Laws of the People's Republic of China

the State Administration of Radio, Film and Television, the Ministry of Commerce

Order of the State Administration of Radio, Film and Television and the Ministry of Commerce of the People's Republic of China

No. 43

The "Interim Provisions on Operation Qualification Access for Movie Enterprises", which were examined and adopted at the executive meeting of the State Administration of Radio, Film and Television on June 15, 2004 and by the Ministry of Commerce of the People's Republic of China, are hereby promulgated and shall come into force as of November 10, 2004.

Director General of the State Administration of Radio, Film and Television, Xu Guangchun

Minister of the Ministry of Commerce of the People's Republic of China, Bo Xilai

October 10, 2004

Interim Provisions on Operation Qualification Access for Movie Enterprises

Chapter I General Provisions

Article 1

The present Provisions are formulated according to the "Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures", "Law of the People's Republic of China on Chinese-foreign Cooperative Joint Ventures" and the "Regulations on the Administration of Movies" for the purpose of bringing public organizations into full play to accelerate the development of movie industry, cultivate market principal parts, regulate market access, reinforce the overall strength and competitiveness of the movie industry, promote the flourishing of socialist movie industry and satisfy the people's demands in their spiritual and cultural lives.

Article 2

The present Provisions shall be applied to the administration of qualification access for companies, enterprises and other economic organizations inside China to operate movie production, distribution, projection, import and export and for overseas companies, enterprises and other economic organizations to participate in the operation of movie production and projection.

Article 3

The State shall apply a permit system to the operation qualifications for movie production, distribution, projection, import and export.

Article 4

The State Administration of Radio, Film and Television (hereinafter referred to as SARFT) shall be the national administrative department for operation qualification access in the industry of movie production, distribution, projection, import and export.

Chapter II Movie Production

Article 5

The State permits companies, enterprises and other economic organizations inside China (excluding foreign-funded enterprises) to establish movie production companies. The company, enterprise or other economic organization inside China that applies to establish a movie production company shall file an application to the SARFT.

(1)

Where two or more companies, enterprises or other economic organizations inside China (excluding foreign-funded enterprises), which have obtained the "Permit for Movie Production", intend to jointly establish a movie production company, the conditions and procedures for application are as follows:

1.

The registered capital of the movie production company shall be not less than 1 million Yuan; and

2.

The application letter, the contract, the articles of association, a photocopy of the business license of each party issued by the administration for industry and commerce and the notice on pre-ratification of the company's name shall be submitted.

(2)

The company, enterprise or other economic organization inside China (excluding foreign-funded enterprise) that has not obtained the "Permit for Movie Production" must, when shooting the film for the first time, shall establish a movie and television culture company which shall apply for the "Permit for Film Production (for Single Film)". The conditions and procedures for obtaining the "Permit for Film Production (for Single Film)" are as follows:

1.

All kinds of movie and television culture entities registered in the administrative departments for industry and commerce at the prefecture (city) level or above are qualified for obtaining the "Permit for Film Production (for Single Film)";

2.

An application letter, a photocopy of the business license issued by the administrative departments for industry and commerce, the proof on the sources of funds used to produce the film, the literature play of the film to be produced (outline of the story) shall be submitted in triplicate;

3.

The SARFT shall examine the production qualification and literature screenplay of the film under application (outline of the story) within 20 working days. If they are examined to be qualified, a "Permit for Film Production (for Single Film)" shall be issued. The applicant shall, with the approval document issued by SARFT, go to the local administrative department for industry and commerce to go through the relevant procedures. However, if the SARFT does not grant the approval, it shall reply in written form to explain the reasons thereof;

4.

The entity that has obtained the "Permit for Film Production (for Single Film)" shall have the right to produce a film for only once. The producer may produce the film either independently or jointly with other production entities (including movie and television culture entities); and

5.

The "Permit for Film Production (for Single Film)" shall be subject to a system that one application shall be made for each film concerned.

(3)

The qualifications and procedures for a company, enterprise or other economic organization inside China (excluding foreign-funded enterprises), which has obtained the "Permit for Film Production (for Single Film)", to apply to establish a movie production company independently or jointly are as follows:

1.

