Laws of the People's Republic of China

China Banking Regulatory Commission

Order of China Banking Regulatory Commission

No. 5

The "Measures for the Administration of Enterprise Group Finance Companies", which were discussed and adopted at the 23rd chairman meeting of China Banking Regulatory Commission, are hereby printed and distributed, and shall go into effect as of September 1, 2004.

Liu Mingkang, the Chairman of China Banking Regulatory Commission

July 27, 2004

Measures for the Administration of Enterprise Group Finance Companies

Chapter I General Provisions

Article 1

For the purpose of regulating the acts of enterprise group finance companies (hereinafter referred to as finance companies), preventing financial risks and promoting the stable operation and healthy development of finance companies, the present Measures are formulated according to the "Company Law of the People's Republic of China", the "Banking Regulatory Law of the People's Republic of China" and other relevant laws and administrative regulations.

Article 2

The "finance companies"as mentioned in the present Measures refers to non-bank financial institutions which provide financial management services for the enterprise group member entities (hereinafter referred to as member entities) for the purpose of strengthening the centralized management of enterprise group funds and improving the efficiency of using the funds.

A finance company established by a foreign-funded investment company for providing its investment enterprises in China with financial management services shall be governed by the relevant provisions of the present Measures.

Article 3

The "enterprise group"as mentioned in the present Measures refers to an association of enterprise artificial persons, which is lawfully registered within the territory of the People's Republic of China, and is composed of parent companies, subsidiary companies, share-participating companies and other member enterprises or businesses, which are bonded by means of capital, with the parent and subsidiary companies as the principal part, and with the articles of association of the group as the common behavior criteria.

The "member entities"as mentioned in the present Measures include the parent company, its subsidiary companies with not less than 51% of shares held by the parent company (hereinafter referred to as subsidiary companies), companies with not less than 20% of their shares solely or jointly held by the parent company or its subsidiary companies or companies with less than 20% of shares but in a status as the largest shareholder; and public institution juridical persons or social organization juridical persons subordinate to the parent company or the subsidiary companies.

The "foreign-funded investment companies"as mentioned in the present Measures refers to a company established within the territory of China with the sole investment of a foreign investor to directly undertake investment activities. The "investment enterprises"include the foreign-funded investment companies, and the enterprise which is registered within the territory of China and whose more than 25% of shares is held by the foreign-funded investment company either solely or jointly with its investors but 10% of shares is held by the foreign-funded investment company. Foreign-funded investment companies shall be subject to the relevant provisions of the present Measures on parent companies, while investment enterprises shall be subject to the relevant provisions of the present Measures on member entities.

Article 4

The finance company shall operate its business according to the laws, regulations and rules, and may not damage the interests of the state or the public.

Article 5

The finance companies shall accept the supervision and administration of China Banking Regulatory Commission according to law.

Chapter II Establishment and Modification of Institutions

Article 6

The establishment of a finance company shall be reported to China Banking Regulatory Commission for examination and approval.

The name of a finance company shall be approved by the industrial and commercial registration organ, and be marked with the words of "Finance Limited Company" or "Finance Limited Liability Company", and the name of the enterprise group either in a full form or in a shortened form. Without the approval of China Banking Regulatory Commission, no entity may use the words of "Finance Company" in its name.

Article 7

An enterprise group applying for the establishment of a finance company shall meet the following conditions:

(1)

According with the industrial policies of the state;

(2)

In the year prior to its application, the registered capital of its parent company is not less than RMB 800 million Yuan;

(3)

In the year prior to its application, the total amount of the assets of its member entities consolidated into statements for accounting as required is not less than RMB 5 billion Yuan, the ratio of return on equity not lower than 30%;

(4)

In the two consecutive years prior to its application, the total amount in each year of the business income of its member entities consolidated into statements for accounting as required is not less than RMB 4 billion Yuan, the total amount of pre-tax profits in each year not less than RMB 200 million Yuan;

(5)

Its cash flow is stable and large;

(6)

Its parent company has been established for 2 years or more, and has experiences in internal financial management and fund management in enterprise group;

(7)

Its parent company has a sound corporate governance structure, and has neither any act in violation of laws or rules nor any ill credibility record in the latest 3 years;

(8)

Its parent company has core business; and

(9)

Its parent company has no inappropriate related party transactions.

