Implementing Opinions on Several Issues Concerning the Application of the Law in the Administration of the Examination, Approval and Registration of Foreign-invested Companies

2. Foreign companies, enterprises, other economic organizations and natural persons (Foreign Investors) may, in accordance with the law, establish companies in the form of Sino-foreign equity and cooperative joint ventures with Chinese enterprises and other economic organizations or, alternatively, may, in accordance with the law, establish companies in the form of wholly foreign-owned equity joint ventures and wholly owned foreign-invested enterprises.

If a one-person limited liability company is established in the form of a wholly owned foreign-invested enterprise, in accordance with the law, the minimum limit on its registered capital shall comply with the provisions of the Company Law on one-person limited liability companies. One-person limited liability companies established by foreign natural persons shall additionally comply with the provisions of the Company Law on the limits on investments of one-person limited liability companies in third parties. Matters shall remain unchanged for wholly owned foreign-invested companies established in accordance with the law before January 1 2006, however, changes in their registered capital and the investments that they make in third parties shall comply with the foregoing provisions.

3. The board of directors of a Sino-foreign equity or cooperative joint venture limited liability company shall be the company's highest authority. The organizational structures of such companies shall be specified by the company in its articles of association pursuant to the Sino-foreign Equity Joint Venture Law or the Sino-foreign Cooperative Joint Venture Law and the Company Law.

The organizational structures of wholly foreign-owned equity joint venture and wholly owned foreign-invested limited liability companies and of foreign-invested companies limited by shares shall comply with the Company Law and the company's articles of association.

4. The time limit for the application for the registration of the establishment of a foreign-invested company shall comply with the Registration Regulations. However, if a company is established in the form of a Sino-foreign cooperative joint venture, wholly foreign-owned equity joint venture or wholly owned foreign-invested company, the application for registration of its establishment shall, in accordance with the Sino-foreign Cooperative Joint Venture Law or the Wholly Foreign-owned Enterprise Law, be made to the company registry within 30 days of the date of receipt of its approval document. If the application for the registration of establishment is made late, the applicant shall report to the examination and approval authority for confirmation of the validity of its original approval document or carry out the examination and approval procedures anew.

5. The entity qualification certificate or proof of identity of a Foreign Investor submitted to the examination and approval authority, and the registry when applying for the examination and approval and the registration of establishment of a foreign-invested company shall have been notarized by a notary office in the country where the Foreign Investor is located and authenticated by the embassy or consulate of China in such country. A notarial deed from a local notary office shall be provided, in accordance with the law, together with the entity qualification certificate or proof of identity of an investor from Hong Kong, Macao or Taiwan.

When applying for the examination and approval of a foreign-invested company and registration of its establishment, in addition to the documents specified in Article 20 or 21 of the Registration Regulations, the Power of Attorney for Service of Legal Documents signed by the Foreign Investor (the authorizing party) and the domestic receiver of legal documents (the attorney) shall be submitted to the examination and approval authority and the registry. The power of attorney shall expressly authorize the domestic attorney to accept service of legal documents on the behalf of the authorizing party, and state the address and method of contacting the attorney. The attorney may be a branch or sub-branch established by the Foreign Investor, a company it intends to establish (if the attorney is a company that the Foreign Investor intends to establish, the power of attorney will enter into effect after the establishment of the company) or other relevant work unit or individual in China.

When a company adds a new overseas investor, it shall also submit the aforementioned documents to the examination and approval authority and the registry.

When a foreign-invested company applies to the company registry for registration of its establishment or amendment of its registration after an equity transfer, it shall no longer be required to submit the equity or cooperative joint venture contract or the investors' certificates of creditworthiness.