It has invested to shoot two or more films in the form of "Permit for Film Production (for Single Film)";

2.

Its registered capital shall be not less than 1 million Yuan;

3.

The application letter, its business license issued by the administrative department for industry and commerce (for joint establishment of a movie production company, the contract, articles of association, a photocopy of each party's business license issued by the administrative department for industry and commerce shall be provided in addition) and the notice on pre-ratification of the company's name shall be submitted; and

4.

The "Permits for Film Production (for Single Film)" and the "Permit for Public Projection of Films", by which it has invested to produce two films, and other relevant documents shall be submitted.

(4)

For an applicant that meets the requirements in Items (1) and (3), the SARFT shall issue the "Permit for Movie Production" within 20 working days. The applicant shall, with the approval document issued by SARFT, go to the local administrative department for industry and commerce to go through the relevant procedures, and shall report to the SARFT for archival purposes. However, if the SARFT does not grant the approval, it shall reply in written form to explain the reasons thereof.

Article 6

The establishment of a movie production company (hereinafter referred to as joint venture company) of a company, enterprise or other economic organization inside China (hereinafter referred to as the Chinese party) with an overseas company, enterprise or other economic organization (hereinafter referred to as the foreign party) in the form of equity joint venture or cooperative joint venture is permitted. To apply for establishing a joint venture company, the Chinese party shall file an application to the SARFT. The qualifications and procedures for application are as follows:

(1)

The Chinese party has obtained the "Permit for Movie Production" or two "Permits for Film Production (for Single Film)";

(2)

The registered capital of the joint venture company shall be not less than 5 million Yuan;

(3)

The proportion of foreign capital among the registered capital shall not exceed 49%;

(4)

In case an applicant meets the requirements in Items (1) through (3), the Chinese party shall submit to SARFT the application letter for the project, the feasibility study report, the contract, the articles of association, the registration certificate (or identity certificate) of each party of the joint venture, the credit standing proof, the notice on pre-ratification of the company's name and etc. The SARFT shall verify these documents according to law. If the applicant is examined to be qualified, the SARFT shall issue the ratification document and the "Permit for Movie Production"

(5)

In case an applicant meets the requirements in Items (1) through (4), the Chinese party shall submit the approval document issued by the SARFT and the documents listed in Item (4) of this Article to the Ministry of Commerce for approval. The Ministry of Commerce shall lawfully make a decision on whether or not to approve the application. If the application is approved, the "Approval Certificate for the Foreign-funded Enterprise" shall be issued to the applicant. However, if it is not approved, the Ministry of Commerce shall reply in written form to explain the reasons thereof; and

(6)

The applicant shall, with the approval documents by SARFT and the Ministry of Commerce, go to the local administrative department for industry and commerce to go through the relevant procedures.

Article 7

The movie production companies, which have obtained the "Permit for Movie Production" pursuant to Article 5 and Article 6 of the present Provisions, shall enjoy rights and assume obligations equal to those of state-owned movie production entities according to the "Regulations on the Administration of Movies".

Article 8

Companies, enterprises or other economic organizations inside China (excluding foreign-funded enterprise) are permitted to establish movie technology companies, to reconstruct basic facilities and technical equipments for movie production and projection. The qualifications and procedures for application are as follows:

(1)

Its registered capital shall be not less than RMB 5 million Yuan;

(2)

The application letter, its business license issued by the administrative department for industry and commerce (for joint establishment of a movie technology company, the contract, articles of association, a photocopy of each party's business license shall be provided in addition) and the notice on pre-ratification of the company's name shall be submitted; and

(3)

In case an applicant meets the requirements in Items (1) and (2), it shall, with the approval document issued by SARFT, go to the local administrative department for industry and commerce to go through the relevant procedures, and report to SARFT for archival purposes. However, if SARFT does not grant the approval, it shall reply in written form to explain the reasons thereof.

