Ministry of Finance, Management and Financial Treatment of State Capital in Enterprise Corporate Restructuring Tentative Provisions

Promulgated: July 27 2002
Effective: August 27 2002
Applicability: "Enterprise corporate restructuring" means the approved restructuring of State-owned enterprises into limited liability companies or companies limited by shares (Article 2).

Main contents: The corporate restructuring of an enterprise shall be implemented by the department or organization that is authorized by the State to hold or manage State capital in that enterprise (the State capital holding work unit) (Article 3). A full check shall be made on the assets, claims and debts of the enterprise to be restructured and the result of the check shall be audited by an intermediary institution appointed by the State capital holding work unit (Article 5). The assets of the enterprise shall be evaluated by a qualified asset valuation institution appointed by the State capital holding entity (Article 7). The valuation result shall be valid for one year and shall be taken as the basis to convert the State capital into equity shares (Article 8). The Provisions set out separate procedures for dealing with the relevant assets, claims and debts of the enterprise as it is restructured in its entirety or through division or merger (Articles 9 and 15). The Provisions also provide that subject to approval or agreement with creditors claims may be converted into equity (Article 16).
Related legislation: PRC Company Law (Revised), Dec 25 1999, CLP 2000 No.1 p4; Administration of State Capital and Financial Management in Enterprises Tentative Procedures; Administration of State Asset Valuation Procedures, Nov 16 1991, CLP 1992 No.1 p22; Several Issues Concerning the Administration of State-owned Asset Valuation Provisions, Dec 31 2001 and Relevant Questions Concerning the Administration of State-owned Equity in Companies Limited by Shares Circular, May 19 2000

Repealed legislation: Ministry of Finance, Issue of the Circular, 1995