Ministry of Finance, General Provisions on Enterprise Finance (Revised)

财政部企业财务通则 (修正)

February 28, 2007 | BY

clpstaff &clp articles &

After more than 10 years, the provisions on enterprise finance have been revised.

Clp Reference: 3000/06.12.04 Promulgated: 2006-12-04 Effective: 2007-01-01

Promulgated: December 4 2006
Effective: January 1 2007
Applicability: The General Provisions apply to state-owned and state-controlled enterprises with legal personality established in China in accordance with the law, with the exception of financial enterprises. The General Provisions also apply to other enterprises (Article 2).

Main Contents: Enterprise financial management shall, in accordance with the formulated financial strategy, raise funds reasonably, operate assets effectively, control costs and expenses, regulate the distribution of earnings and financial restructuring and liquidation, and strengthen financial supervision and financial information management (Article 3).

Enterprises may, in accordance with laws, regulations and relevant state provisions, implement a remuneration scheme for the manager and factory manager of the enterprise or other leaders in the enterprise that are actually responsible for operation and management (Operators) and key technicians which is different from that for other staff and workers (Article 41).

Profits that are not distributed by enterprises in previous years shall be incorporated as profits for the current year, and shall be distributed to investors after full consideration of the cash flow status. Where share option incentives are implemented for Operators and other staff and workers by way of share repurchase, profits required for share repurchase shall be reserved when drawing up the profit distribution plan (Article 50).

Related Legislation: PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p.21; Regulations on Enterprise Financial and Accounting Reports, Jun 21 2000, CLP 2000 No.7 p.5; Regulations on the Penalties and Sanctions of Illegal Financial Acts, 2004; and Official Reply to the «General Provisions on Enterprise Finance» and «Enterprise Accounting Guidelines», 1992

clp reference:3000/06.12.04promulgated:2006-12-04effective:2007-01-01

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