scope, provided that it shall apply for registra
tion of such revision and change.
 
Items within the company's business scope that shall be subject to approval un
der laws, administrative regulations shall be approved according to law. 
 
Article 13  
The post of a company's legal representative shall be held by the chairman of
the board of directors, executive director or the manager of the company and s
hall be registered according to law. If the company's legal representative is
changed, the company shall handle the procedure for registration of the change
. 
 
Article 14  
A company may establish branches. The company shall, if establishing branches,
 apply to the company registration authority for registration of the establish
ment and acquire the business license of the branches. The branches do not pos
sess the status of legal person and their civil liabilities shall be borne by
the company.
 
A company may establish subsidiaries, which shall possess the status of legal
person, and shall independently bear civil liabilities according to law. 
 
Article 15  
A company may invest in other enterprises; provided that, the company shall no
t become the investor undertaking the joint and several liability for the debt
s of the invested enterprises, except as otherwise provided by laws. 
 
Article 16  
Where a company is to invest in other enterprise or provide guarantee for othe
rs, it shall be decided by the board of directors or the shareholders meeting
or the shareholders general meeting in accordance with the provisions of its a
rticles of association; if the articles of association of the company stipulat
e the limit of the total amount of the investment or the guarantee, or the amo
unt of the investment or the guarantee in single item, then, the limit shall n
ot be exceeded.
 
If a company is to provide guarantee for its shareholders or actual controller
s, it shall be decided by the shareholders meeting or the shareholders general
 meeting.
 
The shareholders as provided in the preceding Paragraph and the shareholders c
ontrolled by the actual controllers as provided in the preceding Paragraph sha
ll not participate in the voting for the matter provided in the preceding Para
graph. Such voting shall be passed based on more than half of the voting right
s held by other shareholders attending the meeting. 
 
Article 17  
Companies must protect the lawful rights and interest of their staff and worke
rs, sign labor contracts with their staff and workers according to law, partic
ipate in social insurance, and strengthen labor protection so as to achieve sa
fety in production.
 
Companies shall apply various forms to strengthen professional education and o
n-the-job training for their staff and workers so as to improve their quality.
 
 
Article 18
Company's staff and workers shall, in accordance with the Trade Union Law of t
he People's Republic of China, organize a trade union to carry out the trade u
nion activities and protect the lawful rights and interests of the staff and w
orkers. The company shall provide its trade union with conditions necessary fo
r carrying out its activities. The trade union of the company shall, on behalf
 of the staff and works of the company and according to law, sign with the com
pany a collective contract on such matters as labor salaries, working hours, w
elfare, insurance and labor safety and health of the staff and works.
 
Companies shall, through the staff and workers congress or other forms, practi
ce democratic management in accordance with the provisions of the Constitution
 and relevant laws.
 
If a company is to make decision on system reform, major issues on business op
eration or formulation of important rules and regulations, it shall solicit th
e opinions of its trade union, and solicit the opinions and suggestions of its
 staff and workers through the staff and workers congress or other forms. 
 
Article 19  
In accordance with the Constitution of the Communist Party of China, the organ
ization of the Communist Party of China shall be established in a company so a
s to carry out their activities of the communist Party. The company shall prov
ide its communist organization with conditions necessary for carrying out its
activities. 
 
Article 20  
The shareholders of a company shall abide by laws, administrative regulations
and the articles of association of the company, exercise their rights accordin
g to law, and shall not abuse their rights to damage the interests of the comp
any or other shareholders nor abuse the independent status of corporate legal
person and shareholders' limited liability to damage the interests of the comp
any's creditors.
 
The shareholders, who abuse their rights so as to cause losses to the company
or other shareholders, shall undertake the liability for compensation.
 
If the shareholders of a company abuse the independent status of corporate leg
al person and shareholders' limited liability to avoid debts and damage the in
terests of the company's creditors, they shall undertake the joint and several
 liability for the company's debts. 
 
Article 21  
The holding shareholders, actual controllers, directors, supervisors, senior e
xecutives of a company shall not, by taking advantage of their affiliate relat
ionship, damage the interests of the company.
 
They shall, in violation of the provisions of the preceding Paragraph, underta
ke the liability for compensation if any loss is caused to the company thereby
. 
 
Article 22  
The contents in the resolutions of the shareholders meeting or the shareholder
s general meeting or the board of directors of a company, if in violation of t
he laws or administrative regulations, shall be null and void.
 
If the procedure for convening meetings or the voting method of the shareholde
rs meeting or the shareholders general meeting or the board of directors of a
company are in violation of the laws, administrative regulations or the articl
es of association of the company, or the contents in the resolutions thereof a
re in violation of the articles of association, the shareholders of the compan
y may, within 60 days upon the date of making the resolution, request the peop
le's court to cancel them.
 
If the shareholders bring a lawsuit in accordance with the provisions of the p
receding Paragraph, the people's court may, upon the request the company, requ
ire the shareholders to provide the relevant guarantee.
 
If the company has handled the procedure for registration of change in accorda
nce with such resolutions of its shareholders meeting or the shareholders gene
ral meeting or the board of directors, the people's court shall declare such r
esolutions invalid, or, after such resolutions are cancelled, the company shal
l apply to the company registration authority for cancellation of the registra
tion of change. 
 
Chapter 2   Incorporation and Organizational Structure of the Limited Liabilit
y Companies
 
 
Section 1   Incorporation
 
 
Article 23  
The following conditions shall be fulfilled for the incorporation of a limited
 liability company:
 
(1) the number of shareholders shall conform to the statutory number;
 
(2) the capital contributions of the shareholders shall reach the statutory mi
nimum amount of capital;
 
(3) the shareholders shall have jointly formulated the articles of association
 of the company;
 
(4) the company shall have a name and an organizational structure established
in compliance with the requirements for a limited liability company; and
 
(5) the company shall have a domicile. 
 
Article 24  
A limited liability company shall be jointly invested in and incorporated by n
ot more than 50 shareholders. 
 
Article 25  
The articles of association of a limited liability company shall specify the f
ollowing particulars:
 
(1) the name and domicile of the company;
 
(2) the scope of business of the company;
 
(3) the registered capital of the company;
 
(4) the names or titles of the shareholders;
 
(5) the method and amount of capital contributions by the shareholder;
 
(6) the organization of the company, its method of creation, functions and pow
ers and the rules of procedure;
 
(7) the legal representative of the company;
 
(8) other items which the shareholders meetings deem necessary to be specified
.
 
The shareholders shall sign and affix their seals to the company's articles of
 association. 
 
Article 26  
The registered capital of a limited liability company shall be the amount of t
he capital contributions subscribed for by all of its shareholders as register
ed with the company registration authority. The amount of initial capital cont
ributions paid by all the shareholders of the company shall not be less than 2
0% of the registered capital of the company nor less than the statutory minimu
m amount of registered capital, and the remaining of the registered capital ma
y be paid up by the shareholders within two year upon the incorporation of the
 company, provided that, in case of a investment company, it may be paid up wi
thin five years upon the incorporation of the company.
 
The minimum amount of the registered capital of a limited liability company sh
all be RMB 30,000. If a higher minimum amount of the registered capital of a l
imited liability company than that as stipulated in the preceding sentence is
provided by laws or administrative regulations, such provisions shall prevail.
 
 
Article 27  
A shareholder may make its capital contributions to a company in currency or b
y contributing such non-currency property as material objects, intellectual pr
operty rights, land-use rights at their appraised value that may be evaluated
in currency and may be transferred according to law; except those properties t
hat shall not be contributed as capital in accordance with the provisions of l
aws or administrative regulations.
 
The non-currency property contributed as capital shall undergo an appraisal, v
aluation and verification, and shall not be overvalued or undervalued. If the
appraisal and valuation of such property is provided by laws or administrative
 regulations, such provisions shall apply.
 
The amount of capital contribution in currency by all shareholders shall not b
e less than 30% of the registered capital of the limited liability company. 

 
Article 28  
Each shareholder shall make in full the amount of the capital contribution sub
scribed for by it under the articles of association of the company. Where a sh
areholder makes its capital contribution in currency, it shall deposit the ful
l amount of such capital contribution in currency in the bank account opened b
y the limited liability company. Where a shareholder makes its capital contrib
ution in the form of non-currency property, the transfer procedures for the pr
operty rights shall be handled according to law.
 
Shareholders failing to make the capital contributions in accordance with the
preceding Paragraph shall be liable for breach of contract towards the shareho
lders who have made their capital contributions in full and on time. 
 
Article 29  
After all shareholders have made their capital contribution in full, such cont
ributions must be verified by a statutory capital verification institution whi
ch shall issue capital verification certificates. 
 
Article 30  
After the total capital contributions of the shareholders have been verified b
y a statutory capital verification institution, application shall be made to t
he company registration authority for registration of the incorporation of the
 company by a representative designated by all the shareholders or by an agent
 jointly entrusted by them, who shall submit such documents as an application
for registration, the articles of association and the capital verification cer
tificate. 
 
Article 31  
Where, after the incorporation of a limited liability company, it is discovere
d that the actual value of the non-currency property as capital is notably les
s than the value stated in the articles of association, the shareholders that
made such contributions shall make up the deficiency; those who are shareholde
rs at the time of the incorporation of the company shall bear joint and severa
l liability therefor. 
 
Article 32  
After a limited liability company has been incorporated, it shall issue capita
l contribution certificates to its shareholders.
 
A capital contribution certificate shall specify the following items:
 
(1) the name of the company;
 
(2) the date of the incorporation of the company;
 
(3) the registered capital of the company;
 
(4) the names or titles of the shareholders, the amount and date of their capi
tal contribution; and
 
(5) the serial number of the capital contribution certificate and the date of
its verification and issuance.
 
A capital contribution certificate shall bear the seal of the company on it. 

 
Article 33  
A limited liability company shall prepare a roster of its shareholders with th
e following items therein:
 
(1) the names or titles and domiciles of the shareholders;
 
(2) the amounts of capital contributions of the shareholders; and
 
(3) the serial numbers of the capital contribution certificates.
 
The shareholders recorded in the roster may claim to exercise the shareholder'
s right based on the roster.
 
The company shall register with the company registration authority the names o
r titles and the amounts of capital contributions of its shareholders; in case
 of change of such registered items, the registration of the change shall be h
andled. If the company fails to register such items or such change, it shall n
ot counter any third party. 
 
Article 34  
A shareholder shall have the right to look up and copy the articles of associa
tion, the minutes of shareholders meetings, the resolutions of the meeting of
the board of directors, the resolutions of the meetings of the supervisory boa
rd and the financial statements of the company.
 
The shareholders may require to look up the accounting books of the company. A
 shareholder shall, if requiring to look up the accounting books of the compan
y, submit to the company a written request specifying the purpose. If the comp
any reasonably holds that the shareholder's request for looking up the account
ing books is for undue purpose and may damage the legal interests of the compa
ny, it may refuse to provide the access to the accounting books, and shall, wi
thin 15 days upon its receipt of the shareholder's written request, give to th
e shareholder a written reply specifying the reason. If the company refuses to
 provide the access to the accounting books, the shareholder may request the p
eople's court to require the company to provide the access to the accounting b
ooks. 
 
Article 35  
Shareholders shall draw dividends in proportion to their paid-up capital contr
ibutions. Where a company increases capital, the existing shareholders shall h
ave the priority to subscribe for new shares in proportion to their paid-up ca
pital contributions, except as otherwise agreed by all the shareholders. 
 
Article 36  
Once a company is incorporated, its shareholders shall not withdraw their capi
tal contributions. 
 
Section 2   Organizational Structure
 
 
Article 37  
The shareholders meeting of a limited liability company shall be composed of a
ll the shareholders. The shareholders meeting shall be the organ of power of t
he company and shall exercise its functions and powers in accordance with this
 Law. 
 
Article 38  
The shareholders meeting shall exercise the following functions and power:
 
(1) to decide on the business policy and investment plan of the company;
 
(2) to elect and recall directors and supervisors not acted as by the represen
tatives of the staff and workers, and to decide on matters concerning the remu
neration of directors and supervisors;
 
(3) to examine and approve reports of the board of directors;
 
(4) to examine and approve the reports of the supervisory board or supervisors
;
 
(5) to examine and approve the annual financial budget plan and final accounts
 plan of the company;
 
(6) to examine and approve plans for profit distribution of the company and pl
ans for making up losses;
 
(7) to adopt resolution on the increase or reduction of the registered capital
 of the company;
 
(8) to adopt resolutions on the issuance of company bonds;
 
(9) to adopt resolutions on matters such as the merger, division, transformati
on, dissolution and liquidation of the company; and
 
(10) to amend the articles of association of the company; and
 
(11) to exercise other functions and powers as stipulated in the articles of a
ssociation.
 
