Laws of the People's Republic of China

State Administration for Industry and Commerce

Order of the State Administration for Industry and Commerce

No. 23

The Measures for the Annual Inspection of Enterprises, which were amended at the executive meeting of the State Administration for Industry and Commerce of the People's Republic of China, are hereby promulgated and shall enter into effect as of the day of March 1, 2006.

Director of the State Administration for Industry and Commerce, Wang Zhongfu

February 24, 2006

Measures for the Annual Inspection of Enterprises

Article 1

In order to strengthen the supervision and administration of enterprises and maintain the order of market economy, these Measures are formulated in accordance with the Regulation on the Company Registration Administration, the Regulation on the Registration Administration of Enterprise Legal Persons, and the Regulation on the Registration Administration of Partnership Enterprises.

Article 2

These Measures apply to the limited companies, joint-stock limited companies, non-corporate enterprise legal persons, partnership enterprises, sole proprietorship enterprises and their branches, the enterprises from foreign countries (regions) that engage in business operations in China as well as other business operational entities (hereinafter referred to as the enterprises) that have obtained business licenses.

Article 3

The annual inspection of enterprises (hereinafter referred to as the annual inspection) refers to a supervision and management system whereby the enterprise registration organs carry out regular inspections according to law on the relevant conditions of enterprise registration depending on the annual inspection documents submitted by the enterprises once a year.

Article 4

An enterprise shall hand in the annual inspection documents to the enterprise registration organ from March 1 to June 30 every year. In the case of any justifiable reason, an enterprise may hand in an application for postponing the participation in annual inspection to the enterprise registration organ before June 30, and 30 days may be postponed upon approval of the enterprise registration organ. An enterprise shall be responsible for the authenticity of the annual inspection documents it hands in.

An enterprise registered in the current year shall be subject to the annual inspection as of the next year.

Article 5

The enterprise registration organs at all levels shall take charge of the annual inspection of the enterprises registered thereby.

An enterprise registration organ at a higher level may entrust the enterprise registration organ at a lower level for the annual inspection of the enterprises registered thereby.

An enterprise registration organ may entrust the administrative offices for industry and commerce at the locality of enterprises registered thereby for the annual inspection of these enterprises.

Article 6

The procedures for annual inspection shall be as follows:

(1)

An enterprise hands in its documents for annual inspection;

(2)

The enterprise registration organ accepts and examines the annual inspection documents;

(3)

The enterprise pays the fee for annual inspection; and

(4)

The enterprise registration organ affixes a seal of annual inspection on the duplicate of the business license of the enterprise and gives back the duplicate of the business license to the enterprise.

Article 7

An enterprise shall hand in the documents for the declaration for annual inspection as follows:

(1)

An annual inspection report;

(2)

The certification of the representative or the entrusted agent designated by the enterprise;

(3)

The duplicate of the business license;

(4)

The photocopies of the relevant licensing certificates or approval documents with the seal of the enterprise if there is any business item pertinent to pre-registration administrative license in the business scope of the enterprise; and

(5)

Other documents are required to hand in prescribed by the State Administration for Industry and Commerce.

An enterprise legal person shall hand in its annual balance sheets and profit and loss statements, and a company or foreign- funded enterprise shall hand in the audit report issued by an accountant firm.

If an enterprise has any non-legal-person branch, it shall also hand in a photocopy of the duplicate of the branch's business license.

An enterprise under liquidation shall only hand in the documents mentioned in Paragraph 1.

Article 8

Besides the documents submitted by a non-legal-person branch of an enterprise, the enterprises from foreign countries (regions) that engage in business operations in China and other business operational entities mentioned in Paragraph 1 of Article 7 of these Measures, a non-legal-person branch of an enterprise shall also need to hand in the photocopy of the duplicate of the business license of its parent enterprise that has passed the annual inspection in the previous year, and other business operational entities shall also need to hand in a photocopy of the qualification certification of its parent institution.

Article 9

A annual inspection report shall include the contents as follows:

(1)

The conditions on the registered items;

(2)

The conditions on the items that are kept on records;

(3)

The conditions on foreign investments;

(4)

The conditions on the establishment and cancellation of branches; and

(5)

The conditions on business operations.

The annual inspection report handed in by a non-legal-person branch of an enterprise, an enterprise from a foreign country (region) that engages in the business operations in China or other business operational entities shall only include the contents mentioned in Item (1) of the preceding Paragraph.

Article 10

Where an enterprise hands in comprehensive documents for annual inspection with intact contents, the enterprise registration organ shall accept them and issue a notice on acceptance, except it affixes a seal of passing the annual inspection on the spot in accordance with Article 12 of these Measures.

