Laws of the People's Republic of China

The Ministry of Trade and Economic Cooperation

Decree of Ministry of Foreign Trade and Economic Cooperation

No. 3

The Interim Measures on the Administration of Examination and Approval of Lease Companies with Foreign Investment are hereby promulgated and shall come into force as of September 1, 2001.

Shi Guangsheng, Minister of the Ministry Foreign Trade and Economic Cooperation

August 14, 2001

Interim Measures on the Administration of Examination and Approval of Lease Companies with Foreign Investment

Article 1

These Measures are formulated in accordance with Company Law of the People's Republic of China, Law of the People's Republic of China on Chinese-foreign Joint Ventures, Law of the People's Republic of China on Chinese-foreign Cooperative Enterprises and other relevant laws and regulations with a view to meeting the requirements of socialist market economy, promoting the healthy development of lease companies with foreign investment, standardizing the operational acts of lease companies with foreign investment, and preventing operational risks.

Article 2

These Measures shall apply to the lease companies with foreign investment established by a foreign company, enterprise or other economic organization (hereinafter referred to as the foreign party to a joint venture) with a Chinese company, enterprise or other economic organization (hereinafter referred to as the Chinese party to a joint venture) within the territory of the People's Republic of China in the form of joint venture or cooperation and in compliance with the principle of equality and mutual benefits.

Article 3

Lease companies with foreign investment mentioned in these Measures shall mean the lease companies engaged in the business of financial lease (hereinafter referred to as financial lease companies) and the lease companies engaged in the other lease business other than financial lease (hereinafter referred to as other lease companies), which are established upon the approval of Ministry of Foreign Trade and Economic Cooperation of China. A lease company with foreign investment shall be established as a limited liability company.

Article 4

For the establishment of lease companies with foreign investment, international advanced experiences in operating and managing lease enterprises shall be absorbed, so as to promote the development of the lease industry in China, and bring good economic and social benefits.

Article 5

Lease companies with foreign investment must abide by the relevant laws and regulations of the State. The operational activities carried out by a lease company with foreign investment in accordance with the law, and the lawful rights and interests of the parties to a joint venture shall be protected by Chinese law.

Article 6

A party to a joint venture who applies to establish a financial lease company shall have strong economic strength and financing capability. The total assets of the Chinese party to the joint venture shall not be less than 400 million Yuan one year prior to the application; while the total assets of the foreign party to the joint venture shall not be less than 400 million USD one year prior to the application, and this foreign party shall have 5 years or more of experiences in financial lease.

Article 7

When applying to establish a financial lease company, the following conditions shall be met:

(1)

its registered capital shall not be less than 20 million USD;

(2)

the investment contributed by the Chinese party shall not be less than 20% of the registered capital;

(3)

the operation period shall not exceed 30 years;

(4)

it shall have managerial personnel, and the senior managerial personnel shall have professional qualification and more than three years of experiences in the occupation.

Article 8

A party to a joint venture who applies to establish other lease company shall have strong economic strength. The total assets of the Chinese party to the joint venture shall not be less than 100 million Yuan one year prior to the application; while the total assets of the foreign party to a joint venture shall not be less than 50 million USD one year prior to the application, and this foreign party shall have 3 years or more of experiences in lease business.

Article 9

When applying to establish other lease company, the following conditions shall be met:

(1)

its registered capital shall not be less than 5 million USD;

(2)

the investment contributed by the Chinese party shall not be less than 20% of the registered capital;

(3)

the operation period shall not exceed 20 years;

(4)

it shall have managerial personnel, and the senior managerial personnel shall have corresponding professional qualification and more than three years of experiences in the occupation.