If all the shareholders reach a written agreement upon the matters as listed i
n the preceding Paragraph, then a decision may be made directly instead of con
vening the shareholders meeting, and in such case, all the shareholders shall
sign and affix their seals on the written decision. 
 
Article 39  
The first shareholders meeting of a company shall be convened and presided ove
r by the shareholder who has made the biggest capital contribution to the comp
any and shall exercise its functions and powers in accordance with this Law. 

 
Article 40  
Shareholders meetings shall be divided into regular meetings and interim meeti
ngs. Regular shareholders meetings shall be convened on time as stipulated by
the articles of association of the company. Interim shareholders meetings shal
l be convened upon proposal made by shareholders representing one-tenth or mor
e of the voting rights, or, by one-third or more of directors or by the superv
isory board or by the supervisors of the company having no the supervisory boa
rd. 
 
Article 41  
Where a limited liability company has set up a board of directors, its shareho
lders meetings shall be convened by the board of directors and presided over b
y the chairman of the board. Where special circumstances preclude the chairman
 of the board from performing his functions, the meetings shall be presided ov
er by a vice-chairman; if the vice-chairman cannot or fails to perform his fun
ction, the meetings shall be presided over by a director elected by half or mo
re of the directors.
 
Where a limited liability company has not set up a board of director, the shar
eholders meetings shall be convened and presided over by the executive directo
r.
 
If the board of directors or the executive director of the company cannot or f
ails to perform the functions to convene the shareholders meetings, then the s
upervisory board or the supervisors of the company having no the supervisory b
oard shall be responsible for convening and presiding over the shareholders me
etings; if the supervisory board or the supervisors fail to convene and presid
e over the shareholders meeting, the shareholders representing one-tenth votin
g rights may convene and preside over the shareholders meeting at their own di
scretion. 
 
Article 42  
All shareholders shall be notified 15 days prior to the convening of a shareho
lders meeting; except as otherwise provided in the articles of association of
the company or otherwise agreed by all shareholders.
 
The shareholders meeting shall keep minutes of their decision on matters discu
ssed at it, and the shareholders present at the meeting shall sign the minutes
. 
 
Article 43  
Shareholders shall exercise their voting rights at the shareholders meeting in
 proportion to their capital contributions, except as otherwise provided in th
e articles of association of the company. 
 
Article 44  
The rules of deliberation and voting procedures of the shareholders meeting sh
all, except otherwise provided for by this Law, be stipulated by the articles
of association of the company.
 
Resolutions of the shareholders meeting on the increase or reduction of the re
gistered capital, the division, merger, dissolution, or transformation of the
company must be adopted by shareholders of the company representing two-thirds
 or more of the voting rights. 
 
Article 45  
A limited liability company shall have a board of directors, which shall be co
mposed of three to 13 members.
 
Except as otherwise provided in Article 51 of this Law, The members of the boa
rd of directors of a limited liability company invested in and established by
two or more State-owned enterprises, or by two or more other State-owned inves
tment entities shall include representatives of the staff and workers of the c
ompany. Such representative of the staff and workers shall be democratically e
lected by the staff and workers of the company through the staff and workers c
ongress, workers' assembly or other forms.
 
A board of directors shall have a chairman and may have vice-chairmen. The met
hod for the creation of the chairman and vice-chairmen shall be stipulated in
the articles of association of the company. 
 
Article 46  
The term of office of directors shall be stipulated by the articles of associa
tion of the company but shall not exceed three years. A director may, if refle
cted upon expiration of his term of office, serve consecutive terms.
 
If the members of the board of directors are less than the quorum because rese
lection is not conducted upon expiry of the tem office of a director, or a dir
ector resigns during his term of office, then, before the reselected director
takes his office, the original director shall, in accordance with the provisio
ns of laws, administrative regulations and the articles of association, perfor
m director's function. 
 
Article 47  
The board of directors shall be responsible to the shareholders meeting, and e
xercise the following functions and powers:
 
(1) to be responsible for convening shareholders meetings and to report on its
 work to the shareholders meetings;
 
(2) to implement the resolutions of the shareholders meetings;
 
(3) to decide on the business plans and investment plan of the company;
 
(4) to formulate the annual financial budget plan and final accounts plan of t
he company;
 
(5) to formulate plans for profit distribution and plans for making up losses
of the company;
 
(6) to formulate plans for the increase or reduction of the registered capital
 and issuance of company bond of the company;
 
(7) to formulate plans for the merger, division, transformation and dissolutio
n of the company;
 
(8) to decide on the establishment of the company's internal management organs
;
 
(9) to decide on appointment and dismiss the company's manager and the matter
on the manager's remuneration, and, upon recommendation of the manager, to dec
ide on appointment and dismiss the company's deputy manager(s) and persons in
charge of the financial affairs of the company and the matters concerning thei
r remuneration;
 
(10) to formulate the basic management system of the company; and
 
(11) to exercise other functions and powers provided in the articles of associ
ation of the company. 
 
Article 48  
Meetings of the board of directors shall be convened and presided over by the
chairman of the board. If the chairman cannot or fails to perform his function
, the meeting shall be convened and presided over by a vice-chairman; if the v
ice-chairman cannot or fails to perform his function, the meeting shall be con
vened and presided over by a director elected by half or more of the directors
. 
 
Article 49  
The rules of deliberation and voting procedures of the Board of directors shal
l, except as otherwise provided for by this Law, be stipulated by the articles
 of association of the company.
 
The board meeting shall keep minutes of decisions on matters discussed at it;
directors present at the meeting shall sign the minutes.
The voting of the board meeting shall practice the system of one man, one vote
. 
 
Article 50  
A limited liability company shall have a manager, who shall be appointed or di
smissed by the board of directors. The manager shall be responsible to the boa
rd of directors and shall exercise the following functions and powers:
 
(1) to be in charge of the production, operation and management of the company
, and to organize the implementation of the resolutions of the board of direct
ors;
 
(2) to organize the implementation of the annual business plans and investment
 plans of the company;
 
(3) to draw up plans on the establishment of the internal management organs of
 the company;
 
(4) to draw up the basic management system of the company;
 
(5) to formulate specific rules and regulations of the company;
 
(6) to recommend the appointment or dismissal of the deputy manager(s) and of
persons in charge of the financial affairs of the company;
 
(7) to appoint or dismiss management personnel other than those to be appointe
d or dismissed by the board of directors; and
 
(8) other functions and powers granted by the board of directors.
 
If the manager's functions and powers are otherwise provided in the articles o
f association, such provisions shall apply. The manager shall attend meetings
of the board of directors as a non-voting attendee. 
 
Article 51  
Where a limited liability company has a small number of shareholders or is com
paratively small in scale, it may have an executive director instead of a boar
d of directors. The executive director may concurrently serve as the manager o
f the company.
 
The functions and powers of the executive director shall be stipulated by the
articles of association of the company. 
 
Article 52  
A limited liability company shall have a supervisory board composed of no less
 than three members. Where a limited liability company has a small number of s
hareholders or is comparatively small in scale, it may have one or two supervi
sors instead of a supervisory board.
 
The supervisory board shall be composed of representatives of the shareholders
 and an appropriate proportion of the staff and workers of the company, among
which, the proportion of the staff and workers shall not be less than one-thir
d and the exact proportion shall be stipulated in the articles of association
of the company. The representatives of the staff and workers in the supervisor
y board shall be democratically elected by the staff and workers of the compan
y through the staff and workers congress, workers' assembly or other forms.

 
The supervisory board shall have a chairman who shall be elected by more than
half of all supervisors. The chairman of the supervisory board shall convene a
nd preside over the meetings of the supervisory board; if the chairman cannot
or fails to perform his function, the meetings shall be convened and presided
over by a supervisor elected by more than half of the supervisor.
 
Directors and senior executives of the company shall not concurrently serve as
 supervisors. 
 
Article 53  
The term of office of a supervisor shall be three years. A supervisor may, if
reflected upon expiration of his term of office, serve consecutive terms.
 
If the members of the supervisory board are less than the quorum because resel
ection is not timely conducted upon expiry of the tem office of a supervisor,
or a supervisor resigns during his term of office, then, before the reselected
 supervisor takes his office, the original supervisor shall, in accordance wit
h the provisions of laws, administrative regulations and the articles of assoc
iation, perform supervisor's function. 
 
Article 54  
The supervisory board or the supervisors of the company having no the supervis
ory board shall exercise the following functions and powers:
 
(1) to examine the financial affairs of the company;
 
(2) to supervise the acts of the directors and senior executives performing th
eir functions, and to bring the proposal to dismiss those directors and senior
 executives violating the laws, administrative regulations, the articles of as
sociation of the company or the resolutions of the shareholders meetings;
 
(3) to demand directors and senior executives to make corrections if any of th
eir acts is found to have damaged the interests of the company;
 
(4) to propose the convening of interim shareholders meetings, and to convene
and preside over the shareholders meetings in case the board of directors fail
s to its function of convening and presiding over the shareholders meetings as
 provided by this Law;
 
(5) to bring proposal to the shareholders meetings;
 
(6) to bring a lawsuit against the directors or senior executives in accordanc
e with the provisions of Article 152 of this Law; and
 
(7) to exercise other functions and powers as provided in the articles of asso
ciation of the company. 
 
Article 55  
The supervisors may attend the meetings of the board of directors as non-votin
g attendees, and may bring enquiry and suggestion on the matters decided by th
e board of directors.
 
The supervisory board or the supervisor of the company having no the superviso
ry board may, in case finding the business situation of the company abnormal,
conduct investigation, and, if necessary, may engage any accountant's firm to
assist its work at the expenses of the company. 
 
Article 56  
The meeting of the supervisory board shall be convened at least once each year
, and the supervisors may propose to convene interim meeting of the supervisor
y board.
 
Except as otherwise provided by this Law, the method of deliberation and votin
g procedures shall be stipulated by the articles of association of the company
.
 
The resolutions of the supervisory board shall be passed by more than half of
the supervisors. The supervisory board shall keep minutes of their decision on
 matters discussed at it, and the supervisors present at the meeting shall sig
n the minutes. 
 
Article 57  
The expenses required for exercise of the supervisor's functions and powers by
 the supervisory board or the supervisor of the company having no the supervis
ory board shall be borne by the company. 
 
Section 3   Special Provisions on One-person Limited Liability Companies
 
 
Article 58  
The incorporation and organizational structure of a one-person limited liabili
ty company shall be applied to by the provisions of this Section; in case of n
o relevant provisions in this Section, the provisions of Section 1 and Section
 2 of this Chapter shall apply.
 
A "One-person limited liability company" referred to in this Law shall mean a
limited liability company that has only one shareholder of natural person or l
egal person. 
 
Article 59  
The minimum amount of registered capital of a one-person limited liability com
pany shall be RMB 100,000. The shareholder of the company shall, in a lump sum
 and in full, pay the amount of capital contribution as provided in the articl
es of association.
 
One natural person may invest to establish only one one-person limited liabili
ty company. Such one-person limited liability company shall not invest to esta
blish another one-person limited liability company. 
 
Article 60  
Any one-person limited liability company shall clearly indicate "sole propriet
orship of natural person" or "sole proprietorship of legal person" in the regi
stration of the company, and shall record it in the business license of the co
mpany. 
 
Article 61  
The articles of association of any one-person limited liability company shall
be formulated by its shareholder. 
 
Article 62  
Any one-person limited liability company shall not have a shareholder meeting.
 The shareholder shall, when making the decisions as listed in Paragraph 1 of
Article 38 of this Law, adopt the form in writing and keep them in the company
 after they being signed by the shareholder. 
 
Article 63  
At the end of each fiscal year, any one-person limited liability company shall
 compile the financial statements that shall be audited by an accounting firm.
 
 
Article 64  
If the shareholder of a one-person limited liability company cannot prove that
 the property of the company is independent of the shareholder's own property,
 the shareholder shall bear the joint and several liability for the company's
debts. 
 
Section 4   Special Provisions on Wholly State-owned Companies
 
 
Article 65  
The incorporation and structural organizations of a wholly State-owned company
 shall be governed by the provisions of this Section; in case of no relevant p
rovision in this Section, the provision of Section 1 and Section 2 of this Cha
pter shall apply.
 
A wholly State-owned company referred to in this Law shall mean a limited liab
ility company invested solely by the State, and the investor's functions of wh
ich are performed by the State-owned assets supervision and administration aut
hority of the people's government at the corresponding level under the entrust
ment of the State Council or the local people's government. 
 
Article 66  
The articles of association of a wholly State-owned company shall be formulate
d by the competent State-owned assets supervision and administration authority
, or be formulated by the board of directors of the company and submitted for
the approval of the competent State-owned assets supervision and administratio
n authority. 
 