6. Based on the application, the company registry shall, in accordance with the law, register a foreign-invested company either as a "limited liability company" or a "company limited by shares" and, depending on the form in which it is established, add the words "(Sino-foreign equity joint venture)", "(Sino-foreign cooperative joint venture)", "(wholly foreign-owned equity joint venture)", "(wholly owned by a foreign legal person)", "(wholly owned by a foreign economic organization without legal personality)", "(wholly owned by a foreign natural person)", "(equity joint venture between Taiwan, Hong Kong or Macao investors and foreign investors)", "(equity joint venture between Taiwan, Hong Kong or Macao investors and domestic investors)", "(cooperative joint venture between Taiwan, Hong Kong or Macao investors and domestic investors)", "(equity joint venture between Taiwan, Hong Kong and/or Macao investors)", "(wholly owned by a Taiwan, Hong Kong or Macao legal person)", "(wholly owned by a Taiwan, Hong Kong or Macao economic organization without legal personality)", "(wholly owned by a Taiwan, Hong Kong or Macao natural person)", etc. after "limited liability company", or the words "(Sino-foreign equity joint venture, unlisted)", "(Sino-foreign equity joint venture, listed)", "(wholly foreign-owned equity joint venture, unlisted)", "(wholly foreign-owned equity joint venture, listed)", "(equity joint venture between Taiwan, Hong Kong or Macao investors and foreign investors, unlisted)", "(equity joint venture between Taiwan, Hong Kong or Macao investors and foreign investors, listed)", "(equity joint venture between Taiwan, Hong Kong or Macao investors and domestic investors, unlisted)", "(equity joint venture between Taiwan, Hong Kong or Macao investors and domestic investors, listed)", "(equity joint venture between Taiwan, Hong Kong and/or Macao investors, unlisted)", "(equity joint venture between Taiwan, Hong Kong and/or Macao investors, listed)" after "company limited by shares".

A company registry may, based on state policy on the use of foreign investment in industry and relevant provisions, add the relevant classification identifier after the company type (e.g. "(foreign investment percentage below 25%)", "(A-share merger/acquisition)", "(A-share merger/acquisition 25% or above)", etc.).

With respect to foreign-invested companies established before January 1 2006, company registries shall make the appropriate revisions in accordance with the foregoing provisions when such companies carry out the procedures for the amendment of their registration.

7. Once a foreign-invested company is established, it may make domestic investments in accordance with the law. The company registry shall not longer issue relevant proof of qualifications to make domestic investments.

If the detailed company type is not indicated on the business licence of a foreign-invested company as specified in Article 6 hereof and such company applies to establish a one-person limited liability company, the company registry shall issue a certificate of its being "wholly owned by a person other than a natural person".

8. The registered capital of a foreign-invested company may be expressed either in renminbi or a freely convertible currency. The translation of the foreign currency part of the registered capital of a company into renminbi or between two currencies shall be made at the median of the exchange rates posted by the People's Bank of China on the date of payment.

9. The first instalment of the capital contributions of the shareholders of a foreign-invested limited liability company (including one-person limited liability companies) shall comply with laws and administrative regulations. If the entire amount of a capital contribution is to be paid in, in one lump sum, the full amount shall be paid within six months of the date of establishment of the company. If the capital contributions are to be paid in, in instalments, the amount of the initial instalments may not be less than 15% of the capital contributions subscribed to, nor lower than the statutory minimum registered capital, and shall be paid in within three months of the date of establishment of the company. The time limits for the remainder of the capital contributions shall comply with the Company Law, laws on foreign investment and the Registration Regulations. If other laws or administrative regulations require the shareholders to pay in the entire amounts of their capital contributions at the time of establishment of the company, such requirements shall apply.

The capital contributions to a foreign-invested company limited by shares shall comply with the Company Law.

10. The capital contribution methods of the shareholders of a foreign-invested company shall comply with Article 27 of the Company Law, Article 14 of the Registration Regulations and the Provisions for the Administration of Registration of the Registered Capital of Companies. Until the State Administration for Industry and Commerce together with relevant departments formulate provisions on capital contributions made in the form of property other than cash, physical goods, intellectual property rights and leaseholds, if a shareholder is to make its capital contribution in the form of property other than the property specified in the second paragraph of Article 14 of the Registration Regulations, such property shall be subject to appraisal and valuation by an appraisal institution lawfully established in China. When the property is verified, its value may not be over or underestimated. When the capital contribution is actually made, a capital verification must be carried out by a capital verification institution lawfully established in China, which shall issue a capital verification certificate.