Where the submitted annual inspection documents are not comprehensive or the contents are not intact, the enterprise registration organ shall not accept them and shall issue a notice on refusal of acceptance that indicates the reasons for the refusal of acceptance.

Article 11

An enterprise registration organ shall, within 5 workdays as of the acceptance of the annual inspection documents, accomplish the written examination of the contents of the registered items and the recorded items concerned in the annual inspection documents handed in by an enterprise, unless it shall need to verify the essential contents of the annual inspection documents.

Where the essential contents of the annual inspection documents need to be verified, the enterprise registration organ shall send two or more functionaries for the verification.

Article 12

Where the annual inspection documents accord with the provisions upon examination, the enterprise registration organ shall affix a seal of passing the annual inspection on the duplicate of the business license and return the duplicate to the enterprise; otherwise, the enterprise registration organ shall order the enterprise to make corrections within the time limit, and after the annual inspection documents are found to accord with the provisions, the enterprise registration organ shall affix a seal of passing the annual inspection on the duplicate of the business license and return the duplicate to the enterprise. Where the enterprise shall implement the alteration registration in accordance with law and the items involved in the business license thus shall be altered, the enterprise registration organ shall affix a seal of passing the annual inspection on the duplicate of the new business license after the alteration registration.

Article 13

An enterprise registration organ shall mainly examine such contents in the annual inspection documents handed in by a company as follows:

(1)

Whether the company has used its name in accordance with the provisions, or whether the company has gone through the formalities of alteration registration in accordance with the provisions for renaming;

(2)

Whether the company has gone through the formalities of alteration registration in accordance with the provisions for changing its domicile;

(3)

Whether the company has gone through the formalities of alteration registration in accordance with the provisions for changing its legal person;

(4)

Whether the company makes a false report on its registered capital, whether its shareholders or promoters have made their contributions in accordance with the provisions or have withdrawn their capital contributions;

(5)

Whether the relevant licensing certificates or approval documents have been cancelled, revoked or have expired if there is any business item subject to pre-registration administrative license within the business scope of the company, and whether the business operations of the company are within the scope of its registered business operations;

(6)

Whether the company has gone through the formalities of alteration registration in accordance with the provisions for the equity transfer of its shareholders or promoters;

(7)

Whether the business term of the company has come to the due date;

(8)

Whether the company has gone through the formalities for archival filing in accordance with the provisions for the modification of its articles of association or alteration of its directors, supervisors or managers;

(9)

Whether the company has gone through the formalities for archival filing in accordance with the provisions for the establishment of a branch, whether any of its branches has been cancelled or been ordered to be closed or its business license has been revoked;

(10)

Whether the liquidation group has gone through the formalities for archival filing in accordance with the provisions after the company has come into the procedures of liquidation; and

(11)

Whether one natural person has invested to set up two or more one-person limited companies.

Article 14

An enterprise registration organ shall mainly examine such contents in the annual inspection documents handed in by a non-corporate enterprise legal person as follows:

(1)

Whether the enterprise has used its name in accordance with the provisions, or whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for it's renaming;

(2)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its domicile or business place;

(3)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its legal person;

(4)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its economic nature;

(5)

Whether the relevant licensing certificates or approval documents have been cancelled, revoked or expired if there is any business item subject to pre-registration administrative license in the business scope of the enterprise, and whether the business operations of the enterprise are within the scope of its registered business operations;

(6)

Whether have the act of withdrawn or transferred the registered capital;

(7)

Whether the business term of the enterprise has come to the due date;

(8)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for the setting up or cancellation of any branch;

(9)

Whether the enterprise has gone through the formalities for archival filing in accordance with the provisions for changing its department in-charge; and

(10)

Whether the enterprise has modified its articles of association.

Article 15

An enterprise registration organ shall mainly examine such contents in the annual inspection documents handed in by a partnership enterprise as follows:

(1)

Whether the enterprise has used its name in accordance with the provisions, or whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for renaming;

(2)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its business place;

(3)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing the partner in charge of partnership affairs;

(4)

Whether the relevant licensing certificates or approval documents have been cancelled, revoked or have expired if there is any business item subject to pre-registration administrative license within the business scope of the enterprise, and whether the business operations of the enterprise are within the scope of its registered business operations;

(5)

Whether the business operational mode of the enterprise is within the scope of its registered business operational modes;

(6)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing the name or domicile of any of its partners;

(7)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing the amount or mode of contribution of any of its partners; and

(8)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for the setting up or cancellation of any of its branches.