Article 10

The applicant who applies to establish a lease company with foreign investment shall submit the following documents to Ministry of Foreign Trade and Economic Cooperation:

(1)

the feasibility study report, contract and articles of association of the lease company with foreign investment, signed or recognized by the legal representative of each party to the joint venture;

(2)

the registration certificate (duplicate) of each party to the joint venture, identification certificate (duplicate) of the legal representative, credit certificate by the bank and the financial reports of the three years prior to the application;

(3)

a name list of the members of the board of directors of the lease company with foreign investment planned to be established and the letter of each party to the joint venture for the appointment of directors;

(4)

certificates on qualifications and experience of senior managerial personnel;

(5)

notice on the preliminary approval of the name of the lease company with foreign investment planned to be established issued by the State industrial and commercial administrative department;

(6)

other documents to be submitted as required by Ministry of Foreign Trade and Economic Cooperation.

Article 11

A lease company with foreign investment approved to be established shall, within one month after obtaining the Enterprise with Foreign Investment Approval Certificate issued by Ministry of Foreign Trade and Economic Cooperation, go though the formalities of enterprise registration in the State industrial and commercial administrative department.

Article 12

The business scope of a financial lease company shall conform to the industrial policies of the State. The financial lease company may be engaged in the following business upon approval:

(1)

different forms of business of financial lease in home and foreign currencies such as direct lease, sublease, leaseback, leveraged lease, authorized lease, joint lease, etc. of various advanced or suitable domestic and foreign mechanical equipment such as production equipment, communication equipment, medical treatment equipment, scientific research equipment, inspection and test equipment, engineering machines, means of transportation (including airplane, automobiles and vessels), etc. and their collateral technologies;

(2)

purchase of goods which are needed in the business of lease from home and abroad as well as their collateral technologies upon the lessee's choice;

(3)

the business of selling off and disposing of scrap value of the leased properties;

(4)

the business of consulting and guaranty on lease transaction;

(5)

other business approved by Ministry of Foreign Trade and Economic Cooperation.

Article 13

Where a financial lease company is to be engaged in the financial business other than that provided in Article 12 of these Measures, it shall obtain the consent of Ministry of Foreign Trade and Economic Cooperation, and shall, in accordance with the Measures on the Administration of Financial Lease Companies issued by the People's Bank of China, report to the People's Bank of China for examination and approval.

Article 14

The business scope of other lease company shall conform to the industrial policies of the State. The lease company may be engaged in the following business upon approval:

(1)

the business of leasing various advanced or suitable domestic and foreign general-purpose equipment such as production equipment, communication equipment, medical treatment equipment, scientific research equipment, inspection and test equipment, engineering machines, means of transportation, etc.;

(2)

the business of selling off and disposing of scrap value of the leased properties;

(3)

other business approved by Ministry of Foreign Trade and Economic Cooperation.

Article 15

Where the goods and their collateral technologies under lease which are imported by a financial lease company involve the management of special policies in respect of quota, permit, etc., the lessee or the financial lease company shall go through the formalities of application and obtaining the relevant certificate as provided; the formalities on the equipment imported by another lease company for lease shall be gone through by the company itself in accordance with the relevant present provisions on enterprises with foreign investment's importing equipment.

Article 16

In order to prevent risks and guarantee security in operation, the risk assets of a financial lease company which includes guaranty balance shall not exceed 10 times of the total amount of its assets.

Article 17

The dissolution and liquidation of a lease company with foreign investment shall be carried out in accordance with the relevant Chinese laws and regulations as well as the articles of association of the company.

Article 18

The Leasing Industry Committee of China Association of Enterprises with Foreign Investment is an industrial organization that practices inter-company self-disciplinary management on foreign-funded lease companies. Foreign-funded lease companies shall be encouraged to join the committee.

Article 19

Where a lease company with foreign investment has any act in violation of Chinese laws or regulations, it shall be dealt with in accordance with the relevant Chinese laws and regulations.

Article 20

The establishment of a lease company with foreign investment in the inland jointly by a company, enterprise or other economic organization from Hong Kong Special Administrative Region, Macao Special Administrative Region or Taiwan Region and a Chinese party shall be executed by referring to these Measures.

Article 21

Ministry of Foreign Trade and Economic Cooperation shall be responsible for the interpretation of these Measures.