The foreign-funded investment company shall, in addition to being subject to the provisions of Items (1), (2), (5), (6), (7), (8) and (9) of this Article, have no less than RMB 2 billion Yuan of net assets in the year prior to its application and no less than RMB 200 million Yuan of pre-tax profits each year in the two consecutive years prior to its application.

Article 8

When applying for the establishment of a finance company, the board of directors of the parent company shall make a written commitment to, in the case of an urgent situation of payment difficulties, increase capital accordingly pursuant to the actual needs in resolving the payment difficulties, and state such increase in the articles of association of the finance company.

Article 9

Whoever plans to establish a finance company shall satisfy the following conditions:

(1)

Its enterprise group funds are really in need of centralized management, and are reasonably forecasted to achieve a certain business scale;

(2)

It has the articles of association is in line with the "Company Law of the People's Republic of China" and the present Measures;

(3)

It has the minimum registered capital as required by the present Measures;

(4)

It has qualified directors and senior managers as required by China Banking Regulatory Commission, a prescribed proportion of employees in this field as well as qualified professionals competent for such key posts as risk management, intensive fund management, etc.;

(5)

It has sound systems in respect of corporate governance, internal control, business operation, risk prevention, etc.;

(6)

It has the business place, safety prevention measures and other facilities, which meet relevant requirements; and

(7)

Other conditions as provided for by China Banking Regulatory Commission.

Article 10

The minimum registered capital for the establishment of a finance company shall be RMB 100 million Yuan. And the registered capital shall be the paid-up capital in Renminbi or an equivalent amount of convertible currency.

The registered capital of a finance company undertaking foreign exchange business shall include no less than 5 million USD or an equivalent amount of convertible currency.

China Banking Regulatory Commission may, in light of the development of finance companies and needs of prudent supervision, adjust the minimum limit of the registered capital of finance companies.

Article 11

The finance company's registered capital shall be mainly raised from its member entities, and may also absorb the shares of qualified institutional investors other than those of the member entities.

The "qualified institutional investor"as mentioned in this Article refers to an external strategic investor who will not transfer the finance company's shares it holds within 5 years in principle and has rich management experiences in the industry.

The qualifications of the shareholders of the finance company shall comply with the relevant provisions of China Banking Regulatory Commission.

Article 12

The registered capital for the establishment of a finance company by a foreign-funded investment company may be contributed by the foreign-funded investment company either solely or jointly with its investors.

Article 13

Among the employees of a finance company, those who have engaged in banking or financial work for 3 years or more may not be lower than two thirds of all the employees, and those who have engaged in banking or financial work for 5 years or more may not be lower than one third of all the employees.

Where an auditor of an world famous accounting firm, a program designer or system analyst of a computer company, or a professional who has held the relevant business or management post for 2 years or more in an world famous asset management company, a fund company, an investment bank or a securities company, and has participated in the relevant domestic business and policy training, he shall be considered to have engaged in banking or financial work for 3 years or more.

Article 14

The establishment of a finance company shall undergo two stages, namely, preparation and opening business. To apply for preparation prior to the establishment of a finance company, the parent company shall file an application to China Banking Regulatory Commission, and submit the following documents and materials:

1.

The application letter, which covers the name, locus, registered capital, shareholders, equity structure, business scope, etc. of the finance company to be established;

2.

The feasibility study report, which shall contains:

(1)

The overall production and management situation of the parent company and other member entities, their cash flow analysis, their position in the industry involved, and their mid and long-term development plan;

(2)

The purpose and functions of establishing the finance company and the business forecast;

(3)

The consolidated balance sheets, statements of profits and losses and the statements of cash flow of the latest 2 years, which have been audited by an eligible accounting firm.

3.

A name list of the member entities, and the relevant certification materials as issued by relevant authorities;

4.

The "Enterprise Group Registration Certificate", photocopies of the Business Licenses of the applicant and other investors, and their guaranty for capital contribution;

5.

In the case of the establishment of a foreign-funded finance company, the Approval Certificates of the Foreign-Funded Enterprise of the foreign-funded investment company and its investment enterprises.

6.