Article 67  
A wholly State-owned company shall not have a shareholder meeting, and the com
petent State-owned assets supervision and administration authority shall exerc
ise the functions and powers of the shareholder meeting. The competent State-o
wned assets supervision and administration authority may authorize the board o
f directors of the company to exercise part of the functions and powers of the
 shareholder meeting and to make decisions on important matters of the company
. However, the merger, division, dissolution, increase and reduction of capita
l, and issuance of company bonds must be decided by the competent State-owned
assets supervision and administration authority; among which, the merger, divi
sion, dissolution, application for bankruptcy of any major wholly State-owned
company shall, upon the examination and approval of the competent State-owned
assets supervision and administration authority, submitted to the people's gov
ernment at the corresponding level for approval.
 
The major wholly State-owned company referred to in the preceding Paragraph sh
all be defined according to the provisions of the State Council. 
 
Article 68  
A wholly State-owned company shall have a board of directors that shall exerci
se its functions and powers in accordance with the provisions of Article 47 an
d Article 67 of this Law. Each term of office of the board of directors shall
not exceed three years. The board of directors shall include representatives o
f the staff and workers of the company.
 
The members of the board of directors shall be appointed by the competent Stat
e-owned assets supervision and administration authority; provided that, the re
presentatives of the staff and workers on the board of directors shall be elec
ted by the staff and workers congress.
 
The board of directors shall have a chairman and may have vice-chairmen. The c
hairman and vice-chairmen shall be appointed by the competent State-owned asse
ts supervision and administration authority from the members of the board of d
irectors. 
 
Article 69  
A wholly State-owned company shall have a manager, who shall be engaged and di
smissed by the board of directors. The manager shall exercise his functions an
d powers in accordance with the provisions of Article 50 of this Law.
 
A member of the board of directors may, subject to the consent of the competen
t State-owned assets supervision and administration authority, serve concurren
tly as manager. 
 
Article 70  
The chairman, vice-chairmen and directors of the board of directors and the se
nior executives of a wholly State-owned company shall not, without the consent
 of the competent State-owned assets supervision and administration authority,
 serve concurrently a post in other limited liability companies, joint-stock l
imited companies or other business organizations. 
 
Article 71  
The members of the supervisory board of a wholly State-owned company shall be
no less than five persons, among which, the proportion of the representatives
of the staff and workers shall not be less than one-third and the exact propor
tion shall be stipulated in the articles of association of the company.
 
The members of the supervisory board shall be appointed by the competent State
-owned assets supervision and administration authority; provided that, the rep
resentatives of the staff and workers on the supervisory board shall be electe
d at the staff and workers congress of the company. The chairman of the superv
isory board shall be appointed by the competent State-owned assets supervision
 and administration authority from the members of the supervisory board.
 
The supervisory board shall exercise the functions and powers specified in Ite
ms (1) and (2) of Article 54 of this Law and other functions and powers specif
ied by the State Council. 
 
Chapter 3   Transfer of Stock Ownership of Limited Liability Companies
 
 
Article 72  
The shareholders of a limited liability company may transfer among themselves
all or part of their stock ownership.
 
Where a shareholder intends to transfer its stock ownership to persons who are
 not shareholders of the company, the consent of over half of all the sharehol
ders must be secured. Such shareholder shall notify in writing other sharehold
ers for consent of the matter on the transfer of its stock ownership, and, if
the other shareholders fail to give a reply within 30 days upon their receipt
of such written notice, they shall be deemed to have consented to such transfe
r. If over half of the other shareholders disapprove such transfer, then, thos
e shareholders disapproving the transfer shall purchase the stock ownership to
 be transferred. If such shareholders do not make the purchase, they shall be
deemed to have consented to the transfer.
 
Under equal conditions, the other shareholders shall have the priority to purc
hase the stock ownership to be transferred with the consent of the shareholder
s. If two or more shareholders claim to exercise the priority, they shall, thr
ough consultation, determine the respective proportion of purchase; failing wh
ich, they shall exercise the priority in proportion to their respective capita
l contributions at the time of the transfer.
 
If the transfer of stock ownership is otherwise provided in the articles of as
sociation, such provisions shall apply. 
 
Article 73  
When the people's court transfers the stock ownership of a shareholder of a li
mited liability company in accordance with the enforcement procedures as stipu
lated by laws, it shall notify the company and all of its shareholders, and in
 such case, other shareholders shall have the priority to purchase the stock o
wnership under equal conditions. If other shareholders fail to exercise their
priority to purchase within 20 days upon the date of the notice of the people'
s court, they shall be deemed to have waived their priority to purchase. 
 
Article 74  
After the stock ownership is transferred in accordance with Article 72 and Art
icle 73 of this Law, the company shall cancel the capital contribution certifi
cates of the original shareholders, issue the capital contribution certificate
s to the new shareholders, and revise the records on the shareholders and the
amounts of their capital contribution in the articles of association and the r
oster of shareholders. Such revision of the articles of association does not r
equire the voting of the shareholders meeting. 
 
Article 75  
Under any of the following conditions, any shareholder, who casts a negative v
ote against such resolution of the shareholders meeting, may require the compa
ny to purchase his stock ownership at a reasonable price:
 
(1) where the company fails to distribute profits to its shareholders for cont
inuous five years, while the company has been continuously profitable for such
 five years and meets the conditions on distribution of profits as stipulated
in this Law;
 
(2) where the company merges, divides or transfers its substantial assets; or

 
(3) where the term of operation of the company expires as stipulated in the ar
ticles of association or other events occur for dissolution as stipulated in t
he articles of association, while the shareholders meeting adopts a resolution
 on revision of the articles of association to make the company continue to ex
ist.
 
If, within 60 days upon the date of adoption of the resolution of the sharehol
ders meeting, the shareholders and the company cannot reach an agreement upon
purchase of the stock ownership the shareholders may bring a lawsuit in the pe
ople's court within 90 days upon the date of adoption of the resolution of the
 shareholders meeting. 
 
Article 76  
After a natural person shareholder is deceased, his legitimate heir may succee
d to his shareholder qualification; except as otherwise provided in the articl
es of association of the company. 
 
Chapter 4   Incorporation and Organizational Structure of Joint Stock Limited
Companies
 
 
Section 1   Incorporation
 
 
Article 77  
To incorporate a joint stock limited company, the following conditions must be
 satisfied;
 
(1) the number of sponsors shall conform to the statutory number;
 
(2) the share capital subscribed for by the sponsors and raised shall reach th
e statutory minimum amount of capital;
 
(3) the issuance of shares and preparations for incorporation shall be in conf
ormity with the provisions of laws;
 
(4) the articles of association of the company shall be formulated by the spon
sors, and, in case of incorporation by means of share offer, shall be adopted
at the inaugural meeting;
 
(5) the company shall have a name and an organizational structure required for
 the incorporation of a joint stock limited company; and
 
(6) the company shall have a domicile. 
 
Article 78  
Joint stock limited companies may be incorporated by means of sponsorship or b
y means of share offer.
 
Incorporation by means of sponsorship means incorporation of a company by mean
s of subscription by the sponsors for all the shares to be issued by the compa
ny.
 
Incorporation by means of share offer means incorporation of a company by mean
s of subscription by the sponsors for a portion of the shares to be issued by
the company and offer of the rest to the general public or to specific target.
 
 
Article 79  
To incorporate a joint stock limited company, there shall be not less than two
 and not more than 200 sponsors, of which more than half must have their domic
ile within the territory of the People's Republic of China.
 
 
Article 80  
The sponsors of a joint stock limited company shall undertake the matters conc
erning the preparation for the incorporation of the company. The sponsors shal
l sign a sponsors' agreement defining their respective rights and obligations
during the incorporation of the company. 
 
Article 81  
Where a joint stock limited company is incorporated by means of sponsorship, t
he registered capital shall be the total amount of the share capital subscribe
d for by all sponsors and registered with the company registration authority.
The amount of initial capital contributions of all sponsors shall not be less
than 20% of the registered capital, and the remaining of the registered capita
l may be paid up by the sponsors within two year upon incorporation of the com
pany; provided that, in case of a investment company, it may be paid up within
 five years upon incorporation of the company. Prior to full payment of the re
gistered capital, the company shall not offer shares to others.
 
Where a joint stock limited company is incorporated by means of share offer, t
he registered capital shall be the total amount of the paid-up share capital r
egistered with the company registration authority.
 
The minimum amount of the registered capital of a join stock limited company s
hall be RMB 5,000,000. If a higher minimum amount of the registered capital of
 a joint stock limited company is provided by laws or administrative regulatio
ns, such provisions shall prevail. 
 
Article 82  
The articles of association of a joint stock limited company shall specify the
 following items:
 
(1) the name and domicile of the company;
 
(2) the scope of business of the company;
 
(3) the method of incorporation of the company;
 
(4) the total number of shares, the mount of each share and the registered cap
ital of the company;
 
(5) the names or titles of the sponsors, the numbers of shares subscribed for
by the sponsors, and the method and time of capital contribution by the sponso
rs;
 
(6) the composition, functions and powers, the term of office and the delibera
tion rules of the board of directors;
 
(7) the legal representative of the company;
 
(8) the composition, functions and powers, the term of office and the delibera
tion rules of the supervisory board;
 
(9) methods for the distribution of the company's profit;
 
(10) the reasons for dissolution of the company and liquidation method;
 
(11) methods for notices and announcements of the company; and
 
(12) other matters that the shareholders general meeting deems necessary to be
 specified. 
 
Article 83  
The method of capital contribution by the sponsors shall be governed by Articl
e 72 of this Law. 
 
Article 84  
Where a joint stock limited company is incorporated by means of sponsorship, t
he sponsors shall confirm in full and in writing their subscription of the sha
res to be issued to them according to the articles of association of the compa
ny; in case of payment in a lump sum, all capital contributions shall be paid
up immediately; in case of payment in installments, the initial capital contri
bution shall be paid up immediately. If the capital contributions are made in
non-currency, the transfer procedures for property rights shall be handled acc
ording to law.
 
If the sponsors fail to pay their capital contribution in accordance with the
provisions of the preceding Paragraph, they shall undertake the liability for
breach of contract in accordance with the sponsors' agreement.
 
After the sponsors make their initial capital contributions, they shall elect
the board of directors and supervisory board. The board of directors shall sub
mit the articles of association of the company, capital verification certifica
te issued by the capital verification institution established according to law
 and other documents required by laws or administrative regulations to the com
pany registration authority for registration of incorporation. 
 
Article 85  
Where a joint stock limited company is incorporated by means of share offer, t
he shares subscribed for by the sponsors shall not be less than 35% of the tot
al amount of the company's shares; except as otherwise provided by laws or adm
inistrative regulations. 
 
Article 86  
Where shares are to be offered to the general public, the sponsors must publis
h the company's prospectus on share offer and prepare subscription forms. The
subscription forms shall contain the items listed in Article 87 of this Law, a
nd the subscribers shall fill in the number of shares subscribed for, the amou
nt of money contributed to, and their respective domiciles on the forms, and s
hall sign and seal such forms. The subscribers shall pay their subscription mo
ney in accordance with the number of shares subscribed for. 
 
Article 87  
A prospectus on share offer shall have the articles of association of the comp
any formulated by the sponsors attached, and shall specify the following:
 
(1) the number of shares subscribed for by the sponsors;
 
(2) the face value and the issue price of each share;
 
(3) the total number of bearer shares issued;
 
(4) the purpose of the fund raised;
 
(5) the rights and obligations of the subscribers; and
 
(6) the term of the share offer and a statement to the effect that subscribers
 may withdraw their share subscriptions if all the shares are not taken up wit
hin the time limit. 
 
Article 88  
When sponsors offer shares to the public, the shares shall be distributed by a
 securities company established according to law, with which a distribution ag
reement shall be concluded. 
 
Article 89  
Where shares are to be offered to the public, the sponsors shall enter into an
 agreement with a bank on the collection of subscription money on behalf of th
e company.
 
The bank entrusted with collecting the subscription money shall, in accordance
 with its agreement, collect and keep the subscription money, issue receipts t
o the subscribers for their payments, and bear an obligation to issue certific
ation of receipts to the subscribers' money to the relevant departments. 
 
Article 90  
After payment in full of the subscription money for all shares is made, a stat
utory capital verification institution shall be commissioned to conduct a veri
fication of the funds and produce a verification certificate. The sponsors sha
ll, within 30 days thereafter, convene and preside over an inaugural meeting c
omposed of all the subscribers.
 
If the number of shares has not been fully subscribed for within the time limi
t specified in the prospectus on share offer or, if sponsors fail to hold an i
naugural meeting within 30 days after payment in full of the subscription mone
y for the total share is made, the subscribers may claim a refund from the spo
nsors according to the paid-up share subscription money plus bank deposit inte
rest calculated for the same period. 
 
