Laws of the People's Republic of China

No.43

The Interim Measures Concerning the Confirmation of the Value Maintenance and Appreciation Results of the State-owned Capital of Financial Enterprises have been deliberated and adopted at the ministerial meeting. They are hereby promulgated and shall go into effect as of March 1, 2007. Minister: Jin Renqing

January 11, 2007

Interim Measures Concerning the Confirmation of the Results of Value Maintenance and Appreciation of the State-owned Capital of Financial Enterprises Chapter I General Provisions

Article 1

With a view to strengthening the supervision and administration of the state-owned capital of financial enterprises, reflecting the operation status of the state-owned capital of financial enterprises, regulating the confirmation of the value maintenance and appreciation results of the state-owned capital of financial enterprises, and maintaining the state owners' equity, the present Measures are constituted.

Article 2

The present Measures apply to the confirmation of the value maintenance and appreciation results of the state-owned capital of state-owned and state holding financial enterprises, financial holding companies and bonding companies (hereinafter referred to as financial enterprises) that are set up within the territory of the People's Republic of China in accordance with law.

Article 3

The "term state-owned capital" as mentioned in the present Measures refers to the various forms of investments that the state contributes into financial enterprises, the equities as formed therefrom and other equities as legally confirmed to be owned by the State.

With regard to a solely state-owned financial enterprise, its state-owned capital refers to the owner's equity of this financial enterprise and other equities as legally ascertained to be owned by the state; while with regard to a state holding enterprise, its state-owned capital refers to the shares that ought to be owned by the state out of the owner's equity of this enterprise and other equities as legally confirmed to be owned by the state.

Article 4

In light of the annual financial report of the financial enterprise, which has been audited by accounting firm and in accordance with the principle of "integrated policy and level-to-level management", a financial department under the people's governments at the county level or above (hereinafter referred to as financial department) shall confirm the value maintenance and appreciation results of the state-owned capital of a financial enterprise that is directly governed by it on the basis of comprehensively analyzing the variable factors which influence the increase or decrease of the state-owned capital within the year.

The financial departments of the higher level shall direct and supervise the work of those of the lower level.

Article 5

A financial enterprise shall prepare its annual financial report in accordance with the facts, earnestly analyze and verify the variable factors influencing the increase or decrease of the state-owned capital within the year and factually reflect the operation results of state-owned capital.

Article 6

The financial departments shall take the confirmation results of value maintenance and appreciation of the state-owned capital of financial enterprises as an important basis to evaluate the performance of these enterprises.

Chapter II Index Calculation

Article 7

Except for the circumstances as provisioned in Article 13 of the present Measures, the value maintenance and appreciation results of the state-owned capital of a financial enterprise shall be reflected through the indices on the ratio of value maintenance and appreciation of state-owned capital and the relevant analysis indices shall be taken as reference simultaneously. Index calculation shall take the annual financial report of the financial enterprise as the basis. If a consolidated financial statement is provided to the outside, index calculation shall be made on the basis of the consolidated one .

Article 8

The ratio of value maintenance and appreciation of state-owned capital as mentioned in the present Measures refers to the ratio of the state-owned capital owned by a financial enterprise at the end of a year after deducting the appreciation or depreciation as a result of objective factors to the state-owned capital owned by this enterprise at the beginning of the year and the calculation formula shall be as follows:

Ratio of value maintenance and appreciation of state-owned capital = (state-owned capital at the end of the year after deducting the appreciation or depreciation as a result of objective factors ¡Â state-owned capital at the beginning of the year) ¡Á100%

Article 9

When calculating its ratio of value maintenance and appreciation of state-owned capital, a financial enterprise shall deduct the corresponding increment of its state-owned capital in case the increment occurs because of any of the following objective factors:

(1)

state investment, which means that the increase of state-owned capital occurs as a result of the state's input into this financial enterprise;

(2)

gratuitous transfer, which means that the increase of state-owned capital occurs as a result of the fact that some or all the state-owned capital of other enterprises are transferred into this enterprise according to the related provisions of the state;

(3)

assets assessment, which means that the increase of state-owned capital occurs as a result of the assets assessment that is conducted according to the related provisions of the state for restructuring and listing;

(4)

appraisal of fixed assets and circulating funds, which means that the increase of state-owned capital occurs as a result of the appraisal of fixed assets and circulating funds that is conducted according to the related provisions of the state;