Testimonials signed by the juridical representative of the parent company to confirm the authenticity of the abovementioned documents; and

7.

Other documents as required by China Banking Regulatory Commission.

Article 15

Where the application for preparation prior to the establishment of a finance company is approved by China Banking Regulatory Commission after examination, the applicant shall, within 3 months as of receipt of the approval document, complete the preparatory work for the establishment of the finance company, and file an application to China Banking Regulatory Commission for opening business and submit the following documents in the meantime:

(1)

A draft of the articles of association of the finance company;

(2)

Operation guidelines and plans of the finance company;

(3)

A name list of the shareholders of the finance company, and their respective amounts and proportions of investment contributed;

(4)

A capital verification certificate issued by a legal capital verification institution on the capital contributions of the shareholders of the finance company;

(5)

A name list of the candidates of directors and officers, detailed resumes thereof, and testimonials on their competence for such posts;

(6)

A name list of the candidates of employees for the job of risk management and centralized fund management, and their detailed resumes;

(7)

Testimonials of the relevant personnel certifying that they have engaged in banking or financial work for 5 years or more;

(8)

The finance company's business rules and risk prevention systems;

(9)

Documents on the finance company's business place and other related facilities; and

(10)

Other documents as required by China Banking Regulatory Commission

Article 16

After China Banking Regulatory Commission approves an application of a finance company for opening business, it shall issue the "Financial Business Permit" and make an announcement. The finance company may not open business until it has registered with the administrative department for industry and commerce upon the strength of the "Financial Business Permit", and has obtained the "Business License of Enterprise Juridical Person".

Article 17

The finance company may, in light of the needs of its business and upon the examination and approval from China Banking Regulatory Commission, establish a branch in an area where it has many member entities and large amount of businesses.

The branches of a finance company don¡¯t have the status of a legal person, and shall carry out their business activities upon authorization of the finance company according to the present Measures, with the civil liabilities borne by the finance company.

Article 18

The finance company may, in light of the needs of its business management, establish a representative office in the area where its member entities are densely located, and report it to China Banking Regulatory Commission for archival purposes.

No representative office of the finance company may operate business, except for undertaking such work as business recommendation, customer services, pressing for payment of debts, information collection and feedback and etc.

Article 19

The finance company applying for the establishment of a branch shall satisfy the following conditions:

(1)

It really needs to develop its business and provide financial management services to its member entities;

(2)

It has been established for 2 years or more, and its registered capital is not less than RMB 300 million Yuan and its capital adequacy ratio not lower than 10%;

(3)

There shall be not less than 10 member entities which the to-be-established branch will serve, and the total assets of such member entities may not be lower than RMB 1 billion Yuan; or if there are less than 10 member entities, the total assets of such member entities may not be lower than RMB 2 billion Yuan;

(4)

It is in good operation status, and has no records of irregular operations;

Article 20

The branch of a finance company shall satisfy the following conditions:

(1)

Having the minimum amount of working capital as provided for in the present Measures;

(2)

Having senior managers with qualifications to hold their posts as stipulated by China Banking Regulatory Commission;

(3)

Having sound systems on business operation, internal control, risk management, and assumption of liabilities;

(4)

Having the business place, preventive measures for safety, and other facilities related to the business, which conform to the relevant requirements; and

(5)

Other conditions as provided for by China Banking Regulatory Commission.

Article 21

The working capital of the branch of a finance company may not be less than RMB 50 million Yuan. And the total amount of the working capital allotted by a finance company to all its branches may not be more than 50% of its registered capital.

Article 22

When a finance company applies for the establishment of a branch, it shall submit the following documents and materials to China Banking Regulatory Commission:

(1)

An application letter containing the name, locus, working capital, business scope, the objects of service and etc. of the branch to be established,;

(2)

The feasibility study report including the forecasted amount of business of the branch to be established, the conditions of production and operation of the member entities at the locality, the fund flow analysis, as well as the mid and long-term development plans, etc.;

(3)

Relevant testimonials conforming to the provisions of Article 20 ;

(4)

The resolution of the finance company's board of directors on applying for the establishment of the branch, and the resolution draft on authorization of the business scope of the branch to be established; and

(5)

Other documents as required by China Banking Regulatory Commission.