Article 91  
The sponsors shall notify each subscriber of the date of the inaugural meeting
 or make a public announcement 15 days prior to the convening of the meeting.
The inaugural meeting may be convened only if subscribers representing more th
an half of the total shares issued are present.
 
The following functions and powers shall be exercised at an inaugural meeting:
 
 
(1) to examine the sponsors report on the preparation for the incorporation of
 the company;
 
(2) to adopt the articles of association of the company;
 
(3) to elect members of the board of directors;
 
(4) to elect members of the supervisory board;
 
(5) to examine and verify the expenses incurred in the incorporation of the co
mpany;
 
(6) to examine and verify the valuation of the property used by the sponsors t
o pay for subscription money; and
 
(7) to resolve not to incorporate the company in the event that a force majeur
e or major changes in business operation conditions directly affect the incorp
oration of the company.
 
The resolution made at the inaugural meeting on the issues listed in the prece
ding Paragraph must be approved by subscribers attending the meeting who repre
sent more than half of the voting rights. 
 
Article 92  
Sponsors and subscribers shall not withdraw their share capital after paying t
heir subscription money or making their capital contributions as substitutes f
or subscription money, except where the total share issue is not fully subscri
bed for within the time limit or the sponsors fail to convene the inaugural me
eting according to the schedule, or the inaugural meeting resolves not to inco
rporate the company. 
 
Article 93  
The board of directors shall, within 30 days after the inaugural meeting, subm
it the following documents to the company registration authority and apply for
 registration of the incorporation of the company;
 
(1) the written application for registration of the company;
 
(2) the minutes of the inaugural meeting;
 
(3) the articles of association of the company;
 
(4) the capital verification certificate;
 
(5) the appointment documents and identity certificates of the legal represent
ative, directors and supervisors;
 
(6) the certificates of legal person qualification or natural person identity
of the sponsors; and
 
(7) the certificate of the company's domicile.
 
Where the joint stock limited company is incorporated by means of share offer
and shares are issued publicly, the approval document of the securities regula
tory authority under the State Council shall be filed to the company registrat
ion company. 
 
Article 94  
Where, after the incorporation of a joint stock limited company, the sponsors
fail to make the capital contribution in full in accordance with the provision
s of the articles of association of the company, the sponsors shall make up th
e deficiency; other sponsors shall bear joint and several liability therefore.
 
 
Where, after the incorporation of a joint stock limited company, it is discove
red that the actual value of the property in non-currency contributed as capit
al is notably less than the value stated in the articles of association, the s
ponsors that made such contributions shall make up the deficiency; other spons
ors shall bear joint and several liability therefore. 
 
Article 95  
The sponsors of a joint stock limited company shall bear the following respons
ibilities:
 
(1) in the event of the company failing to be incorporated, joint and several
liabilities for all debts and expenses incurred in the act of the incorporatio
n;
 
(2) in the event of the company failing to be incorporated, joint and several
liabilities for refunding to the subscribers the paid-up subscription money pl
us bank deposit interest calculated for the same period of time; and
 
(3) in the event of the interests of the company being damaged during the cour
se of its incorporation due to fault of the sponsors, liability for compensati
on to the company. 
 
Article 96  
Where a limited liability company is converted into a joint stock limited comp
any, the total amount of its paid-up share capital converted shall not be more
 than the amount of its net assets. Where a limited liability company that is
converted into a joint stock limited company issues shares publicly for the pu
rpose of increasing its capital, it shall be handled according to law. 
 
Article 97  
A joint stock limited company shall keep its articles of association, roster o
f the shareholders, the counterfoil of company bonds, minutes of the sharehold
ers general meetings, minutes of the meetings of the board of directors, minut
es of the meetings of the supervisory board and financial statements at the co
mpany. 
 
Article 98  
The shareholders shall have the rigths to check and review the articles of ass
ociation of the company, the register of the shareholders, the stubs of the co
mpany bonds, the meeting minutes of the shareholders' general meeting, the res
olutions of the board of directors, the resolutions of the board of supervisor
s, and the financial and accounting reports, and to raise suggestions and inte
rpellation on the operations of the company. 
 
Section 2   Shareholders General Meetings
 
 
Article 99  
A joint stock limited company shall form a shareholders general meeting which
shall be composed of all the shareholders. The shareholders general meeting is
 the organ of power of the company and shall exercise its functions and powers
 in accordance with this Law. 
 
Article 100  
The provisions of Paragraph 1 of Article 38 of this Law on the functions and p
owers of a limited liability company shall be applicable to any joint stock li
mited company. 
 
Article 101  
The annual meeting of the shareholders general meeting shall be convened once
each year. An interim shareholders general meeting shall be convened within tw
o months if any of the following situations occurs:
 
(1) if the number of directors is less than the number stipulated by this Law,
 or less than two-thirds of the number required by the articles of association
 of the company;
 
(2) if the amount of the company's losses that have not been made up reaches o
ne-third of the total amount of its paid-up share capital;
 
(3) if shareholders holding separately or jointly ten percent or more of the c
ompany's shares request to convene a shareholders meeting;
 
(4) if the board of directors deems it necessary;
 
(5) if the supervisory board proposes that such a meeting be convened; and
 
(6) if other circumstances occur as stipulated in the articles of association
of the company. 
 
Article 102  
A shareholders general meeting shall be convened by the board of directors and
 presided over by the Chairman of the board. Where the Chairman is unable to o
r fails to perform his duties, the meeting shall be presided over by the vice-
chairman of the board; if the vice-chairman is unable to or fails to perform h
is duties, the meeting shall be presided over by a director jointly elected by
 half or more of shareholders.
 
Where the board of directors is unable to or fails to perform its function of
convening the shareholders general meeting, the supervisory board shall timely
 convene and preside over the meeting; if the supervisory board fails to conve
ne and preside the meeting, the shareholders, who separately or jointly hold t
en percent or more of the company's shares for continuous 90 days, may convene
 and preside over the meeting in their own discretion. 
 
Article 103  
Where a shareholders general meeting is to be held, the shareholders shall be
notified of the time and place of holding the meeting and matters to be consid
ered at the meeting 20 days prior to the holding of the meeting; where an inte
rim shareholders general meeting is to be held, the shareholders shall be noti
fied of the same fifty days prior to the holding of the meeting; Where bearer
shares are issued, the same shall be publicly announced 30 days prior to the h
olding of the meeting.
 
The shareholders separately or jointly holding three percent of the company's
shares may bring interim proposals and submit them to the board of directors t
en days prior to the holding of the shareholders general meeting; the board of
 directors shall notify other shareholders within two days upon its receipt of
 the proposals and submit the proposals to the shareholders general meeting fo
r consideration. The contents of the interim shall fall within the scope of th
e functions and powers of the shareholders general meeting and shall have defi
nite topics and specific matters to be discussed.
 
No resolutions may be adopted at the shareholders general meeting in respect o
f matters not listed in the notices referred to in the two preceding Paragraph
s. Holders of bearer shares attending the shareholders general meeting shall d
eposit their share certificates with the company for the period from five days
 prior to the holding of the meeting until the end of the meeting. 
 
Article 104  
Shareholders attending a shareholders general meeting shall have the right to
one vote for each share held, but the company's shares held by the company sha
ll have no voting right. A resolution of the shareholders general meeting must
 be passed by more than one half of the voting rights held by the shareholders
 present at the meeting. Resolutions on the merger, division, dissolution or t
ransformation of the company adopted by the shareholders general meeting must
require more than two-thirds of the voting rights held by the shareholders pre
sent at the meeting. 
 
Article 105  
In respect of such matters as transfer or acceptance major assets or provision
 of external guarantee on which a resolution must be made at the shareholders
general meeting in accordance with this Law and the articles of association, t
he board of directors shall timely convene a shareholders general meeting and
the meeting shall vote on the said matters. 
 
Article 106  
When a shareholders general meeting elects directors or supervisors, the accum
ulative voting system may be practiced in accordance with the provisions of th
e articles of association or the resolution of the shareholders general meetin
g. The accumulative voting system referred to in this Law shall mean the syste
m that, when a shareholders general meeting elects directors or supervisors, e
ach share has the voting rights equal to the number of the directors or superv
isor to be elected, and concentrated use of the voting rights held by a shareh
older is permitted. 
 
Article 107  
A shareholder may entrust a proxy to attend the shareholders general meeting o
n his behalf. The proxy shall present the shareholder's power of attorney to t
he company and exercise voting rights within the scope of authorization. 
 
Article 108  
Resolutions on matters discussed at a shareholders general meeting shall be mi
nuted down. The directors attending the meeting shall sign the minutes. The mi
nutes of the meeting shall be kept together with the roster of the signatures
of the shareholders attending the meeting and the powers of attorney of attend
ing proxies. 
 
Section 3   Board of Directors and Manager
 
 
Article 109  
A joint stock limited company shall have a board of directors composed of five
 to 19 members.
 
The board of directors shall be responsible to the shareholders general meetin
g and exercise the following functions and powers:
 
The members of the board of directors may include the representatives of the s
taff and workers of the company. The representatives of the staff and workers
on the board of directors shall be democratically elected by the staff and wor
kers of the company through the staff and workers congress, workers' assembly
or other forms.
 
The provision of Article 46 of this Law on the term of office of the directors
 of a limited liability company shall be applicable to the directors of a join
t stock limited company.
 
The provision of Article 47 of this Law on the functions and powers of the boa
rd of directors of a limited liability company shall be applicable to the boar
d of directors of a joint stock limited company. 
 
Article 110  
The board of directors shall have one chairman and may have vice-chairmen. The
 chairman and vice-chairmen shall be elected by the affirmative votes of more
than half of all the directors.
 
The chairman shall convene and preside over the board meeting and examine the
implementation of resolutions of the board of directors. The vice-chairmen sha
ll assist the chairman in his work. Where the Chairman is unable to or fails t
o perform his duties, a vice-chairman shall perform the duties; if the vice-ch
airman is unable to or fails to perform his duties, half or more of the direct
ors shall jointly elect a director to perform the duties. 
 
Article 111  
Meetings of the board of directors shall be held at least twice a year. All th
e directors and supervisor shall be notified of the meeting ten days prior to
the holding of the meeting. Interim board meetings may be convened upon propos
al made by shareholders representing one-tenth or more of the voting rights, o
r, by one-third or more of directors or the supervisory board. The chairman sh
all, within ten days upon its receipt of the proposal, convene and preside ove
r the board meeting. The notification method and notification period for conve
ning interim board meetings may be separately decided. 
 
Article 112  
A meeting of the board of directors shall be convened only if more than one ha
lf of all the directors are present. Any resolution of the board must be adopt
ed by the affirmative votes of more than one half of all the directors.
 
The voting for the resolution of the board shall practice the system of one ma
n, one vote. 
 
Article 113  
Meetings of the board of directors shall be attended by the directors in perso
n. If a director is unable to attend the meetings for certain reasons, he may
entrust another director in writing with attending the meeting on his behalf.
The power of attorney shall define the scope of authorization.
 
Decisions on matters discussed at a meeting of the board of directors shall be
 minutes. Such minutes of the meeting shall be signed by the directors present
 at the meeting.
 
Directors shall be responsible for resolutions passed by the board of director
s. If a resolution of the board violates the law, administrative regulations o
r the articles of association of the company and thus causes serious losses to
 the company, the directors who participated in the adoption of such a resolut
ion shall be liable for compensation to the company. However, if a director is
 proved to have expressed his objection to such a resolution when it was put t
o the vote and his objection was recorded in the minutes of the meeting, he ma
y be exempted from such liability. 
 
Article 114  
A joint stock limited company shall have a manager, who shall be engaged or di
smissed by the board of directors.
 
The provision of Article 50 of this Law on the functions and powers of the man
ager of a limited liability company shall be applicable to the manager of a jo
int stock limited company. 
 
Article 115  
The board of directors may decide that one of its members shall concurrently s
erve as the manager of the company. 
 
Article 116  
The company shall not, directly or through its subsidiaries, provide any loan
to any of its directors, supervisors or senior executives. 
 
Article 117  
The company shall periodically disclose to its shareholders the information on
 the remuneration obtained by its directors, supervisors or senior executives
from the company. 
 
Section 4   Supervisory Board
 
 
Article 118  
A joint stock limited company shall have a supervisory board composed of no le
ss than three members.
 
The supervisory board shall be composed of shareholders' representatives and a
n appropriate proportion of representatives of the staff and workers of the co
mpany, the proportion of such representatives shall not be less than one-third
 and the specific proportion shall be provided for by the articles of associat
ion of the company. The representatives of the staff and workers on the superv
isory board shall be democratically elected by the staff and workers of the co
mpany through the staff and workers congress, workers' assembly or other forms
.
 