When a shareholder of a Sino-foreign equity joint venture limited liability company is to make its capital contribution in the form of non-monetary property (excluding leaseholds), such as physical goods (including equipment), industrial property rights, etc., as specified in the Sino-foreign Equity Joint Venture Law, the value thereof may be discussed and determined by the parties.

11. The funds raised by a shareholder of a foreign-invested company in the form of a loan, etc. taken out in its own name shall be deemed funds owned by such shareholder and, after issuance of a capital verification certificate by a capital verification institution, may serve as such shareholder's capital contribution.

12. The time limit for a foreign-invested company to apply for amendment of its registration shall comply with the Registration Regulations. If laws or administrative regulations specify or if the State Council decides that a company and its registered particulars require approval before amendment of registration, the company shall carry out the procedures for the amendment of its registration within 30 days of the date of approval by the examination and approval authority. If the application is made late, the applicant shall report to the original examination and approval authority for confirmation of the validity of its document or carry out examination and approval procedures anew.

13. When a foreign-invested company applies for amendment of its registration it shall submit the relevant documents as specified in Article 27 and Article 29, 31, 32, 33, 34 or 35 of the Registration Regulations. When carrying out the procedures for the amendment of registration for a change in the registered particulars set forth below, the examination and approval document issued by the original examination and approval authority and the amended approval certificate shall additionally be submitted:

(1) registered capital;

(2) company type;

(3) scope of business;

(4) term of operation;

(5) the capital contribution amount subscribed to by a shareholder or promoter, or the capital contribution method;

(6) the merger or division of the foreign-invested company;

(7) a change of address that crosses the jurisdiction of the examination and approval authority; or

(8) a transfer of the equity of a limited liability company or shares in a company limited by shares (unless the particulars recorded on the business licence and approval certificate are not affected).

In circumstances other than those specified in the preceding paragraph, if the registered particulars of a foreign-invested company are changed such that amendment of the company's articles of association is involved, amendment procedures shall be carried out with the examination and approval authority within 30 days after carrying out the procedures for the amendment of registration.

14. If a foreign-invested company is to be relocated (beyond the jurisdiction of the original company registry), the procedures for relocation shall be carried out with the original company registry. If the relocation crosses examination and approval authority jurisdictions, an application shall be submitted to the examination and approval authority of the place to where the company is relocating. The examination and approval authority of the place to where the company is relocating shall seek the opinion of the examination and approval authority of the place from where the company is relocating within five working days of receipt of the application. The examination and approval authority of the place from where the company is relocating shall reply within five working days of receipt of the letter seeking its opinion. The examination and approval authority of the place to where the company is relocating shall issue its official reply within three working days of receipt of the opinion. The original company registry shall seek the opinion of the company registry of the place to where the company is relocating within five working days of receipt of the application. The registry of the place to where the company is relocating shall reply within five working days. The original company registry shall recover the business licence and issue a relocation certificate based on the opinions consenting to the relocation issued by the company registry and the examination and approval authority of the place to where the company is relocating and, within 10 working days, forward the application materials and the company registration file to the company registry of the place to where the company is relocating. The company applying for relocation shall return its approval certificate to the examination and approval authority of the place from where it is relocating on the strength of the relocation certificate and the approval document of the examination and approval authority, collect its approval certificate from the examination and approval authority of the place to where it is relocating and apply to the company registry of the place to where it is relocating for amendment of its registration and collect its business licence.

15. If a foreign-invested company increases its registered capital, and the company is a limited liability company (including a one-person limited liability company) or a company limited by shares established through promotion, the shareholders shall pay in 20% of the capital increase at the time the company applies for amendment of the registration of its registered capital. The schedule for the payment of the remainder shall comply with theCompany Law, laws on foreign investment and the Registration Regulations. If other laws or administrative regulations provide otherwise, such provisions shall prevail.

When a company limited by shares issues new shares to increase its registered capital, the subscription for new shares by shareholders shall be handled in accordance with provisions on the payment of subscription moneys for the establishment of a company limited by shares.