(5)

definition of property rights, which means that the increase of state-owned capital occurs as a result of the definition of property rights that is conducted according to the related provisions of the state;

(6)

tax policies, which means that the state-owned capital is increased according to the related tax policies of the state;

(7)

capital (stock) premium, which means that the increase of state-owned capital occurs as a result of the fact that the financial enterprise, with its entire or main assets, issues stocks or distributes stock dividends at a premium;

(8)

accounting adjustment, which means that the increase of state-owned capital occurs as a result of the major variation of the enterprise's operational achievements within the year resulted from the major modification of accounting policies or accounting valuation, adjustment of accounting error and so on.;

(9)

Other objective factors, which mean that the increases of state-owned capital occurs as a result of the factors which do not fall within any of the circumstances mentioned above but are confirmed by the financial departments according to the related provisions.

Article 10

When calculating the ratio of value maintenance and appreciation of state-owned capital, the corresponding reduced amount shall be added in case the state-owned capital of a financial enterprise reduces because of any of the following objective factors:

(1)

gratuitous transfer, which means that the reduce of state-owned capital occurs as a result of the fact that some or all the state-owned capital of the financial enterprise is transferred into other enterprises according to the related provisions of the state;

(2)

assets assessment, which means that the reduce of state-owned capital occurs as a result of the assets assessment that is conducted according to the related provisions of the state for restructuring and listing;

(3)

appraisal of fixed assets and circulating funds, which means that the reduce of state-owned capital occurs as a result of the appraisal of fixed assets and circulating funds that is conducted according to the related provisions of the state;

(4)

definition of property rights, which means that the reduce of state-owned capital occurs as a result of the definition of property rights that is conducted according to the related provisions of the state;

(5)

policy-related losses, which means that the reduce of state-owned capital occurs as a result of the losses suffered from undertaking the policy-related business of the state within the year and the reduce has been confirmed by the financial department;

(6)

accounting adjustment, which means that the reduce of state-owned capital occurs as a result of the major variation of the enterprise's operational achievements within the year resulted from the major modification of accounting policies or accounting valuation adjustment of accounting error and so on.;

(7)

force majeure, which means that the state-owned capital is reduced for majeure including natural disaster;

(8)

other objective factors, which mean that the reduce of state-owned capital occur as a result of the factors which do not fall within any of the circumstances mentioned above but are confirmed by the financial departments according to the related provisions.

Article 11

The analysis indices on value maintenance and appreciation of the state-owned capital of financial enterprises may be sorted into general indices and industrial indices.

General indices cover the rate of return on net assets, profit growth rate, rate of return on total assets, bad assets rate and so on, and apply to all kinds of financial enterprises.

Industrial indices cover the capital sufficiency rate, bad loans rate, solvency sufficiency rate, net capital liability ratio and so on, among which , the capital sufficiency rate and the bad loans rate apply to banking financial enterprises, the solvency sufficiency rate applies to insurance-related financial enterprise, and the net capital liability ratio applies to securities-related financial enterprises.

Article 12

Where the ratio of value maintenance and appreciation of the state-owned capital of a financial enterprise is above 100%, the value of its state-owned capital is appreciated; where the ratio equals 100%, the value is maintained; and where the ratio is below 100%, the value is depreciated.

Article 13

It is not required to calculate the ratio of value maintenance and appreciation of state-owned capital, and the results of value maintenance and appreciation of state-owned capital may be determined directly in case of any of the following circumstances:

(1)

in case the state-owned capital at the beginning of the year is a negative value and that at the end of the year after deducting the appreciation or depreciation as a result of objective factors is a positive value, the result of value maintenance and appreciation of the state-owned capital shall be appreciation;

(2)

in case the state-owned capital at the beginning of the year is a positive value and that at the end of the year after deducting the appreciation or depreciation as a result objective factors is a negative value, the result of value maintenance and appreciation of the state-owned capital shall be depreciation;

(3)

in case the state-owned capital at the beginning of the year is a negative value, that at the end of the year after deducting the appreciation or depreciation as a result of objective factors is a negative value and its absolute value is larger than the value at the beginning of the year, the result of value maintenance and appreciation of the state-owned capital is depreciation;

(4)

in case the state-owned capital at the beginning of the year is a negative value, that at the end of the year after deducting the appreciation or depreciation as a result of objective factors is a negative value and its absolute value is smaller than the value at the beginning of the year, the result of value maintenance and appreciation of the state-owned capital is appreciation.