Article 9

companies, enterprises or other economic organizations inside China (hereinafter referred to as the Chinese party) are permitted to establish movie technology companies with overseas companies, enterprises or other economic organizations (hereinafter referred to as the foreign party) in the form of equity joint venture or cooperative joint venture, and to reconstruct basic facilities and technical equipments for movie production and projection. The qualifications and procedures for application are as follows:

(1)

The registered capital of the company shall be not less than 5 million Yuan;

(2)

The proportion of foreign capital among the registered capital shall not exceed 49%. And the shares may be held by foreign capital in provinces and cities approved by the state;

(3)

In case an applicant meets the requirements in Items (1) and (2), the Chinese party shall submit to the SARFT the application letter for the project, the feasibility study report, the contract, the articles of association, the registration certificate (or identity certificate) of each party to the joint venture, the credit standing proof, the notice on pre-ratification of the company's name and etc. The SARFT shall verify such documents according to law. In case the applicant is examined to be qualified, the SARFT shall issue the approval document.

(4)

In case an applicant meets the requirements in Items (1) through (3), the Chinese party shall submit the approval document issued by SARFT and the documents listed in Item (3) of this Article to the Ministry of Commerce for approval. The Ministry of Commerce shall make a decision on whether or not to approve the application according to law. In case the application is approved, the "Approval Certificate for the Foreign-funded Enterprise" shall be issued to the applicant. However, if it is not approved, the Ministry of Commerce shall reply in written form to explain the reasons thereof; and

(5)

The applicant shall, with the approval documents by SARFT and the Ministry of Commerce, go to the local administrative department for industry and commerce to go through the relevant procedures.

Chapter III Movie Distribution and Projection

Article 10

Companies, enterprises and other economic organizations inside China (excluding foreign-funded enterprises) are encouraged to establish companies exclusively operating the distribution of domestically produced films. The qualifications and procedures for application are as follows:

(1)

The registered capital shall be not less than RMB 500,000 Yuan;

(2)

The applicant has been entrusted by a movie production entity to represent the distribution of two films or has been entrusted by a TV play production entity to distribute two TV plays;

(3)

The application letter, a photocopy of the business license issued by the administrative department for industry and commerce, the notice on pre-ratification of the company's name, the proof on being entrusted to represent the distribution of films and TV plays and etc. shall be submitted. And

(4)

In case the applicant meets the requirements in Items (1) through (3) and applies to SARFT for establishing a company exclusively operating the distribution of domestically produced films, the SARFT shall, within 20 working days, issue the "Operation Permit for Movie Distribution" which permits the distribution of domestically produced films throughout the country. In case the applicant applies to the local movie administrative department at the provincial level for establishing a company exclusively operating the distribution of domestically produced films, the local movie administrative department shall, within 20 working days, issue the "Operation Permit for Movie Distribution" of the province (autonomous region, or municipality directly under the Central Government) which permits exclusive operation of domestically produced films in this province (a autonomous region, or a municipality directly under the Central Government). The applicant shall, with the approval document issued by the movie administrative department, go to the local administrative department for industry and commerce to go through the relevant procedures. However, if the approval is not granted, a written reply explaining the reasons thereof shall be issued to the applicant.

Article 11

The SARFT shall, according to the relevant provisions on annual assessment of distribution and projection of domestically produced films, make annual assessment on the companies which have obtained the "Operation Permit for Movie Distribution".

Article 12

The circuit companies of cinemas are permitted to be integrated in either a close or a loose type. They are encouraged to be re-integrated based on a trans-provincial cinema circuit and pursuant to the principle of administration on by one. It is not permitted to entirely merge cinema circuits by administrative areas. The integration of cinema circuits shall be submitted to SARFT for approval.

The companies, enterprises and other economic organizations inside China (excluding foreign-funded enterprises) are encouraged to invest in the existing cinema circuit companies or in establishing cinema circuit companies independently.

