Shanghai Municipality, Issues Relevant to Further Regulating the Transactions of State-owned Assets and Equity of Sino-foreign Equity and Cooperative Joint Ventures in the Municipality Circular

Promulgated: January 28 2005

Main contents: The Chinese party of a Sino-foreign equity or cooperative joint venture holding state-owned assets and equity assigning equity interest to the foreign party or to other parties of the joint venture, or being assigned with equity interest held by foreign party of the joint venture, shall, in accordance with the relevant provisions on the assignment of state-owned assets and equity, submit the case to the capital contribution regulatory work units to carry out examination and approval procedures. Asset valuation shall be conducted on state-owned equity interest assigned by Chinese parties of Sino-foreign equity and cooperative joint ventures, or on equity interest assigned to Chinese parties by foreign parties, and the valuation results thereof shall undergo verification or record filing procedures as stipulated. After examination and approval by capital contribution regulatory work units, assignment of state-owned equity interest of Sino-foreign equity and cooperative joint ventures to the foreign party of the joint venture, or assignment of equity interest from the foreign party to the Chinese party of the joint venture, may be carried out on the stock exchange by agreement. For assignment of state-owned equity interest of Sino-foreign equity and cooperative joint ventures to third parties, information on the assignment may be announced on the stock exchange only after the other parties to the equity or cooperative joint venture have issued written documents consenting to such assignment and waivers of pre-emptive rights. Assignment by agreement, auction, invitation for bids, competitive bidding and other methods provided by state laws and regulations may be adopted for transactions of assets and equity.
Related legislation: Administration of the Assignment of Enterprise State-owned Assets and Equity Tentative Procedures, Dec 31 2003, CLP 2004 No.1 p8 and Shanghai Municipality, Administration of the Assets and Equity Trading Market Procedures