Laws of the People's Republic of China

Circular of the State Administration for Industry and Commerce and the Ministry of Commerce on the Relevant Issues Concerning Foreign Investors' Establishing Foreign-funded Advertising Enterprises through Share Right Merger

Gong Shang Guang Zi [2006] No. 99

The administrations for industry and commerce and the commerce administrative departments of all provinces, autonomous regions, municipalities directly under the Central Government and cities directly under separate state planning,

According to the Provisions on the Administration of Foreign-funded Advertising Enterprises (Order No. 8 of the State Administration for Industry and Commerce and the Ministry of Commerce issued on March 2, 2004, hereinafter referred to as the Advertising Provisions) and the Interim Provisions on Foreign Investors to Merge Domestic Enterprises (Order No. 3 of the Ministry of Foreign Trade and Economic Cooperation, the State Administration of Taxation, the State Administration for Industry and Commerce and the State Administration of Foreign Exchange issued on March 7, 2003, hereinafter referred to as the Merger Provisions), we hereby make the following notices on the issues concerning foreign investors' establishing foreign-funded advertising enterprises through share right merger:

1.

A foreign investor may, according to the Merger Provisions, Advertising Provisions, and other relevant provisions, establish a Sino-foreign joint advertising enterprise through purchasing part of the share rights of a domestic enterprise, or establish a foreign-funded advertising enterprise through purchasing all of the share rights of a domestic enterprise.

2.

As for a foreign-funded advertising enterprise that is established by a foreign investor through share right merger, the Chinese and foreign investors shall meet the conditions as prescribed in Articles 9 and 10.

If the domestic advertising enterprise to be merged or purchased has mainly or concurrently engaged in advertising business for 2 years or more, the original Chinese investor of the domestic advertising enterprise may continue to hold its shareholder's position and is not subject to the restriction as prescribed in the preceding paragraph.

3.

Where a foreign investor invests in advertising industry by merging a domestic advertising enterprise, it shall transact the formalities of examination, approval and registration according to Articles 6 and 7 of the Advertising Provisions.

When applying for the Opinion on the Examination and Approval of the Foreign-funded Advertising Enterprise Project, an applicant shall submit the following documents to the State Administration for Industry and Commerce or its authorized provincial administration for industry and commerce:

(1)

The share right merger requisition signed jointly by the foreign investor and the domestic advertising enterprise to be merged;

(2)

The resolution of the shareholder's meeting (the board of directors) of the domestic advertising enterprise to be merged;

(3)

The resolution of the shareholders' meeting (the board of directors) of the foreign investor;

(4)

The registration certificate of the domestic advertising enterprise to be merged;

(5)

The registration certificate of the foreign investor;

(6)

The capital and credit certificate of the foreign investor; and

(7)

The preliminary examination opinion of the local administration for industry and commerce.

The foreign investor, which intends to establish a Sino-foreign joint advertising enterprise through purchasing part of the share rights of a domestic advertising enterprise, shall, besides the documents as mentioned above, submit the situation of the shareholders of the domestic advertising enterprise to be merged and the relevant registration certificate of every foresaid shareholder, the capital and credit certificate of the domestic advertising enterprise to be merged as well as the capital and credit certificate of every shareholder of the domestic advertising enterprise to be merged.

4.

After an applicant obtains the Opinion on the Examination and Approval of the Foreign-funded Advertising Enterprise Project issued by the State Administration for Industry and Commerce, it shall submit the documents to the commerce administrative department, and transact the formalities of examination and approval according to the Advertising Provisions and the relevant provisions of the state on the merger.

Please execute the opinions as mentioned above accordingly.

State Administration for Industry and Commerce

Ministry of Commerce

April 11, 2006