The supervisory board shall have a chairman and may have vice-chairmen. The ch
airman and vice-chairmen shall be elected by affirmative votes of more than ha
lf of all supervisors. The meetings of the supervisory board shall be convened
 and presided over by the chairman; if the chairman is unable to or fails to p
erform his duties, the meetings shall be presided over by a vice-chairman; if
the vice-chairman is unable to or fails to perform his duties, the meetings sh
all be convened and presided over by a supervisor jointly elected by half or m
ore of all supervisors.
 
Directors and senior executives shall not serve concurrently as supervisors.

 
The provisions of Article 53 of this Law on the term of office of the supervis
ors of a limited liability company shall be applicable to the supervisors of a
 joint stock limited company. 
 
Article 119  
The provisions of Article 54 and Article 55 of this Law on the term of office
of the supervisory board of a limited liability company shall be applicable to
 the supervisory board of a joint stock limited company.
 
The expenses required for exercise of the functions and powers of the supervis
ory board shall be borne by the company. 
 
Article 120  
The meetings of the supervisory board shall be held at least once for each six
 months. The supervisors may propose to hold interim meetings of the superviso
ry board.
 
The method of deliberation and voting procedures of the supervisory board shal
l be stipulated in the articles of association of the company.
 
The supervisory board shall make minutes of the decisions on the matters discu
ssed at its meetings, and the supervisors present at the meetings shall sign t
he minutes. 
 
Section 5   Special Provisions on Organizational Structure of Listed Companies
 
 
 
Article 121  
A listed company referred to in this Law shall mean a joint stock limited comp
any which has its stocks listed and traded at stock exchanges. 
 
Article 122  
Where the major assets purchased or sold by a listed company or the amount of
guarantee provided by it may exceed 30% of the total amount of its assets with
in one year, it shall be resolved at the shareholders general meeting and adop
ted on an affirmative vote of two-thirds of the voting rights held by the shar
eholders attending the meeting. 
 
Article 123  
A listed company shall have independent directors and the specific measures th
erefor shall be stipulated by the State Council. 
 
Article 124  
A listed company shall have a secretary of the board of directors, who shall b
e responsible for such matters as preparing for the shareholders general meeti
ngs and the meetings of the board of directors, keeping files, managing the co
mpany's equity and handling the information disclosure affairs. 
 
Article 125  
Where any director of a listed company has the affiliate relationship with the
 enterprises related to the matters to be resolved at the meetings of the boar
d of directors, such director shall not exercise the voting rights upon such r
esolutions nor may exercise the voting rights on behalf of other directors. Th
e meetings of the board of directors may be held if more than half of the dire
ctors having no such affiliate relationship attend the meetings, and the resol
ution made at the meetings of the board of directors shall be passed by more t
han half of directors having no such affiliate relationship. Where the number
of the directors having no such affiliate relationship who attend the meetings
 is less than three, such matters shall be submitted to the shareholders gener
al meeting of the listed company for examination and discussion. 
 
Chapter 5   Issue and Transfer of Shares of Joint Stock Limited Companies
 
 
Section 1   Issue of Shares
 
 
Article 126  
The capital of a joint stock limited company shall be divided into shares of e
qual value.
 
The shares of the company shall take the form of share certificates, which are
 vouchers issued by the company to certify the shares held by their shareholde
rs. 
 
Article 127  
The issue of shares shall be in compliance with the principles of fairness and
 justice. Each share of the same class shall carry the same rights.
 
Shares of the same issue shall be issued on the same conditions and at the sam
e price. A unit or an individual subscribing to shares shall pay the same pric
e for each share. 
 
Article 128  
Shares may be issued at or above par but not below par. 
 
Article 129  
Share certificates may be in paper form or in such other forms as stipulated b
y the securities regulatory authority under the State Council.
 
The following main particulars shall be clearly stated on a share certificate:
 
 
(1) the name of the company;
 
(2) the date of the incorporation of the company;
 
(3) the class of the shares, the par value and the number of shares represente
d by the certificate; and
 
(4) the serial number of the share certificate.
 
A share certificate shall be signed by the legal representative and affixed wi
th the seal of the company.
 
In the case of share certificates owned by sponsors, the words "sponsor's shar
e certificate" shall be clearly stated on the share certificates. 
 
Article 130  
Shares issued by a company may be either registered shares or bearer shares.

 
Shares issued by a company to sponsors or legal persons shall be registered sh
ares which shall state the names or titles of the sponsors or legal person. Su
ch shares shall not be registered in other names, nor in the names of their re
presentatives. 
 
Article 131  
Where registered shares are issued, the company shall prepare a roster of the
shareholders, in which the following items shall be recorded:
 
(1) the names or titles, and domiciles of the shareholders;
 
(2) the number of shares held by each shareholder;
 
(3) the serial numbers of the share certificates held by each shareholder; and
 
 
(4) the date on which each shareholder obtained his share.
 
Where bearer shares are issued, the company shall keep a record of the number,
 the serial numbers and the issue date of the share certificates. 
 
Article 132  
The State Council may formulate separate regulations on the issue of other cla
sses of shares which are not provided for in this Law. 
 
Article 133  
A joint stock limited company shall formally deliver share certificates to its
 shareholders upon its incorporation. No company may deliver share certificate
s to its shareholders prior to its incorporation. 
 
Article 134  
Where a company issues new shares, resolutions on the following matters shall
be adopted by the shareholders general meeting or the board of directors in ac
cordance with the provisions of the articles of association:
 
(1) the class and number of the new shares;
 
(2) the issue price of the new shares;
 
(3) the opening and closing dates of the new share issue; and
 
(4) the class and number of new shares issued to existing shareholders. 
 
Article 135  
When a company obtains the approval of the securities regulatory authority und
er the State Council to publicly issue new shares, it must publicly announce i
ts prospectus on new share offer and its financial accounting statements, and
shall prepare subscription application forms.
 
The provisions of Article 88 and Article 89 of this Law shall be applicable to
 public issue of new shares by a company. 
 
Article 136  
Where a company issues new shares, it may determine the pricing proposal for n
ew shares based upon its business operation situation and financial standing.
 
 
Article 137  
Where the new share issue of a company is fully subscribed for, the company sh
all apply to the company registration authority for registration of the change
 and make a public announcement thereafter. 
 
Section 2   Transfer of Shares
 
 
Article 138  
Shares held by shareholders may be transferred according to law. 
 
Article 139  
Transfer of shares by shareholders shall be conducted through stock exchanges
established according to law or through other forms as stipulated by the State
 Council. 
 
Article 140  
Registered shares shall be transferred by means of endorsement by the sharehol
ders or by such other means as provided for by laws and administrative regulat
ions; When registered shares are transferred, the company shall register the t
ransferee's name or title and domicile in its roster of shareholders.
 
No registration of change in the roster of shareholders as stipulated in the p
receding Paragraph shall be made within 20 days prior to the convening of a sh
areholders general meeting or within five days prior to the base date decided
by the company for the distribution of dividends, except as otherwise stipulat
ed by laws on the registration of change in the roster of shareholders. 
 
Article 141  
Transfer of bearer shares shall become effective immediately after the shareho
lder delivers the share certificates to the transferee. 
 
Article 142  
Shares held by the sponsors of a company shall not be transferred within one y
ears upon the date of incorporation of the company. The shares issued prior to
 public issue of shares of a company shall not be transferred within one year
upon the date when the company's share certificates are listed and traded at s
tock exchanges.
 
Directors, supervisors and senior executives shall declare to the company the
numbers of shares of the company held by them and the change therein, and such
 shares transferred by them each year during their terms of office shall not e
xceed 25% of the total number of the shares of the company held by them; the s
hare of the company held by them shall not be transferred within one year upon
 the date when the company's share certificates are listed and traded at stock
 exchanges. The above personnel shall not the shares of the company held by th
em within half a year after they leave their posts. The articles of associatio
n of the company may impose other restrictive provisions on the transfer by th
e company's directors, supervisors and senior executives of the company's shar
es held by them. 
 
Article 143  
A company shall not purchase its own shares except under any of the following
conditions:
 
(1) where the company is to reduce its registered capital;
 
(2) where the company merges with other companies holding its shares;
 
(3) where the company is to offer its shares to its staff and workers as a rew
ard; or
 
(4) where any shareholder of the company has objection to the resolution on di
vision or merger of the company adopted by the shareholders general meeting, s
o, requires the company to purchase his shares.
 
Where the company purchases its own share by reason of Item (1) to (3) of the
preceding Paragraph, a resolution thereupon shall be adopted at the shareholde
rs general meeting. After the company purchases its own share in accordance wi
th the provisions of the preceding Paragraph, in case of the circumstances of
Item (1), the shares purchased by the company shall be cancelled within ten da
ys upon the purchase; in case of the circumstances of Item (1) or (4), the sha
res purchased by the company shall be transferred or cancelled within six mont
hs upon the purchase.
 
The shares of the company purchased by the company in accordance with the prov
isions of Item (3) of Paragraph 1 shall not exceed 5% of the total amount of t
he shares issued by the company; the fund for the purchase shall be paid from
the after-tax profits of the company; the shares purchased shall be transferre
d to the staff and workers within one year upon the purchase.
 
A company shall not accept its own shares as the subject matter of pledge. 

 
Article 144  
Where any registered share certificate are stolen, lost or destroyed, the shar
eholder may, in accordance with the procedure of public summons for exhortatio
n provided for in the Civil Procedure Law of the People's Republic of China, r
equest a people's court to declare such share certificate as void.  After the
share certificate has been declared void by a people's court, the shareholder
may apply to the company for a replacement of the share certificates. 
 
Article 145  
The shares of a listed company shall be listed and traded in accordance with t
he relevant laws and administrative regulations and the transaction rules of t
he stock exchanges. 
 
Article 146  
A listed company must, in compliance with the provisions of the laws and admin
istrative regulations, make public its financial and business situations and m
ajor lawsuits, and shall publicize the financial statements every half year of
 each fiscal year. 
 
Chapter 6   Qualification and Obligations of Corporate Directors, Supervisors
and Senior Executives
 
 
Article 147  
None of the following persons may hold the position of director, supervisor or
 senior executive of a company:
 
(1) A person without capacity or with restricted capacity for civil acts;
 
(2) A person who was sentenced to criminal punishment for the crime of embezzl
ement, bribery, seizure of property or misappropriation of property or for und
ermining the socialist market economy order, where not more than five years ha
ve elapsed since the expiration of the enforcement period; or a person who was
 deprived of his political rights for committing a crime, where not more than
five years have elapsed since the expiration of the enforcement period;
 
(3) A director, or factory head or manager of a bankrupt and liquidated compan
y or enterprise who was personally responsible for the bankruptcy of the compa
ny or enterprise, where not more than three years have elapsed since the date
of completion of the bankruptcy liquidation;
 
(4) A legal representative of the company or enterprise that had the business
license revoked for violating the law, where such legal representative bears i
ndividual liability therefor and not more than three years have elapsed since
the date of revocation of the business license; and
 
(5) A person with relatively large amount of personal debts that have fallen d
ue but have not been repaid.
 
Where a company elects or appoints a director or supervisor or engages senior
executives in violation of the preceding Paragraph, such election, appointment
 or engagement shall be invalid.  Where any director, supervisor or senior exe
cutive of a company during his term of office occurs any circumstance as liste
d in Paragraph 1 of this Article, the company shall remove him from office. 

 
Article 148  
The directors, supervisors and senior executives of a company shall comply wit
h the laws, administrative regulations and the articles of association of the
company, and bear the duties of loyalty and due diligence towards the company.
 
 
The directors, supervisors and senior executives of a company shall not, by ta
king advantage of their positions and powers, accept bribes or other unlawful
incomes, nor may they misappropriate the property of the company. 
 
Article 149  
The directors, supervisors and senior executives of a company shall not commit
 any of the following acts:
 
(1) Misappropriate the company's funds;
 
(2) Deposit the company's assets in their own personal accounts or in personal
 accounts of other individuals;
 
(3) In violation of the company's articles of association and without the cons
ent of the shareholders meeting or the shareholders general meeting or the boa
rd of directors, lend the company's funds to others or use the company's prope
rty to provide guarantee to others;
 
(4) In violation of the company's articles of association or without the conse
nt of the shareholders meeting or the shareholders general meeting or the boar
d of directors, enter into contracts or conduct transactions with the company;
 
 
(5) Without the consent of the shareholders meeting or the shareholders genera
l meeting, by taking advantage of their positions, seek for themselves or othe
rs the commercial opportunity that should belong to the company, or operate fo
r themselves or others the same category of business as that of the company;

 
(6) Accept and possess the commission in the transaction between others and th
e company;
 
(7) Disclose the company's secrets without authorization; and
 
(8) Commit other acts in violation of the duty of loyalty to the company. 
 
