Administration of Sino-foreign Equity and Cooperative Joint Ventures that Produce and Distribute Radio and Television Programmes Tentative Provisions

(Promulgated by the State Administration of Radio, Film and Television and the Ministry of Commerce on October 28 2004 and effective as of November 28 2004.)

Order of SARFT and MOFCOM No.44

PART ONE: GENERAL PROVISIONS

Article 1: These Provisions have been formulated pursuant to such provisions as thePRC Sino-foreign Equity Joint Venture Law, thePRC Sino-foreign Cooperative Joint Venture Law and the Administration of Radio and Television Regulations, etc., in order to promote the development of China's radio and television programme production industry and regulate the administration of Sino-foreign equity and cooperative joint ventures that produce and distribute radio and television programmes.

Article 2: These Provisions shall govern the establishment and operation of Sino-foreign equity and cooperative joint ventures that produce and distribute radio and television programmes in the People's Republic of China.

Article 3: For the purposes of these Provisions, the term "Sino-foreign equity and cooperative joint ventures that produce and distribute radio and television programmes" means equity and cooperative joint ventures that are established in China by foreign professional radio and television enterprises (the Foreign Party) together with Chinese radio and television programme production organizations and other domestic investors (the Chinese Party) and that engage in radio and television programme production and distribution as their main or sideline business (Joint Ventures).

Article 4: The establishment of wholly foreign-owned radio and television production enterprises is prohibited.

Article 5: The State Administration of Radio, Film and Television and the Ministry of Commerce shall be jointly responsible for the examination and approval of the establishment of Joint Ventures and the regulation thereof nationwide based on the division of their responsibilities.

Provincial-level radio and television administrative departments shall be responsible for the day-to-day regulation of Joint Ventures within their jurisdiction.

PART TWO: ESTABLISHMENT

Article 6: To apply to establish a Joint Venture, the following conditions shall be satisfied:

(1) compliance with the state formulated development and distribution plan for the radio and television programme production industry;

(2) each of the Chinese and Foreign Parties have independent legal person status; one of the Chinese Parties shall be an organization possessing a Permit to Produce and Distribute Radio and Television Programmes or Television Drama Production Permit (Type A) and the Foreign Party shall be a professional radio or television enterprise;

(3) the Joint Venture shall be a limited liability company;

(4) registered funds of not less than US$2 million or the equivalent in renminbi; for the establishment of a Joint Venture specializing in the production of animated pictures, registered funds of not less than US$1 million or the equivalent in renminbi;

(5) the legal representative must be appointed by the Chinese Party;

(6) one of the organizations comprising the Chinese Party to the Joint Venture shall hold not less than 51% of the Joint Venture's shares;

(7) none of the applicants has committed a violation of laws or regulations or has another record of improper activity during the three years prior to the application; and

(8) the Joint Venture must have an independent corporate logo.

Article 7: The Chinese Party may make its capital contribution in cash or in the form of buildings, factory buildings, machinery, equipment or other material, industrial property, proprietary technology, premises use rights, etc. for consideration. The Foreign Party must make its capital contribution in cash foreign exchange.

Article 8: To establish a Joint Venture, the Chinese Party controlling shareholder shall submit an application to the State Administration of Radio, Film and Television and the Ministry of Commerce, and matters shall be handled in accordance with the following procedure:

(1) the Chinese Party shall submit an application to the provinciallevel radio and television administrative department of the place where it is located; after preliminary examination and approval, the provincial-level radio and television administrative department will forward the application to the State Administration of Radio, Film and Television; the State Administration of Radio, Film and Television will render its decision on whether or not to grant approval within 20 working days of the date of receipt of all the documentation; if it grants its approval, the State Administration of Radio, Film and Television will issue an approval document and if it does not grant approval, it will explain the reason therefor in writing;

(2) on the strength of the approval document issued by the State Administration of Radio, Film and Television, the Chinese Party shall apply for examination and approval to the Ministry of Commerce via the provincial-level commerce administrative department of the place where it is located; the Ministry of Commerce will render its decision on whether or not to grant approval within 20 working days of the date of receipt of all the documentation; if it grants its approval, it will issue a Foreign-invested Enterprise Approval Certificate and if it does not grant approval, it will explain the reason therefor in writing;

(3) the State Administration of Radio, Film and Television will issue a Permit to Produce and Distribute Radio and Television Programmes (Joint Venture) to those Joint Ventures that obtain a Foreign-invested Enterprise Approval Certificate; and

(4) the Joint Venture shall carry out business registration procedures in accordance with the law on the strength of the Permit to Produce and Distribute Radio and Television Programmes (Joint Venture) and Foreign-invested Enterprise Approval Certificate and obtain an Enterprise Legal Person Business Licence.

Work units at the central government level and organizations directly subordinate to them shall apply directly to the State Administration of Radio, Film and Television and the Ministry of Commerce.

