Tentative Measures for the Administration of Overseas State-owned Assets and Equity of Enterprises Directly under the Central Government

For the purposes of these Measures, the term “overseas state-owned assets and equity” means the equity interests arising from the capital contributions made by Central Enterprises and their Subsidiaries in various forms to overseas enterprises.

For the purposes of the preceding paragraph, the term “overseas enterprise” means an enterprise invested in and established outside China or in the Hong Kong Special Administrative Region, Macao Special Administrative Region or Taiwan by a Central Enterprise or a Subsidiary thereof in accordance with local laws.

Article 3: A Central Enterprise, as the entity with the responsibility of managing its overseas state-owned assets and equity, shall establish and enhance a management system for overseas state-owned assets and equity in accordance with Chinese laws and administrative regulations, and at the same time comply with the relevant laws of the place of registration and of listing abroad and ensure that its management of overseas state-owned assets and equity is compliant.

Article 4: A Central Enterprise shall enhance the governance structure of its overseas enterprises, strengthen the management of the overseas enterprises' articles of association, optimise the allocation of overseas state-owned assets and equity and ensure the safety of overseas state-owned assets and equity.

Article 5: The management of the domestic state-owned assets and equity held by overseas enterprises wholly owned or controlled by Central Enterprises or their Subsidiaries shall be handled with reference to relevant Sasac provisions for the administration of domestic state-owned assets and equity.

Article 6: Overseas state-owned assets and equity shall be held by a Central Enterprise or a Subsidiary thereof. If relevant laws of the place of registration of an overseas enterprise specify that they must be held in the name of an individual, the same shall be centrally decided or approved by the Central Enterprise in accordance with relevant provisions, the legal procedures for the preservation of state-owned assets and equity, such as those for entrusted capital contributions, shall be carried out in accordance with the law and the same shall be reported in writing to Sasac.

Article 7: Central Enterprises shall strengthen their management of special purpose vehicles, such as offshore companies. If a special purpose vehicle needs to be established for the purposes of reorganisation, listing, transfer or business or management reasons, the same shall be decided or approved by the Central Enterprise and reported to Sasac in writing. If the continued existence of a special purpose vehicle is no longer necessary, it shall be de-registered in accordance with the law in a timely manner.

Article 8: If any of the following matters apply to a Central Enterprise or a Subsidiary thereof, application procedures for the registration of assets and equity shall be centrally carried out with Sasac by the Central Enterprise:

(1) a new overseas enterprise is established by investment, division, merger, etc., or assets and equity in an overseas enterprise are acquired for the first time by way of an acquisition, acquisition of an equity stake by investment, etc.;

(2) a change in the basic particulars of an overseas enterprise, such as its name, place of registration, registered capital and the scope of its main business, occurs, or a change in the assets and equity in the overseas enterprise occurs as a result of a change in its investors, the amount of their capital contributions, the percentages of their capital contributions, etc.;

(3) the overseas enterprise is dissolved or goes bankrupt or the state-owned assets and equity are no longer retained as a result of a transfer thereof, a capital reduction or other such reason; or

(4) another circumstance necessitating the registration of assets and equity arises.

Article 9: If a Central Enterprise or a Subsidiary thereof wishes to inject or transfer domestic state-owned assets and equity that it owns into/to an overseas enterprise or inject or transfer overseas state-owned assets and equity that it owns into/to a domestic enterprise, it shall, in accordance with relevant provisions of the Tentative Measures for Administration of the Appraisal of the State-owned Assets of Enterprises (Order of Sasac No.12), engage a qualified domestic appraisal firm to appraise the subject matter and carry out record filing or approval procedures for the appraisal.

Article 10: If an overseas enterprise wholly owned or controlled by a Central Enterprise or a Subsidiary thereof is involved in an economic act abroad such as a transfer or acquisition of assets and equity, the making of a capital contribution in the form of non-monetary assets, change in the equity percentage of the state-owned shareholder of a non-listed company, merger, division, dissolution or liquidation, a qualified professional firm with professional experience and a good reputation shall be engaged to appraise or value the subject matter, and the appraised item or outcome of the valuation shall be reported for the record by the Central Enterprise. If an economic act that would involve a key subsidiary enterprise of a Central Enterprise changing from being wholly state-owned to being under absolute control, or from being under absolute control to being under relative control or a loss of the controlling position therein is to be carried out, the appraised item or outcome of the valuation shall be reported to Sasac for record filing or approval.