Article 150  
If the directors, supervisors and senior executive of a company violate the la
ws, administrative regulations or the articles of association of the company i
n performance of their functions and thus cause loss to the company, they shal
l be liable for compensation. 
 
Article 151  
Where the shareholders meeting or the shareholders general meeting of a compan
y requires any director, supervisor or senior executive to attend its meetings
 as non-voting attendee, such director, supervisor or senior executive shall a
ttend the meeting and accept the inquiry of the shareholders.
 
The directors, supervisors or senior executives of a company shall faithfully
provide the relevant information and materials to the supervisory board or the
 supervisor of a limited liability company having no supervisory board, and sh
all not hinder the supervisory board or supervisor from exercising their funct
ions and powers. 
 
Article 152  
Where any director or senior executive of a company is under the circumstances
 of Article 150 of this Law, in case of a limited liability company, the share
holders, or in case of a joint stock company, the shareholders separately or j
ointly holding one percent or more of the company's shares for 180 consecutive
 days may request in writing the supervisory board or the supervisor of the li
mited liability company having no supervisory board to bring a lawsuit before
the people's court; where any supervisor of the company is under the circumsta
nces of Article 150 of this Law, the said shareholders may request in writing
the board of directors or the executive director of the limited liability comp
any having no board of directors to bring a lawsuit before the people's court.
 
 
If the supervisory board or the supervisors of the limited liability company h
aving no supervisory board, or the board of directors or the executive directo
r of the limited liability company having no board of directors, upon its rece
ipt of the shareholders' written request as stipulated in the preceding Paragr
aph, refuses to raise a lawsuit, or fails to raise a lawsuit within 30 days up
on its receipt of such request, or in case of emergency, the company's interes
ts will suffer irreparable damage if no lawsuit is raised immediately, then, t
he shareholders as stipulated in the preceding Paragraph may, for the benefits
 of the company, directly bring a lawsuit before the people's court in their o
wn name.
 
Where others infringe the lawful rights and interests of a company and cause l
oss to the company, the shareholders as stipulated in the Paragraph 1 of this
Article may raise a lawsuit in accordance with the preceding two Paragraphs. 

 
Article 153  
Where any director or senior executive of a company in violation of the provis
ions of the laws, administrative regulations and the articles of association o
f the company, cause damage to the interests of any shareholder of the company
, such shareholder may bring a lawsuit before the people's court. 
 
Chapter 7   Company Bonds
 
 
Article 154  
Company bonds referred to in this Law mean negotiable instrument issued by a c
ompany in accordance with the legal procedures with repayment of the principal
 and payment of the interest within a definite time limit.  Issue of company b
onds shall conform to the conditions on issue as stipulated in the securities
law of the People's Republic of China. 
 
Article 155  
After an application for the issue of company bonds is approved by the departm
ent authorized by the State Council, the company shall make a public announcem
ent of the method of offer of the company bonds.
 
The method of offer of company bonds shall specify the following main particul
ars:
 
(1) the name of the company;
 
(2) the purpose of the funds raises from the offer of the company bonds;
 
(3) the total amount of the bonds and their par value;
 
(4) the method for determining the interest rate of the bonds;
 
(5) the time limit for and the method of the repayment of the principal and th
e payment of interest;
 
(6) the information on security for the bonds;
 
(7) the bond issue price and the beginning and ending dates of the bond issue;
 
 
(8) the amount of the net assets of the company;
 
(9) the total amount of the undue bonds issued by the company; and
 
(10) the selling agency of the company bonds. 
 
Article 156  
Where a company issues its company bonds in the form of in-kind coupons, it mu
st clearly record thereon such items as the name of the company, the par value
 of the bonds, the interest rate and the time limit for repayment, and the bon
ds shall be signed by the legal representative and sealed by the company. 
 
Article 157  
Company bonds may be either registered bonds or bearer bonds. 
 
Article 158  
A company issuing company bonds shall prepare the counterfoils of bands issued
.
 
When registered company bonds are issued, the counterfoils of bonds shall spec
ify the following items:
 
(1) the name or title and domicile of each bondholder;
 
(2) the date on which each bondholder acquired the bonds and their serial numb
ers;
 
(3) the total amount of the bonds, the par value, the interest rate of the bon
ds and the method of and time limit for repayment of the principal and payment
 of interest; and
 
(4) the issuing date of the bonds.
 
Where bearer company bonds are issued, the counterfoils of the company bonds s
hall specify the total amount of the bonds, the interest rate, the time limit
for and method of repayment of the principal and payment of interest, the issu
ing date of the bonds and the serial numbers. 
 
Article 159  
The registration and clearing institutions for registered company bonds shall
establish the relevant systems such as registration, maintenance and managemen
t, payment of interest, conversion into cash of the bonds. 
 
Article 160  
Company bonds may be transferred, and the price for the transfer shall be agre
ed upon by the transferor and transferee.
 
If the company bonds are listed and traded at a stock exchange, the transfer t
hereof shall be bound by the transaction rules of the stock exchange. 
 
Article 161  
Registered bonds shall be transferred by means of endorsement by the bondholde
r or by other means provided for by the laws or administrative regulations; wh
ere registered bonds are transferred, the name or title and domicile of the tr
ansferee shall be recorded in the counterfoils of the company bonds.
 
Where bearer bonds are transferred, the transfer becomes effective immediately
 after the bondholder delivers his bonds to the transferee. 
 
Article 162  
Upon adoption of a resolution by the shareholders general meeting, a listed co
mpany may issue company bonds which can be converted into shares. The specific
 measures for the conversion shall be stipulated in the method of offer of the
 company bonds.
 
The issue of company bonds convertible into shares shall be subjected to the a
pproval of the securities regulatory authority under the State Council.
 
In issuing company bonds convertible into shares, the words "convertible compa
ny bonds" shall be clearly indicated on the bonds and the amount of convertibl
e company bonds shall be recorded in the counterfoils of company bonds. 
 
Article 163  
A company that issues company bonds convertible into shares shall let the bond
holders convert their bonds into shares in accordance with the conversion meas
ures. However, bondholders shall have an option whether or not to convert thei
r bonds into shares. 
 
Chapter 8   Financial Affairs and Accounting of Companies
 
 
Article 164  
A company shall establish its financial and accounting system in accordance wi
th the laws, administrative regulations and the stipulations of the department
 in charge of financial affairs under the State Council. 
 
Article 165  
At the end of each fiscal year, a company shall prepare its financial statemen
ts, which shall be audited by an accountant's firm according to law.
 
The financial statements shall be formulated in accordance with the laws, admi
nistrative regulations and the stipulations of the department in charge of fin
ancial affairs under the State Council. 
 
Article 166  
A limited liability company shall send the financial statements to each of its
 shareholders within the time limit stipulated in its articles of association.
 
 
A joint stock limited company shall make the financial statements available at
 the company for examination by its shareholders 20 days prior to the convenin
g of the shareholders annual general meeting; a joint stock limited company pu
blicly issuing shares must announce its financial statements. 
 
Article 167  
When a company distributes the annual after-tax profits, it shall allocate ten
 percent of its profits to its statutory common reserve fund. Where the accumu
lated amount of the statutory common reserve fund has exceeded 50 percent of t
he registered capital of the company, the company may make no further allocati
on.
 
Where the statutory common reserve fund is insufficient to make up the company
's losses of the previous fiscal year, the company shall apply its annual afte
r-tax profits to making up its losses before allocating such profits to the st
atutory common reserve fund in accordance with provisions of the preceding Par
agraph.
 
After making its allocation to the statutory common reserve fund from the comp
any's after-tax profits, the company may, upon resolution made by the sharehol
ders meeting or the shareholders general meeting, make allocations to the disc
retionary common reserve fund.
 
After a company makes up its losses and makes allocations to the statutory com
mon reserve fund, a limited liability company shall distribute the remaining a
fter-tax profits to its shareholders according to the provisions of Article 35
 of this Law; and a joint stock limited company shall distribute the remaining
 after-tax profits to its shareholders according to the proportion of the shar
es held by each shareholder, except the articles of association of the company
 stipulates the profits shall not be distributed according to the proportion o
f shareholding.
 
Where the shareholders meeting or the shareholders general meeting or the boar
d of directors violates the provisions of the preceding Paragraphs by distribu
ting profits to the shareholders before making up the company's losses and mak
ing allocations to the statutory common reserve fund, the profits distributed
in violation of the legal provisions must be returned by the shareholders to t
he company.  No profits may be distributed upon a company's shares held by the
 company itself. 
 
Article 168  
The premium income derived from issuing shares above par by a joint stock limi
ted company and other income which according to the rules set by the departmen
ts in charge of financial affairs under the State Council should be entered in
to the capital common reserve fund, shall be entered into the capital common r
eserve fund of the company. 
 
Article 169  
A company's common reserve fund shall be used to make up the company's losses,
 to expand the production and operation of the company or to increase the capi
tal of the company by means of conversion, but the capital common reserve fund
 shall not be used to make up the company's losses.
 
When the statutory common reserve fund of a company is converted into its capi
tal, the remaining amount of the statutory common reserve fund shall not be le
ss than 25 percent of the registered capital. 
 
Article 170  
If a company is to engage or dismiss any accountant's firm handling the audit
affairs of the company, it shall be decided by the shareholders meeting or the
 shareholders general meeting or the board of directors in accordance with the
 articles of association of the company.
 
When the shareholders meeting or the shareholders general meeting or the board
 of directors of the company votes for engagement or dismiss of the accountant
's firm, the accountant's firm shall be permitted to state its opinions. 
 
Article 171  
A company shall provide to the accountant's firm engaged by it true and comple
te accounting vouchers, accounting books, financial statements and other accou
nting materials, and shall not refuse to provide or conceal or falsely provide
 the same. 
 
Article 172  
A company shall not have any other account books in addition to its statutory
account books.
 
No account may be opened in the name of any individual for deposit of a compan
y's assets. 
 
Chapter 9   Merger, Division, Increase and Reduction of Capital of Companies

 
 
Article 173  
The merger of a company may take the form of merger by absorption or merger by
 new establishment.
 
When a company absorbs another, it is an absorption merger, and the company be
ing absorbed shall be dissolved. When two or more companies merge to establish
 a new company, it is merger for new establishment, and all parties being merg
ed shall be dissolved. 
 
Article 174  
When companies merge, the parties to a merger shall sign a merger agreement an
d formulate a balance sheet and a detailed inventory of assets. The company sh
all inform its creditors of the intended merger within ten days following the
date on which the merger resolution is adopted, and make at least three announ
cements in newspaper within 30 days. The creditors shall have the right to cla
im full repayment of their debts or provision of a corresponding guarantee for
m the company with 30 days from the date of receipt of the notice or, within 4
5 days from the date of the first public announcement for those who have not r
eceived the notice. 
 
Article 175  
When companies merge, the claims and debts of the parties to the merger shall
be succeeded to the absorbing company or the newly established company when co
mpanies are merged. 
 
Article 176  
Where a company proceeds into a division, its assets shall be divided correspo
ndingly.
 
Where a company decides to divide itself, it shall formulate a balance sheet a
nd a detailed inventory of assets and shall inform its creditors of the intend
ed division within ten days following the date on which the division resolutio
n is adopted, and make at least three announcements in newspaper within 30 day
s. 
 
Article 177  
The companies following the division shall assume the joint and several liabil
ity for the debts prior to the division of the company, except as otherwise pr
ovided in an written agreement upon satisfaction of the debts reached between
the company and its creditors prior to the division. 
 
Article 178  
Where a company intends to reduce its registered capital, it must formulate a
balance sheet and a detailed inventory of assets.
 
The company shall inform its creditors of the planned reduction of its registe
red capital within ten days following the date on which the resolution to redu
ce its capital is adopted, and make at least three announcements in newspaper
within 30 days following the aforesaid date. The creditors shall have the righ
t to claim full repayment of their debts or provision of a corresponding guara
ntee from the company within 30 days from the date of the receipt of the notic
e or, within 45 days from the date of the first public announcement for those
who have not received the notice.
 
After the reduction of capital, the amount of a company's registered capital s
hall not be lower than the statutory minimum amount. 
 
Article 179  
Where a limited liability company increase its registered capital, the capital
 contributions to the newly increased capital subscribed for by the shareholde
rs shall be governed by the relevant provisions of this Law regarding the paym
ent of capital contributions in connection with the incorporation of a limited
 liability company.
 
Where a joint stock limited company issues new shares to increase its register
ed capital, subscription for the new shares by shareholders shall be governed
by the relevant provisions of this Law regarding the payment of subscription m
oney in connection with the incorporation of a joint stock limited company. 