Chapter III Reporting Requirements

Article 14

A financial enterprise directly under the administration of the Central Government shall report to the Ministry of Finance the following materials prior to May 15 of each year:

(1)

data and circumstance description about the value maintenance and appreciation of state-owned capital, including the accomplishment situation of value maintenance and appreciation of state-owned capital, the contrastive analysis with the results ascertained in the previous year, explanation on the objective factors influencing the increase and decrease of state-owned capital, explanation on the standards for the adjustment of the data obtained at the beginning of the year, explanation on any major fluctuation or abnormal variation of analysis indices, and other information needs reporting;

(2)

the related evidential materials on the objective factors influencing the increase and decrease of state-owned capital, including the documents of the related departments of the state.

The materials to be reported to the financial departments of the same level by local financial enterprises and the filing time shall be stipulated otherwise by the provincial financial departments.

Article 15

A financial department at the provincial level shall, prior to May 15 of each year, report the Ministry of Finance the data and circumstance description of the previous year on value maintenance and appreciation of state-owned capital of the financial enterprises within its region .

Article 16

The materials on value maintenance and appreciation of state-owned capital reported by a financial enterprise shall be authentic and complete, and the filling standards shall be in accordance with the related provisions.

Article 17

The principle of a financial enterprise shall be responsible for the authenticity and integrity of the materials on value maintenance and appreciation of state-owned capital reported by this enterprise.

Chapter IV Results Confirmation

Article 18

After receiving the materials filed by the provincial financial departments and the financial enterprises directly under the administration of the Central Government, the Ministry of Finance shall measure and calculate the standard values for confirming the results of value maintenance and appreciation of state-owned capital of the financial enterprises of each industry of the whole nation, and shall , prior to June 20 of each year, print and distribute them to the provincial financial departments and the financial enterprises directly under the administration of the Central Government.

The standard values of each industry for the confirmation of the results of value maintenance and appreciation of state-owned capital shall be classified into five grades, that is, excellent, good, adequate, poor and bad.

Article 19

After receiving the materials filed by a financial enterprise, the Ministry of Finance shall according to the related provisions of the present Measures, examine the materials, confirm the result and then determine the grade of value maintenance and appreciation of state-owned capital on the basis of the confirmed result, standard values as well as reference and analysis indices.

Article 20

The financial departments shall feedback the confirmed results and grades of value maintenance and appreciation of state-owned capital of the financial enterprises to the corresponding financial enterprises and the related departments prior to July 30 of each year.

Article 21

A financial department at the provincial level shall, prior to August 30 of each year, file the Ministry of Finance the situation on the confirmation of the results of value maintenance and appreciation of state-owned capital of the financial enterprises within its jurisdiction as well as the summary and analysis report.

Article 22

The results of value maintenance and appreciation of state-owned capital, which are provided to the outside by a financial enterprise, shall be the results that have been confirmed by the financial department of the same level.

Chapter V Penalty Provisions

Article 23

In case any financial enterprise fails to file the materials on value maintenance and appreciation of state-owned capital according to the provisions of the present Measure, the financial department of the same level shall order it to make corrections within a fixed time limit.

Article 24

In case any financial enterprise falls within such circumstances as failing to report the related materials, hiding the truth and providing false materials, etc. when filing the materials on value maintenance and appreciation of state-owned capital, the financial department of the same level shall order it to make corrections within a fixed time limit and shall give it an admonition.

Article 25

In case any accounting firm or certified public accountant issues any false report and causes the results of value maintenance and appreciation of state-owned capital seriously untrue, punishment shall be imposed thereupon by the financial department in accordance with law.

Article 26

In case any of the functionary of financial departments abuses his/her power, neglects his/her duties, commits any self-seeking misconduct or leaks the business secrets of financial enterprises, administrative punishment shall be imposed on him/her in accordance with law.

Chapter VI Supplementary Provisions

Article 27

The measures for the confirmation of the results of value maintenance and appreciation of the state-owned capital of financial assets management companies shall be provisioned otherwise.

Article 28

A provincial financial department may, in accordance with these Measures and in light of the actual situation of the region, formulate the specific measures for the implementation of the present Measures and shall file the measures with the Ministry of Finance for record.

Article 29

The present Measures shall go into effect as of March 1, 2007.