When an overseas enterprise that is wholly owned or controlled by a Central Enterprise or a Subsidiary thereof carries out the economic act for which the appraisal or valuation was relevant, the result of the appraisal or valuation that was reported for record filing shall serve as the benchmark for the consideration for the transaction.

Article 11:  The transfer of overseas state-owned assets and equity and other such matters that involve a change in the particulars of state-owned assets and equity shall be decided or approved by the Central Enterprise, and relevant procedures shall be carried out in accordance with relevant state laws and regulations. If a key subsidiary enterprise of a Central Enterprise would change from being wholly state-owned to being under absolute control, or from being under absolute control to being under relative control or the controlling position therein would be lost, the same shall be reported to Sasac for review and consent.

Article 12: If a Central Enterprise or a Subsidiary thereof wishes to transfer overseas state-owned assets and equity, a comparison and selection from among more than one transferee that has expressed intent shall be required. Where conditions allow, a public solicitation of transferees with intent and a transfer by competitive bidding shall be carried out, or the overseas state-owned assets and equity shall be listed for trading with the organisation for pilot trading for the transfer of state-owned assets and equity of Central Enterprises.

Article 13: Where a Central Enterprise carries out an internal asset reorganisation and the transferor is the Central Enterprise or a directly or indirectly wholly-owned overseas enterprise thereof and the transferee is the Central Enterprise or a directly or indirectly wholly-owned domestic or overseas enterprise thereof, the transfer price may be determined using the net asset value as appraised or confirmed by audit as the floor price.

Article 14: The transfer price for overseas state-owned assets and equity shall be paid in accordance with the assets and equity transfer contract and the payment thereof shall, in principle, be made in full in one lump sum. If payment genuinely needs to be made in instalments, the transferee must provide lawful security.

Article 15: If an overseas enterprise that is wholly owned or controlled by a Central Enterprise or a Subsidiary thereof is to make an initial public offering of shares abroad or if a change is to be made in the shares of a company registered and listed abroad that are held by a Central Enterprise or a Subsidiary thereof, the same shall be decided or approved by the Central Enterprise in accordance with securities regulatory laws and regulations, and relevant matters shall be reported to Sasac in writing. If the company registered and listed abroad is a key subsidiary enterprise of the Central Enterprise, the aforementioned matters shall be reported to Sasac for review and consent or record filing in accordance with relevant provisions of the Tentative Measures for the Administration of the Transfer by State-owned Shareholders of Their Shares in Listed Companies (Order of Sasac No.19).

Article 16: A Central Enterprise shall put in place the responsibility for the management of overseas state-owned assets and equity in accordance herewith, enhance file management, and report relevant matters such as its rules and regulations for the management of its overseas state-owned assets and equity and the organ responsible therefor to Sasac in writing in a timely manner.

Article 17: A Central Enterprise shall conduct a monitoring inspection of the implementation of these Measures by its Subsidiaries on an annual basis, and report the outcome of such inspection to Sasac in writing in a timely manner.

Sasac shall carry out random examinations of the management of the overseas state-owned assets and equity of Central Enterprises on an ad hoc basis.

Article 18: If a relevant responsible person of a Central Enterprise or a Subsidiary thereof violates state laws or regulations or these Measures by failing to perform his/her duty of overseeing overseas state-owned assets and equity, resulting in a loss of state-owned assets, the relevant department shall sanction him/her in accordance with its authority for the management of cadres and relevant laws and regulations. If a criminal offence is suspected, the case shall be transferred in accordance with the law to the judicial authorities for handling.

Article 19: Local state-owned assets supervision and administration authorities may refer to these Measures in formulating rules and regulations for the administration of the overseas state-owned assets and equity of enterprises to which they have made capital contributions.

Article 20: These Measures shall be effective as of July 1 2011.