16. When an applicant applies for a change in its registered capital under the circumstances set forth below, if imported goods that are to serve as a capital contribution, made in the form of physical goods, may be exempted from duties and tax in accordance with provisions, the applicant shall explain the relevant circumstances to customs in writing and shall first carry out the procedures for the release on bond of imported equipment on the strength of a Confirmation as a Domestic or Foreign-invested Project Whose Development is Encouraged by the State and, after obtaining its amended business licence, carry out the relevant duty and tax reduction or exemption procedures:

(1) when a foreign-invested company is to increase its registered capital, it applies to have a capital contribution made in the form of imported physical goods and receives the approval of the examination and approval authority therefor;

(2) when a Foreign Investor or a foreign-invested company acquires a domestic enterprise and is to increase its registered capital, it applies to have a capital contribution made in the form of imported physical goods and receives the approval of the examination and approval authority therefor; or

(3) a foreign-invested company applies for the import of physical goods in connection with another change in its registered capital and receives the approval of the examination and approval authority therefor.

17. The foreign exchange departments shall no longer require the applicant to submit its amended business licence when handling the following matters:

(1) when a foreign-invested company increases its registered capital and applies for amendment of its foreign exchange registration or for the opening or changing of a capital account;

(2) when a Foreign Investor or a foreign-invested company acquires a domestic enterprise, increases its registered capital and applies for foreign exchange registration or for the opening of a capital account;

(3) when a foreign-invested company reduces its registered capital and carries out the procedures with the foreign exchange department for a capital reduction approval document; or

(4) when a foreign-invested company carries out the procedures for other amendments to its foreign exchange registration due to a change in its capital.

18. The following particulars of a foreign-invested company and changes thereto shall be reported to the company registry for the record:

(1) proposed amendments to the company's articles of association or the amended articles of association of the company that do not involve registered particulars and that were approved by the examination and approval authority (including changes to the total investment);

(2) the company's directors, supervisors or managers;

(3) the establishment or closing down of branches of the company; and

(4) the list of the members and person in charge of the company's liquidation committee.

The carrying out of record filing procedures shall no longer be required for extensions granted to shareholders of a foreign-invested company to make their capital contributions or the paid-in registered capital of such company, rather, the relevant procedures for amendment of registration shall be carried out in accordance with the Registration Regulations.

When a foreign-invested company carries out the procedures for the record filing of a matter, it shall submit to the company registry a record filing application signed by its legal representative (or the person in charge of its liquidation committee) and relevant documents evidencing the occurrence of the matter to be recorded. Once the record filing documents are complete, the company registry shall grant record filing and, as required by the applicant, issue a record filing certificate.

19. When a Foreign Investor (authorizing party) changes its domestic receiver of legal documents (attorney), it shall sign a new Power of Attorney for Service of Legal Documents, and report the same to the company registry for the record in a timely manner. If such particulars as the name or address of the attorney change, the same shall likewise be reported to the company registry for the record in a timely manner. The company registry shall record such particulars in the company's registration file.

If a Foreign Investor fails to carry out the aforementioned record filing procedures, when the company registry serves a domestic legal document on the attorney recorded by the company registry, the same shall be deemed to have been served on the Foreign Investor.

20. When a shareholder of a foreign-invested company carries out the procedures for the record filing of a pledge of its equity, it shall submit to the company registry the application for record filing of a pledge of equity issued by the company, the approval document from the examination and approval authority and the pledge contract. After the company registry accepts the same for record filing, it may, at the request of the applicant, issue a record filing certificate that records such particulars as the name of the shareholder making the pledge, the percentage of the enterprise's equity accounted for by the pledged equity, the name of the pledgee, the pledge term, the examination and approval authority for the pledge contract, etc. During the pledge term, the shareholder that made the pledge may not transfer or re-pledge the pledged equity without the consent of the pledgee and may not reduce its corresponding capital contribution amount.

21. If a foreign-invested company applies for cancellation of the amendment of its registration pursuant to Article 22 of the Company Law, it shall submit an application for cancellation of the amendment of its registration and the judgement or ruling of the people's court to the company registry. If approved foreign investment particulars were involved, the approval document of the examination and approval authority shall additionally be submitted. If the same comply with the Company Law, the company registry shall render a decision permitting the cancellation of the amendment of registration, and, if particulars recorded on the business licence were involved, it shall replace the business licence.

