CIRCULAR OF THE STATE COUNCIL CONCERNING THE STANDARDIZATION OF EXISTING LIMITED LIABILITY COMPANIES AND COMPANIES LIMITED BY SHARES IN ACCORDANCE WITH THE COMPANY LAW

Circular of the State Council Concerning the Standardization of Existing Limited Liability Companies and Companies Limited by Shares in Accordance With the Company Law of the People's Republic of China

Prior to the Company Law of the People's Republic of China (hereinafter
referred to as the Company Law), limited liability companies and companies
limited by shares which were registered according to the relevant laws,
administrative regulations, local regulations and "Standard Notes on Limited
Liability Companies" and "Standard Notes on Companies Limited by Shares" as
promulgated by the relevant departments of the State Council, are hereinafter
referred to as existing limited liability companies and companies limited by
shares, these companies have played an active part in the economic
construction of our country. However, in certain aspects they do not fully
conform with the conditions set out in the Company Law, thus according to the
provisions of the Company Law the existing limited liability companies and
companies limited by shares must be standardized in accordance with the
Company Law. The following problems with regard to standardization are hereby
notified:

Existing limited liability companies and companies limited by shares
must be standardized in strict accordance with the provisions of the Company
Law and the accompanying laws and regulations. Companies which have undergone
internal checking procedures and which already fully conform to the stipulated
conditions may directly apply to the company registration authority for
re-registration; existing companies limited by shares which have been approved
for trading on a stock exchange by the securities management department of the
State Council may apply directly to the company registration authority for
re-registration and the company registration authority shall re-register them.
Companies which have undergone internal checking procedures and which do not
fully conform to the stipulated conditions shall standardize themselves, all
companies which fully conform to the stipulated conditions within the
stipulated time limit (before December 31, 1996) may apply to the company
registration authority for re-registration; if they have not fully conformed
to the stipulated conditions within the stipulated time limit, they cannot
apply for re-registration and according to law they shall change their
registration to become another type of enterprise, thus they may not use the
words "limited liability company" or "company limited by shares" in their
names.

Close attention should be paid to standardization, this should not be a
mere formality. During the process of standardization, the production and
management activities of existing limited liability companies and companies
limited by shares shall carry on as usual.

(1) The number of shareholders and promoters of a company shall comply
with the statutory requirements. The number of promoters of an existing
company limited by shares may maintain the status quo; in cases where the
number of shareholders of a former limited liability company does not comply
with the provisions of the Company Law, it shall be changed to comply with
these requirements within the stipulated time limit.

(2) The registered capital of the companies shall comply with the minimum
amount required by the law, this being the capital actually contributed. The
company's balance sheet at the end of last year shall be the criterion whereby
capital is verified. In cases where the minimum amount is not met, shortfalls
shall be supplemented within the stipulated time limit.

(3) The formulation of the rules and regulations of a company and the
matters clearly set out therein must comply with the provisions of the Company
Law, anything that does not comply shall be amended and corrected within the
stipulated time limit.

(4) The establishment of the management structure of a company, the
production procedures and the conditions of office of the directors, the
chairmen of the board of directors, the supervisors and the convenors of the
supervisory committees shall comply with the provisions of the Company Law,
anything that does not comply shall be rectified within the stipulated time
limit.

(5) A company's system of financial affairs and accounting shall comply
with the provisions of the Company Law, anything that does not comply with
the provisions shall be changed to comply with these requirements within the
stipulated time limit.

(6) The valuation and verification of company assets shall comply with the
provisions of the Company Law, anything that does not comply shall be
rectified within the stipulated time limit.

In addition, after re-registration existing companies limited by shares
which were approved for trading on a stock exchange by the securities
management department of the State Council shall improve their organization
and standardize their behavior.

Existing limited liability companies and companies limited by shares
shall apply to the company registration authority with which they originally
registered for re-registration, these existing companies shall provide all the
documentation required for re-registration; after re-registration the
existing companies limited by shares shall report to the original company
examination and inspection authority for the record. The specific requirements
for re-registration shall be stipulated by the State Administration for
Industry and Commerce together with other relevant departments.

Company registration authorities at every level shall conscientiously
exercise their functions and powers in strict accordance with the provisions
of the Company Law and the accompanying laws and regulations, they shall
earnestly carry out the work of re-registering the existing limited liability
companies and companies limited by shares, as well as providing the
departments responsible for organizational or guidance work with information
concerning re-registration.

If no items in the registration are altered when re-registering, the
company registration authority shall charge the relevant fees according to the
provisions; if any items in the registration are altered, the company
registration authority shall charge a fee for altering the registration in
accordance with the provisions for altering the registration. No other fees
may be charged.

Work at state level on organizational guidance shall be carried out by the
State Economic and Trade Commission, the State Commission for Restructuring
the economy, the Ministry of Foreign Trade and Economic Cooperation, the
People's Bank of China, the State Administration for Industry and Commerce,
the State Administration of State Property, the Securities Commission of
the State Council and other departments; organizational guidance work in each
province shall be carried out by the people's government of each province,
autonomous region or municipality directly under the Central Government.

The people's government of each province, autonomous region or
municipality directly under the Central Government and the relevant
departments of the State Council shall enforce organizational guidance work,
taking charge of its implementation, guaranteeing its quality, coordinating
and settling any relevant problems, and creating good external conditions for
the standardization of existing limited liability companies and companies
limited by shares in accordance with the Company Law.

Category	LEGAL PERSONS AND ECONOMIC ORGANIZATIONS	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1995-07-03	Effective Date	1995-07-03

Laws of the People's Republic of China

CIRCULAR OF THE STATE COUNCIL CONCERNING THE STANDARDIZATION OF EXISTING LIMITED LIABILITY COMPANIES AND COMPANIES LIMITED BY SHARES IN ACCORDANCE WITH THE COMPANY LAW