Article 16

An enterprise registration organ shall mainly examine such contents in the annual inspection documents handed in by a sole-investor enterprise as follows:

(1)

Whether the enterprise has used its name in accordance with the provisions, or whether the company has gone through the formalities of alteration registration in accordance with the provisions for renaming;

(2)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its domicile;

(3)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing the name or domicile of its contributor;

(4)

Whether the relevant licensing certificates or approval documents have been cancelled, revoked or expired if there is any business item subject to pre-registration administrative license within the business scope of the enterprise, and whether the business operations of the enterprise are within the scope of its registered business operations;

(5)

Whether the business operational mode of the enterprise is within the scope of the registered business operational modes; and

(6)

Whether the enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing the amount or mode of contributions of the contributor.

Article 17

An enterprise registration organ shall mainly examine such contents in the annual inspection documents handed in by a non-legal-person branch of an enterprise, an enterprise from a foreign country (region) that engaged in business operations in China or any other business operational entity as follows:

(1)

Whether the relevant enterprise has used its name in accordance with the provisions, or whether it has gone through the formalities of alteration registration in accordance with the provisions for renaming;

(2)

Whether the relevant enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its business (operation) place;

(3)

Whether the relevant enterprise has gone through the formalities of alteration registration in accordance with the provisions for changing its person-in-charge;

(4)

Whether the relevant licensing certificates or approval documents have been cancelled, revoked or expired if there is any business item subject to pre-registration administrative license within its business scope, and whether its business operations are within the scope of its registered business operations; and

(5)

Whether any other business entity has gone through the formalities of alteration registration in accordance with the provisions for changing its parent institution.

Article 18

An enterprise registration organ or administrative office for industry and commerce that is authorized to implement the annual inspection shall report the annual inspection circumstance to the authorizing enterprise registration organ before July 31.

An enterprise registration organ shall, before July 31, report the annual inspection circumstance to the administrative office for industry and commerce at the locality of enterprises, and the administrative office for industry and commerce shall bring the annual inspection information into the economic registration information of the enterprises.

Article 19

If an enterprise fails to accept the annual inspection in accordance with the provisions, the enterprise registration organ shall order it to accept the annual inspection within the time limit. If it is a company, it shall be imposed a fine from RMB 10, 000 Yuan to RMB100, 000 Yuan. If it is a subsidiary, a non-corporate enterprise legal person or any of its branches or an enterprise from a foreign country (region) that engages in business operations in China or any other business operational entity, it shall be imposed a fine less than RMB 30,000 Yuan. And if it is a partnership enterprise, a sole-investor enterprise or any of its branches, it shall be imposed a fine less than RMB 3,000 Yuan.

If an enterprise still fails to accept the annual inspection within the time limit after being ordered to do so, the enterprise registration organ shall announce it. If it still fails to accept the annual inspection within 60 days as of announcement, its business license shall be revoked in accordance with law.

Article 20

If an enterprise keeps from actual situation or resorts to deceits in the annual inspection, the enterprise registration organ shall order it to make corrections within the time limit. If it is a company, it shall be imposed a fine from RMB10, 000 Yuan to RMB 50,000 Yuan. Where the circumstance is serious, its business license shall be revoked. If it is a subsidiary, a non-corporate enterprise legal person or any of its branches or an enterprise from a foreign country (region) that engages in business operations in China or any other business entity, it shall be imposed a fine less than RMB 30,000 Yuan. If it is a partnership enterprise, a sole-investor enterprise or any of its branches, it shall be imposed a fine less than RMB 3,000 Yuan.

Article 21

Where an enterprise registration organ finds, in the course of annual inspection, that an enterprise commits any act in violation of the provisions on enterprise registration administration, it may, except to order the enterprise to make corrections give punishment on the enterprise in accordance with the provisions on enterprise registration administration.

Article 22

Where an enterprise registration organ or any of its functionaries refuses to implement the annual inspection for an enterprise which accords with the provisions or implements the annual inspection for an enterprise which fails to accord with the provisions, or arbitrarily charges fees by taking advantage of annual inspection, charges fees by making use of annual inspection, deducts other fees, asks for or accepts property or money of others or seeks for other interests, the principal and other persons who are directly responsible shall be subject to the corresponding liabilities n accordance with the laws and disciplines.

Article 23

The formats of the reports on annual inspection and the styles of the seals for annual inspection shall be uniformly regulated by the State Administration for Industry and Commerce.

Article 24

These Measures shall be implemented as of March 1, 2006. The Measures for the Annual Inspection of Enterprises, which was promulgated on December 13, 1996(Order of the State Administration for Industry and Commerce, No.61) and was amended on December 3, 1998 (Order of the State Administration for Industry and Commerce, No.86), shall be abolished simultaneously.