22. If a foreign-invested company fails to establish a liquidation committee within the time limit specified in the Company Law to liquidate the company after grounds for liquidation have arisen and its creditors fail to apply to a people's court to appoint a liquidation committee to liquidate the company, the highest authority of the company, its shareholders or its creditors may apply, in accordance with the Measures for the Liquidation of Foreign-invested Enterprises, to the examination and approval authority for the carrying out of special liquidation. The customs procedures for goods under customs surveillance shall be carried out first, and the relevant duties and taxes paid retroactively.

23. When a foreign-invested company applies for de-registration, it shall submit the relevant documents in accordance with Article 44 of the Registration Regulations. The liquidation report shall be accompanied by the proofs of de-registration issued by the tax authorities and proof issued by customs that the customs procedures have been carried out or proof that customs registration procedures were not carried out. If a foreign-invested company terminates its business operations early and applies for de-registration, it shall additionally submit the approval document issued by the examination and approval authority (unless it was ordered to dissolve or declared bankrupt by a court, or was ordered to close down, had its business licence revoked, had its establishment permission revoked or had its establishment registration cancelled by an administrative authority).

24. When a foreign-invested company establishes or closes down a branch, it shall apply for registration directly to the foreign-invested company registry of the place where the branch is located without passing through its original company registry.

If, pursuant to laws, administrative regulations, a decision of the State Council or special state provisions on foreign investment in projects in the restricted category or on the trade in services sector, the establishment or closing down of a branch requires the approval of the relevant departments, the registration application shall be made within 30 days of the approval date. If the application is made late, the applicant shall report to the original examination and approval authority for confirmation of the validity of its document or carry out examination and approval procedures anew.

25. Company registries shall no longer carry out registration procedures for the offices of foreign-invested companies. Procedures for the amendment of the registration or the renewal of the term of offices that have previously been registered shall no longer be carried out. Upon expiration of their terms, they shall either carry out de-registration procedures or, as required, apply for establishment as a branch. The branches of a foreign-invested company may engage in liaison, consulting and other such business within the scope of business of the company.

Company registries shall investigate and handle business activities engaged in ostensibly as an office.

26. If a shareholder or promoter of a foreign-invested company fails to make or fails to make on time its cash capital contribution or capital contribution in the form of non-monetary property, the company registry shall impose penalties in accordance with the applicable principles of the Provisions for the Administration of Registration of the Registered Capital of Companies. For companies established prior to January 1 2006, the capital contribution deadlines applicable at the time of the registration of their establishment shall prevail.

If a shareholder in a Sino-foreign cooperative joint venture company fails to perform its capital contribution obligation on schedule, the company registry shall order it to perform such obligation within a specified period of time in accordance with Article 9 of the Sino-foreign Cooperative Joint Venture Law. If it still fails to perform its obligation, the matter shall be handled in accordance with the first paragraph of this Article. If a shareholder in a wholly foreign-owned equity joint venture or wholly owned foreign-invested company fails to make payment on schedule, the company registry may, in addition to handling the matter in accordance with the first paragraph of this Article, revoke the company's business licence in accordance with Article 9 of the Wholly Foreign-owned Enterprise Law.

27. If a foreign-invested company exceeds its approved scope of business to engage in business activities in the encouraged or permitted categories of the Foreign Investment Industrial Guidance Catalogue without authorization, the company registry shall apply Article 73 of the Registration Regulations in imposing penalties.

If a foreign-invested company exceeds its approved scope of business to engage in business activities in the restricted or prohibited categories of the Foreign Investment Industrial Guidance Catalogue without authorization, the company registry may determine that it has "operated in violation of the law by exceeding its approved and registered scope of business in engaging, without authorization, in business activities that may only be engaged in after obtaining a permit or other approval document", and apply the Measures for Investigating, Handling and Shutting Down Unlicensed Business Operations in imposing penalties. If a criminal offence is established, the company's criminal liability shall be pursued in accordance with the law.

28. The administration of the examination, approval and registration of companies invested in and established by investors from Taiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region, Chinese citizens resident abroad (overseas Chinese), as well as foreign-invested investment companies and companies invested in and established by foreign-invested venture investment companies shall, mutatis mutandis, be governed in accordance with these Opinions.