Article 9: When applying to establish a Joint Venture, the investors shall submit the following materials:

(1) an application stating the proposed Joint Venture's name, address, method of contact and name of its legal representative; a basic overview of each party; the registered funds of the Joint Venture; the capital contribution ratios and organizational structure of each party; the specific reasons for applying to establish the Joint Venture, its strengths and development plans, etc.;

(2) the contract for and articles of association of the Joint Venture (the contract must specify that programme topics and contents are subject to the consent of the Chinese Party);

(3) the Chinese Party's registration documents and Permit to Produce and Distribute Radio and Television Programmes or Television Drama Production Permit (Type A);

(4) the Chinese Party's certificate of creditworthiness;

(5) the Foreign Party's bank certificate of creditworthiness, certificate of lawful existence and proof that the Foreign Party specializes in radio or television business;

(6) the proofs of identity of the legal representative and the main managerial officers (members of the board of directors, general manager, deputy general managers and chief financial officer);

(7) the notice of preliminary approval of the name of the proposed Joint Venture issued by the administration for industry and commerce; and

(8) a specimen of the Joint Venture's corporate logo.

Article 10: The provisions of Article 6 hereof shall be complied with when a change in the equity of an established Joint Venture occurs and the same shall be submitted to the Ministry of Commerce for examination and approval. The Ministry of Commerce will render its decision on whether or not to approve the change after consultations with the State Administration of Radio, Film and Television.

If a change in the legal representative, address, etc. of a Joint Venture occurs, or if it intends to establish a branch or sub-branch or terminate its radio or television programme production and distribution business, the relevant examination and approval, deregistration and other such procedures shall be carried out with the original examination and approval authority.

PART THREE: ADMINISTRATION

Article 11: Joint Ventures must observe the relevant laws, regulations and policies of the People's Republic of China, and their legitimate business activities and lawful rights and interests shall be protected by the laws of the People's Republic of China.

Article 12: Joint Ventures may produce such radio and television programmes as topical programmes, opinion programmes, variety programmes, animated pictures, etc. but may not produce current politics news programmes and similar topical and opinion programmes.

If a joint venture intends to produce television dramas, it must separately apply and obtain a Television Drama Production Permit in accordance with the relevant provisions of the State Administration of Radio, Film and Television.

Article 13: A Joint Venture shall produce radio and television programmes on Chinese subjects that account for not less than two-thirds of its total programmes each year. The state encourages the engagement of Chinese professionals to participate in the programme production of Joint Ventures.

Article 14: Joint Ventures are strictly prohibited from producing and dealing in programmes with the following content:

(1) content that opposes the fundamental principles determined in the Constitution;

(2) content that compromises the unity, sovereignty or territorial integrity of the state;

(3) content that discloses state secrets, compromises state security or harms the dignity or interests of the state;

(4) content that incites ethnic hatred or racial discrimination, damages inter-ethnic unity or harms national customs and practices;

(5) content that propagates heretical teachings or superstition;

(6) content that disrupts social order or social stability;

(7) content that propagates obscenity, gambling or violence or incites the commission of crimes;

(8) content that insults, slanders or infringes upon the legitimate rights and interests of a third party;

(9) content that harms social morality or fine national culture and traditions; or

(10) other content prohibited in laws, administrative regulations or state provisions.

Article 15: Joint Ventures shall engage in production and distribution activities in strict accordance with the scope of business approved in their Permit to Produce and Distribute Radio and Television Programmes (Joint Venture). A Permit to Produce and Distribute Radio and Television Programmes (Joint Venture) shall be valid for 10 years. An extension application may be made at the expiration of such term.

Article 16: Joint Ventures enjoy the same rights and bear the same obligations as wholly Chinese-owned radio or television programme production and distribution organizations. The radio and television programmes they produce shall be deemed to be programmes produced in China and shall be administered in accordance with relevant state provisions.

Radio or television programmes co-produced by a Joint Venture with another foreign organization or produced using other funds attracted from abroad shall be administered in accordance with state provisions on Sino-foreign co-produced programmes. The distribution in China of radio and television programmes from abroad shall be administered in accordance with regulations on the import of foreign programmes.

Article 17: The state encourages Joint Ventures to distribute or sell abroad or act as an agent in the export of various types of radio and television programmes produced in China.

Article 18: A Joint Venture's operations may not be entrusted or leased to the Foreign Party, a foreign organization or another foreign-invested enterprise in China nor may its operations be contracted to the Foreign Party, a foreign organization or another foreign-invested enterprise in China.

Article 19: The alteration, lease, lending, sale or forging of the Permit to Produce and Distribute Radio and Television Programmes (Joint Venture) of a Joint Venture in any manner is prohibited.

Article 20: Joint Ventures shall voluntarily submit themselves to the regulation of the radio and television administrative departments and shall submit their programme production and distribution results for the previous year to the State Administration of Radio, Film and Television for the record by January 31 of each year.

PART FOUR: PENAL PROVISIONS

Article 21: Violations hereof shall be punished in accordance with the PRC Sino-foreign Equity Joint Venture Law, the PRC Sino-foreign Cooperative Joint Venture Law and the Administration of Radio and Television Regulations. If a criminal offence is constituted, criminal liability shall be pursued in accordance with the law.

PART FIVE: SUPPLEMENTARY PROVISIONS

Article 22: The establishment of equity and cooperative joint ventures that produce and distribute radio or television programmes by domestic organizations and enterprises or other economic organizations from the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan shall, mutatis mutandis, be handled in accordance with these Provisions.

Article 23: The State Administration of Radio, Film and Television and the Ministry of Commerce are in charge of interpreting these Provisions.

Article 24: These Provisions shall be effective as of November 28 2004.