 
Article 180  
Where the merger or division of a company involves changes in registered items
, such changes shall be registered according to law with the company registrat
ion authority. Where a company is dissolved, it shall apply for cancellation o
f its registration according to law. Where a new company is incorporated, the
registration of the incorporation of the company shall be handled according to
 law.
 
Where a company increase or reduces its registered capital, it shall apply to
the company registration authority for registration of the changes according t
o law. 
 
Chapter 10   Dissolution and Liquidation of Companies
 
 
Article 181  
Where any of the following circumstances occurs, a company shall be dissolved:
 
 
(1) the term of operation as stipulated by the articles of association of the
company expires or other reasons for dissolution as stipulated by the articles
 of association occur:
 
(2) the shareholders meeting or the shareholders general meeting resolves to d
issolve the company;
 
(3) dissolution is necessary as a result of the merger or division of the comp
any;
 
(4) the company's business license is cancelled or the company is ordered to b
e closed down or is revoked according to law; and
 
(5) the company is dissolved by the people's court in accordance with Article
183 of this Law. 
 
Article 182  
If a company is under the circumstances of Item (1) of Article 181 of this Law
, it may continue to exist by means of revision of its articles of association
.
 
The revision of the articles of association under the preceding Paragraph shal
l be, in case of a limited liability company, passed by the shareholders holdi
ng two-thirds or more of the voting rights, or, in case of a joint stock limit
ed company, passed upon an affirmative votes of two-thirds or more of the voti
ng rights held by the shareholders attending the shareholders general meeting.
 
 
Article 183  
If the operation and management of a company occur serious difficulty, continu
ed existence of the company will cause major loss to the shareholders' interes
ts and the situation cannot be solved through other approaches, the shareholde
rs holding ten percent of all shareholders' voting rights of the company may r
equest the people's court to dissolve the company. 
 
Article 184  
Where a company is to be dissolved in accordance with the provisions of Item (
1), (2), (4) or (5) of the Article 181, a liquidation committee shall be forme
d within 15 days after the reason for dissolution occurs and commence the liqu
idation. The liquidation committee of a limited liability company shall be com
posed of its shareholders, and the membership of the liquidation committee of
a joint stock limited company shall be decided upon by the directors or the sh
areholders general meeting of the company. Where a company fails to form a liq
uidation committee to conduct liquidation within the time limit, its creditors
 may request a people's court to designate relevant personnel to form a liquid
ation committee and conduct liquidation. The people's court shall accept such
request and without delay form the liquidation committee to conduct liquidatio
n. 
 
Article 185  
During liquidation, a liquidation committee shall exercise the following funct
ions and powers:
 
(1) to check up on the company's assets, and separately formulate a balance sh
eet and a detailed inventory of assets;
 
(2) to notify creditors by notice or public announcement;
 
(3) to dispose of and liquidate the relevant unfinished business of the compan
y;
 
(4) to pay off taxes owed by the company and incurred during liquidation;
 
(5) to clear up claims and debts;
 
(6) to dispose of, after paying off the debts of the company, its remaining pr
operty; and
 
(7) to participate in civil lawsuits on behalf of the company. 
 
Article 186  
A liquidation committee shall inform the company's creditors of its establishm
ent within ten days following the date of its establishment, and make at least
 three announcements in newspaper within 60 days following the aforesaid date.
 The creditors shall declare their claims to the liquidation committee within
30 days from the date of receipt of the notice or, within 45 days from the dat
e of the first public announcement for those who have not received the notice.
 
 
A creditor shall, when declaring his claims, specify the relevant items of the
 claim and provide supporting materials. The liquidation committee shall regis
ter the claims. During the period of declaration of claims, the liquidation co
mmittee shall not satisfy the creditors. 
 
Article 187  
After the liquidation committee has checked up on the company's assets, formul
ated the balance sheet and a detailed inventory of assets, it shall formulate
a liquidation plan and shall submit such plan to the shareholders meeting or t
he shareholders general meeting or the people's court for confirmation.
 
After all liquidation fees, wages, social insurance premiums and statutory com
pensatory amounts of the staff and workers, due taxes and debts of the company
 are respectively paid off from the company's property, the remaining assets o
f the company shall be distributed, in the case of a limited liability company
, in proportion to the shareholders' capital contributions, or, in the case of
 a joint stock limited company, in proportion to the shares held by the shareh
olders.
 
During liquidation, a company still exists but shall not engage in new busines
s activities unrelated to the liquidation. No assets of the company may be dis
tributed to the shareholders prior to full payments as stipulated by the prece
ding Paragraph. 
 
Article 188  
If the liquidation committee of a company, having checked up on the company's
asset and formulating the balance sheet and a detailed inventory of assets, di
scovers that there are insufficient assets in the company to pay off its debts
, the committee shall apply to the people's court for a declaration of bankrup
tcy of the company.
 
After the people's court has ruled to declare the company bankrupt, the liquid
ation committee shall turn the liquidation matters over to the people's court.
 
 
Article 189  
After the completion of liquidation, the liquidation committee shall formulate
 a liquidation report and submit the report to the shareholders meeting or the
 shareholders general meeting or the people's court for confirmation and submi
t it to the company registration authority in order to cancel the registration
 of the company and publicly announce the company's termination. 
 
Article 190  
Members of a liquidation committee shall be devoted to their duties and perfor
m their liquidation obligations.
 
Members of a liquidation committee shall not accept bribes or other illegal in
come, or misappropriate the property of the company by taking advantage of the
ir positions and powers.
 
Members of a liquidation committee who cause losses to the company or to its c
reditors, either will fully or through gross negligence, shall be liable for c
ompensation. 
 
Article 191  
If a company is declared bankrupt according to law, the bankruptcy liquidation
 of the company shall be conducted in accordance with the laws on enterprise b
ankruptcy. 
 
Chapter 11   Branches of Foreign Companies
 
 
Article 192  
A foreign company referred to in this Law shall mean a company incorporated ou
tside the territory of the People's Republic of China in accordance with forei
gn laws. 
 
Article 193  
A foreign company that intends to establish a branch within the territory of t
he People's Republic of China must submit an application to the authorities in
 charge in China together with relevant documents such as its articles of asso
ciation and the company's registration certificate issued by its country. Upon
 approval, it shall apply to the company registration authority for registrati
on and for a business license for the branch according to law.
 
Measures for examining and approving the establishment of branches of foreign
companies shall be formulated separately by the State Council. 
 
Article 194  
A foreign company that establishes a branch within the territory of the People
's Republic of China must appoint its representative or agent within the terri
tory of the People's Republic of China to take charge of the branch and shall
allocate to the branch funds commensurate with the business which it is to eng
age in.
 
Where a minimum amount of operational funds is required for a branch of a fore
ign company, the State Council shall separately prescribe to that effect. 
 
Article 195  
A branch of a foreign company shall clearly indicate in its name the nationali
ty and the form of liability of such foreign company.
 
The branch shall keep at its domicile a copy of the articles of association of
 such foreign company. 
 
Article 196  
A branch established by A foreign company within the territory of the People's
 Republic of China shall not have the status of a Chinese legal person.
 
A foreign company shall bear civil liability for the operational activities en
gaged in by its branch within the territory of the People's Republic of China.
 
 
Article 197  
The business activities engaged in within the territory of the People's Republ
ic of China by foreign companies' branches established upon approval must comp
ly with the laws of China and shall not harm the social and public interest of
 China. The lawful rights and interests of such branches shall be protected by
 the laws of China. 
 
Article 198  
Where a foreign company dissolves its branch established within the territory
of the People's Republic of China, it must pay off the branch's debts accordin
g to law and carry out liquidation in accordance with the relevant procedures
concerning company liquidation provide for in this Law. The assets of the bran
ch shall not be transferred out of the territory of the People's Republic of C
hina prior to the full payment of its debts. 
 
Chapter 12   Legal Liability
 
 
Article 199  
Where a company obtains its registration by making a false report on its regis
tered capital, submitting falsified materials, or resorting to other fraudulen
t means to conceal important facts in violation of this Law, it shall be order
ed to make a rectification; where a company makes a false report on its regist
ered capital, it shall be fined an amount of not less than five percent but no
t more than 15 percent of the registered capital falsely reported; where a com
pany submits falsified materials or resorts to other fraudulent means to conce
al important facts, it shall be punished with a fine of not less than RMB 50,0
00 but not more than RMB 500,000; If the circumstances are serious, the regist
ration of the company shall be cancelled or its business license shall be revo
ked. 
 
Article 200  
Where a sponsor or a shareholder makes a false capital contribution or fails t
o pay or fails to pay within the stipulated time limit the promised currency o
r property in non-currency as capital contribution, he shall be ordered to mak
e a rectification and imposed a fine of not less than five percent but not mor
e than 15 percent of the false capital contributions. 
 
Article 201  
Where a sponsor or a shareholder of a company surreptitiously withdraws his ca
pital contribution after the incorporation of the company, he shall be ordered
 to make a rectification and imposed a fine of not less than five percent but
not more than 15 percent of the amount of capital contribution surreptitiously
 withdrawn. 
 
Article 202  
Where a company violates the provisions of the Law by setting up accounting bo
oks in addition to its statutory accounting books, it shall be ordered to make
 a rectification and imposed a fine of not less than RMB 50,000 but not more t
han RMB 500,000 by the department in charge of financial affairs of the people
's government at or above county level. 
 
Article 203  
Where a company submits to the competent department in charge such materials f
inancial statements having false records or concealing important facts, the pe
rsons in charge and other persons held directly responsible shall be imposed u
pon a fine of not less than RMB 30,000 but not more than RMB 300,000. 
 
Article 204  
Where a company fails to make allocations to its statutory common reserve fund
 in accordance with this Law, it shall be ordered to make up the amount that i
t is required to allocate and shall be imposed upon a fine of not more than RM
B 200,000. 
 
Article 205  
Where a company fails to issue a notice or make an public announcement to its
creditors according to this Law in case of merger, division, reduction of its
registered capital or liquidation, it shall be ordered to make a rectification
 and be imposed upon a fine of not less than RMB 10,000 but not more than RMB
100,000.
 
Where a company, in the process of its liquidation, conceals property, records
 false information in its balance sheet or detailed inventory of assets or, di
stributes the company's assets prior to the full payment of its debts, it shal
l be ordered to make a rectification by the company registration authority and
 be imposed upon a fine of not less than five percent but not more than ten pe
rcent of the amount concealed or of the amount distributed prior to the full p
ayment of the debts of the company. The persons in charge and others held dire
ctly responsible shall be imposed upon a fine of not less than RMB 10,000 but
not more than RMB 100,000. 
 
Article 206  
Where a company, in the process of its liquidation, carries out any business a
ctivity unrelated to the liquidation, it shall be given a warning by the compa
ny registration authority and the illegal earnings shall be confiscated. 
 
Article 207  
Where a liquidation committee fails to submit a liquidation report to the comp
any registration authority in accordance with this Law, or where a liquidation
 report submitted conceals major facts or contains major omission, it shall be
 ordered to make a rectification by Company Registration Authority.
 
Where a member of the liquidation committee takes advantage of his position an
d power to practice favouritism for personal gains, seek illegal incomes or mi
sappropriate the property of the company, he shall be ordered to return the pr
operty to the company, confiscated of his illegal gains and imposed upon a fin
e from one to five times the amount of his illegal gains. 
 
Article 208  
Where an institution in charge of asset valuation, capital verification or cer
tificate verification provides false materials, the illegal income derived the
refrom shall be confiscated by the company registration authority and a fine f
rom one to five times the amount of the illegal income shall be imposed; the r
elevant department in charge may, according to law, order the institution to s
uspend its business or revoke the qualification certificates of those held dir
ectly responsible or revoke the business license of the institution.
 
Where an institution in charge of asset valuation, capital verification or cer
tificate verification provides by negligence reports with major omissions, it
shall be ordered to make a rectification; where the circumstances are relative
ly serious, a fine from one the five times the amount of the income derived th
erefrom shall be imposed, and the relevant department in charge may, according
 to law, order the institution to suspend its business or revoke the qualifica
tion certificates of those held directly responsible or revoke the business li
cense of the institution.
 
Where an institution in charge of asset valuation, capital verification or cer
tificate verification provides untrue evaluation results, capital verification
 or certificate verification and therefore cause losses to the company's credi
tors, it shall undertake the liability for compensation to the extent the amou
nt is under untrue evaluation or verification, except the institution can prov
e it has no fault. 
 
Article 209  
Where the company registration authority approves an application for registrat
ion which does not meet the requirements as stipulated in this Law, or disappr
oves an application for registration which does meet the requirements as stipu
lated in this Law, the persons in charge and others held directly responsible
shall be given administrative sanctions according to law. 
 