(1)

In the event of investment in an existing cinema circuit company in the form of participation with shares, the share participant must, within three years, invest not less than 30 million Yuan to build up or rebuild cinemas in this cinema circuit. In the event of investment in an existing cinema circuit company in share-control form, the share holder must, within three years, invest not less than 40 million Yuan to build up or rebuild cinemas in the cinema circuit. In the event of independent establishment of a cinema circuit company within the province or the whole nation, the establisher must, within three years, invest not less than 50 million Yuan to build up or rebuild cinemas in the cinema circuit;

(2)

The establishment of a cinema circuit company within a province (a autonomous region, or a municipality directly under the Central Government) shall be approved by the movie administrative department under the people's government of the province, the autonomous region, or the municipality directly under the Central Government within 20 working days and shall be reported to SARFT for archival purposes. The establishment of a trans-provincial cinema circuit company shall be approved by SARFT within 20 working days. The applicant shall, with the approval document issued by the movie administrative department, go to the local administrative department for industry and commerce to go through the relevant procedures. However, if SARFT (or the aforesaid administrative department) does not grant the approval, it shall reply in written form to explain the reasons thereof.

Article 13

The companies, enterprises and other economic organizations inside China (excluding foreign-funded enterprises) are encouraged to establish movie distribution and projection cinema circuits for juveniles and children.

(1)

Where any applicant has concluded film supply agreements with not less than 20 high schools, elementary schools, juveniles' palaces, children's activity centers, cinemas, theaters, auditoriums and etc, it may apply to the local movie administrative department at the provincial level to establish a movie distribution and projection cinema circuit for juveniles and children within the province, autonomous region, or municipality directly under the Central Government;

(2)

Where any applicant has concluded film supply agreements with not less than 30 high schools, elementary schools, juveniles' palaces, children's activities centers, cinemas, theaters, auditoriums and etc, it may apply to SARFT to establish a movie distribution and projection cinema circuit for juveniles and children which covers the different provinces, autonomous regions, or municipalities directly under the Central Government;

(3)

The establishment of a cinema circuit company within the province, autonomous region, or municipality directly under the Central Government shall be approved within 20 working days by the movie administration department under the local people's government of the province, autonomous region, or municipality directly under the Central Government and shall be reported to SARFT for archival purposes. The establishment of a trans-provincial film cinema circuit company shall be approved by SARFT within 20 working days. The applicant shall, with the approval document issued by the movie administrative department, go to the local administrative department for industry and commerce to go through the relevant procedures. However, if SARFT (or the involved movie administration department) does not grant the approval, it shall reply in written form to explain the reasons thereof.

Article 14

The companies, enterprises, other economic organizations and individuals inside China are encouraged to, according to the "Regulations on the Administration of Movies", operate movie distribution and projection business in various forms in rural areas throughout the country as well as movie projection business in urban communities and schools.

Article 15

The companies, enterprises, other economic organizations and individuals inside China are encouraged to investing in building up and rebuilding cinemas. No matter who intends to operate movie projection business must apply to the local movie administrative department at the county level or above for approval and go through the relevant procedures in the local administrative department for industry and commerce.

The foreign-funded cinemas shall be administered according to the "Interim Provisions on the Administration of Foreign-funded Cinemas".

Chapter IV Movie Import and Export

Article 16

The import of movies shall be exclusively operated by movie import enterprises that are approved by SARFT. The distribution of imported movies nationwide shall be carried out by the distribution companies that are approved by SARFT and have the right to distribute imported movies nationwide.

Article 17

The film production entities are encouraged to export in various channels domestically produced films for which the "Permit for Public Projection of Films" has been obtained.

Chapter V Supplementary Provisions

Article 18

The "Permit for Movie Production" and "Operation Permit for Movie Distribution" issued by SARFT shall be subject to a system of inspection every other year. The local movie administrative departments shall, in pursuance with their administrative powers, apply an annual inspection system to the issued "Operation Permit for Movie Distribution" and "Operation Permit for Movie Projection".

Article 19

The matters that are not covered by the present Provisions shall be handled according to the relevant provisions in the "Regulations on the Administration of Movies".

Article 20

The interpretation of the present Provisions shall remain with SARFT and the Ministry of Commerce.

Article 21

The present Provisions shall come into force as of November 10, 2004. The "Interim Provisions on the Access of Operation Qualifications for Movie Production, Distribution and Projection" promulgated by SARFT (No. 20 of SARFT) and the "Detailed Rules for the Implementation of the Qualification Certifying System for Obtaining the Permit for Film Production (for Single Film) (for Trial Implementation)" (No. 1483 [2001] of SARFT) shall be abolished simultaneously.