Article 210  
Where departments at a level higher than the company registration authority fo
rce the company registration authority to approve an application for registrat
ion which does not meet the requirements as stipulated in this Law, or force t
he company registration authority to disapprove an application for registratio
n which does meet the requirements as stipulated in this Law, or covers up an
illegal registration, the persons in charge and others held directly responsib
le shall be given administrative sanctions according to law. 
 
Article 211  
Where a company that has not registered according to law as a limited liabilit
y company or a joint stock limited company assumes the name of "limited liabil
ity company" or "joint stock limited company", or a branch that has not regist
ered according to law as a branch of a limited liability company or a joint st
ock limited company assumes the name of "branch of limited liability company"
or "branch of joint stock limited company", it shall be ordered to make a rect
ification or be banned, and a fine of not more than RMB 100,000 may be imposed
 concurrently. 
 
Article 212  
Where a company fails to commence its business without justification within th
e period of more than six months of its incorporation or, after commencing its
 business, suspends business at its own will for a period of six consecutive m
onths or more, the company registration authority shall revoke the company's b
usiness license.
 
Where a company fails to apply for registration of change in accordance with t
his Law whenever change occurs in registered items of the company, it shall be
 ordered to handle the registration within a specified time limit; and if the
company still fails to register within the specified time limit, a fine of not
 less than RMB 10,000 but not more than RMB 100,000 shall be imposed. 
 
Article 213  
Where a foreign company, in violation of the provisions of this Law, establish
es a branch within the territory of the People's Republic of China without aut
horization, it shall be ordered to make a rectification or to be closed down,
and a fine of not less than RMB 50,000 but not more than RMB 200,000 may be im
posed concurrently. 
 
Article 214  
Where a company, in the name of the company, commits serious illegal acts of e
ndangering the State security or social public interests, its business license
 shall be revoked. 
 
Article 215  
Where a company violating the provisions of this Law shall assume civil liabil
ity for compensation and pay fines and penalties, and the company's property i
s insufficient to pay such compensation, fines and penalties, the company shal
l assume the civil liability for compensation first. 
 
Article 216  
Where any circumstance, in violation of the provisions of this Law, constitute
s a crime, the criminal liability shall be investigated. 
 
Chapter 13   Supplementary Provisions
 
 
Article 217  
The meaning of the following terms for the purposes of this Law:
 
(1) "Senior executive" shall mean any manager, deputy manager and person in ch
arge of financial affairs of any company, and the secretary of the board of di
rectors of any listed company and other personnel as stipulated in the article
s of association of any company.
 
(2) "Holding shareholder" shall mean any shareholder whose capital contributio
n amount accounts for 50% or more of the total amount of the capital of a limi
ted liability company or the shares held by whom accounts for 50% of the total
 amount of the share capital of a joint stock limited company; and any shareho
lder, although whose capital contribution amount or shares held by whom is les
s than the said 50%, who can, through his voting rights upon his capital contr
ibution amount or shares held by him, have a major effect upon the resolutions
 of the shareholders meeting or the shareholders general meeting.
 
(3) "Actual controller" shall mean any person who is not a shareholder of a co
mpany but can control the company's acts through investment relationship, agre
ements or other arrangements.
 
(4) "affiliate relationship" shall mean the relationship between a company's h
olding shareholders, actual controllers, directors, supervisors, senior execut
ives and a enterprise directly or indirectly controlled by the forgoing person
s, and any relationship that may transfer a company's interests. However, the
State-holding enterprises shall not be deemed to have affiliate relationship o
nly because they are under common State holding. 
 
Article 218  
This Law shall apply to limited liability companies and joint stock limited co
mpanies with foreign investment. Where laws concerning foreign investment prov
ide otherwise, such provisions shall prevail. 
 
Article 219  
This Law shall come into effect as of January 1, 2006. 

For trading enterprise: Their chief feature is that they mainly carry on commodity or service exchange using some kind of currency. Generally, its operation pattern is a buying and selling.

For service enterprise: They provide certain invisible services, such as consultation, technology, patent and so on. Generally there is no trading of physical commodities.

Tax affairs:
Manufacturing enterprise: they have to pay Value Added Tax (output tax payable minus input tax), where there are generally two different tax rates: 13% and 17% (For some special industry the rates will be different).  Instead of VAT invoice, small taxpayers can issue plain invoice with the tax rate of 5% based on sales revenue. Enterprise income tax rate is 25% based on net profit at the year end.

Trading enterprise: they have to pay Value Added Tax (output tax payable minus input tax), where there are generally two different tax rates: 13% and 17% (For some special industry the rates will be different). Tax refund with rates from 4% to 13% is available for companies engaged in international trading. Enterprise income tax rate is 25% based on net profit at the year end.

Service enterprise: generally use plain invoice with the tax rate of 5% (few companies such as advertisement service and so on are exposed to different tax rate). Enterprise income tax rate is 25% based on net profit at the year end.

Registration request:
According to the new Corporation law, the minimum registered capital for an enterprise is 30,000 RMB (except sole proprietorship and industry with special permission). Considering respective operating environment and convenience for registration, we suggest as follows:

Manufacturing enterprise: The minimum registered capital is 500,000 US dollars. It shall have at least 1 executive director and 1 supervisor if it doesn’t have a board of director or a board of supervisor. The executive director is the legal representative, and may hold a concurrent post of general manager. The registration procedure needs the enterprise to provide leasing contract of manufacturing location (it should be the contract of factory location, instead of office location), the environmental protection examination opinion and the Fire service opinion.

Trading enterprise: The minimum registered capital is 200,000 US dollars. It shall have at least 1 executive director and 1 supervisor if it doesn’t have a board of director or a board of supervisor. The executive director is the legal representative, and may hold a concurrent post of general manager.  The registration procedure needs the enterprise to provide leasing contract of office (or building) location.

Service enterprise: The minimum registered capital is 100,000 US dollars. It shall have at least 1 executive director and 1 supervisor if it doesn’t have a board of director or a board of supervisor. The executive director is the legal representative, and may hold a concurrent post of general manager.  The registration procedure needs the enterprise to provide leasing contract of office (or building) location.

One salient feature of the Italian economy is its propensity toward entrepreneurship - seen in the very high number of small and medium-sized businesses: 98% of the over 4 million companies employ fewer than 19 persons (the average is 4 employees per company).

The geographical position of Italy (at the centre of the Mediterranean and the infrastructural links with the countries of Europe) allows it to form a crossroads for international trade, and a natural bridge between Europe and Africa.

Foreign investors must be aware of the applicable EU Laws.

Foreign investors are free to adopt any form of business investment, and may acquire a stake in or take control of a company which has already been set up.

Selling business to Italy is best done by delegating an agent or distributor. However, caution must be taken in planning a written contract, probably best overcome with the assistance of a professional advisor. Verbal agreements can also be held good at law. Furthermore, it is not advised that you enter into contracts from a distance or on the foundation of meeting on neutral territory. Make sure you are familiar with your representative, his capabilities, assets (offices, staff, etc), customer base and industrial relations.

Setting up business in Italy should be approached similarly to any other developed and competitive market. Exporters need to be aware of cultural differences. Generally speaking, you need to develop an effective and reliable business relationship at a personal level. Vital personnel should be involved from the start and must be of a quality sufficient enough to converse with their Italian counterparts.

Businesspeople should find a way to communicate in English, whether written or spoken. Major businesses will have staff on all levels that are fluent in English, and English is more common in the business sphere than in the public.

Inaugural correspondence, as well as product literature and tender documents, should be translated into Italian by a professional, and ideally followed with an e-mail or telephone call. There are many business schools that can offer placements to aid you with this. Additionally, using the Italian language in documents, such as invoices, will help to clarify your intentions and eliminate confusion or misunderstanding.

Essential for companies is getting a product or service to the market on time. The main options for this are: Road, Rail and air-freight, Post, air parcel post or express/courier services.

All these methods, of course, are dependent on the product requirements for time, expense and safety.

Italy generally has a sound transport infrastructure; although heavy traffic occasionally causes bottlenecks in and around the main northern and city centres. This can often lead to severe traffic limitations, making local delivery arduous. Heavy goods transport on motorways in is usually limited or sanctioned on Sundays and some public holidays. Infringement of this rule can at times lead to heavy fines, confiscation of driving licences and impounding of the vehicle. Freight transportation companies should also be alert of becoming the innocent targets of smugglers (i.e. drugs and tobacco).

Italian State Railways offer an inexpensive and reliable means of passenger transportation. Commercial freight is foremost carried by road, but the railways are also taking increasingly more long distance goods. Although, beware that some international rail freight services from have been the subject of infiltration by illegal immigrants travelling via to .

Warehouse and storage space is available in most major cities. However, it is recommended that you consult legal advisors before entering into any agreement.

Chinese visa is a permit issued to a foreigner by the Chinese visa authorities for entry into, exit from or transit through the Chinese territory. The Chinese visa authorities may issue a diplomatic, courtesy, service or ordinary visa to a foreigner according to his identity, purpose of visit to China and passport type. Hereunder is an introduction to the ordinary visa and its application procedure:

The ordinary visas consist of eight sub-categories, which are marked with Chinese phonetic letters (D, Z, X, F, L, G, C, J-1 and J-2 respectively).

Visa D:issued to aliens who are to reside permanently in China. A permanent residence confirmation form shall be required for the application of Visa D. The applicant shall apply to obtain this form himself or through his designated relatives in China from the exit-and-entry department of the public security bureau in the city or county where he applies to reside.

Visa Z:Issued to aliens who are to take up posts or employment in China, and to their accompanying family members. To apply for a Visa Z, an Employment License of the People's Republic of China for Foreigners (which could be obtained by the employer in China from the provincial or municipal labor authorities) and a visa notification letter/telegram issued by an authorized organization or company are required.

Visa X:Issued to aliens who come to China for study, advanced studies or job-training for a period of six months or more. To apply for a Visa X, certificates from the receiving unit and the competent authority concerned are required, i.e., Application Form for Overseas Students to China (JW201 Form or JW202 Form), Admission Notice and Physical Examination Record for Foreigners.

Visa F:Issued to an applicant who is invited to China on a visit, on a study or lecture, business tour, for scientific-technological and cultural exchanges, for short-term refresher course or for job-training, for a period of no more than six months. To apply for a Visa F, the invitation letter from the inviting unit or the visa notification letter/telegram from the authorized unit is required.

Visa L:Issued to aliens who come to China for sightseeing, visiting relatives or other private purposes. For a tourist applicant, in principle he shall evidence his financial capability of covering the travelling expenses in China, and when necessary, provide the air, train or ship tickets to the heading country/region after leaving China. For the applicants who come to China to visit relatives, some are required to provide invitation letters from their relatives in China.

Visa G:Issued to aliens who transit through China. The applicants are required to show valid visas and on-going tickets to the heading countries/regions.

Visa C:Issued to train attendants, air crewmembers and seamen operating international services, and to their accompanying family members. To apply for a visa C, relevant documents are required to be provided in accordance with bilateral agreements or regulations of the Chinese side.

Visa J-1:Issued to foreign resident correspondents in China.

Visa J-2:Issued to foreign correspondents who make short trip to China on reporting tasks. The applicants for J-1 and J-2 visas are required to provide a certificate issued by the competent Chinese authorities.

In addition to providing the above-mentioned documents, an applicant is also required to answer relevant questions and go through the following formalities (with the exception of those stipulated otherwise by agreements):

Providing valid passport or a travel document in lieu of the passport

Filling out a visa application form, and providing a recent 2-inch, bareheaded and full-faced passport photo.

Permanent Resident Requirements

Foreigners who want to apply for permanent residence in China should obey Chinese laws, be healthy and have no criminal records. At same time, they should act in accordance with one of the conditions below:

First, the applicants have invested in China directly, have steady investment condition and good revenue record for more than 3 years.

Second, the applicants take the job continually as or above the assistant general manager or factory director, have the high title of or above the associate professor or assistant researcher, or have enjoy the equal treatment in China for more than 4 years, during which the applicants have been living in China adding up to no less than 3 years and have good revenue records.

Third, the applicants have great and outstanding contributions to China or meet the special requirements of Chinese government.

Fourth, the spouse and unmarried children younger than 18, of the applicants referred in the first, second and third item of this article above, can apply.

Fifth, the spouse of Chinese citizens or the aliens who have got the qualification of permanent resident in China, has lasted the marriage for more than 5 years, lived in china for more than 9 months every year and have steady living guarantee and residence.

Sixth, the unmarried children younger than 18, go and seek refuge with parents.

Seventh, the applicants who have no direct relatives abroad, go and seek refuge with the domestic direct relatives, over sixty years old, living in China for no less than 9 months every year and having steady living guarantee and residence.