Article 23

For a finance company's branch that is approved to be established, China Banking Regulatory Commission shall issue the "Financial Business Permit" to it and shall make an announcement. The branch may not open its business until it has gone through the registration formalities in the administrative department for industry and commerce upon the strength of the "Financial Business Permit" and has obtained the Business License.

Article 24

Where a finance company or its branch that is approved to be established does not open its business within 6 months as of the date of obtaining the Business License without justifiable reasons, or suspends its business for 6 consecutive months as of the date of opening its business without justifiable reasons, its "Financial Business Permit" shall be revoked by China Banking Regulatory Commission, and such revocation shall be announced to the public.

Article 25

The finance company shall use the "Financial Business Permit" according to the laws, administrative regulations and the provisions of China Banking Regulatory Commission, and is prohibited from counterfeiting, altering, transferring, leasing or lending the "Financial Business Permit".

Article 26

The nature, organizational form and organizational structure of a finance company shall comply with the "Company Law of the People's Republic of China" and other relevant laws and regulations, and shall be stated in the company's articles of association.

Article 27

If a finance company plans to modify any of the following items, it shall report to China Banking Regulatory Commission for approval:

(1)

Its name;

(2)

Its business scope;

(3)

Its registered capital;

(4)

Its shareholder(s) or equity structure;

(5)

Its articles of association;

(6)

Its director(s) or senior manager(s);

(7)

Its business place; or

(8)

Other matters as prescribed by China Banking Regulatory Commission.

Where a finance company's branch intends to modify its name, working capital, business place or to replace any of the senior managers, the finance company shall report it to China Banking Regulatory Commission for approval.

Chapter III Business Scope

Article 28

The finance company may operate the whole or part of the following businesses:

(1)

Providing its member entities with financial and financing advise, credit authentication, as well as related consultation and agency services;

(2)

Assisting its member entities in collection and payment of money for transactions;

(3)

Providing approved insurance agency services;

(4)

Providing guarantee to its member entities;

(5)

Handling entrusted loans and entrusted investments between member entities;

(6)

Handling acceptance and discount of bills for member entities;

(7)

Handling internal transfer settlement between member entities, and designing programs for settlement and clearance accordingly;

(8)

Absorbing deposits from its member entities;

(9)

Granting loans to and handling financial lease for the member entities;

(10)

Engaging in inter-bank borrowing; and

(11)

Other businesses as approved by China Banking Regulatory Commission.

Article 29

The finance company which satisfies the prescribed conditions may apply to China Banking Regulatory Commission for undertaking the following businesses:

(1)

Issuing finance company bonds upon approval;

(2)

Underwriting enterprise bonds of the member entities;

(3)

Contributing share right investments to financial institutions;

(4)

Securities investment; and

(5)

Undertaking consumption credit, buyer's credit and financial lease of the products of the member entities.

Article 30

The finance company must, when engaging in the businesses as listed in Article 29 of the present Measures, strictly comply with the relevant provisions of the state and the relevant requirements of China Banking Regulatory Commission on prudent supervision, and shall also meet the following conditions:

(1)

It has been established for not less than 1 year, and is in good management condition;

(2)

Its registered capital is not less than RMB 300 million Yuan; and if it engages in consumption credit, buyer's credit and financial lease of the products of its member entities, its registered capital is not less than RMB 500 million Yuan;

(3)

It has been approved by the shareholders' meeting and authorized by the board of directors;

(4)

It has sound investment decision-making mechanism, risk control system, working regulations and corresponding management information system;

(5)

It has corresponding qualified professionals; and

(6)

Other conditions as prescribed by China Banking Regulatory Commission.

Article 31

The finance company may not engage in any offshore business, nor may it engage in any form of cross-border fund business except those as provided for in Paragraph 2 of Article 28 of the present Measures.

Article 32

The business scope of a finance company shall, after approved by China Banking Regulatory Commission, be stated in the finance company's articles of association. The finance company may not undertake any non-financial businesses such as industrial investment and trade.

The finance company shall, when classifying its business into detailed types within the approved business scope, report to China Banking Regulatory Commission for archival purposes, with an exception of the intermediary businesses involving no credits or debts.

Article 33

The business scope of a finance company's branch shall be authorized by the finance company within its business scope in light of the principle of prudent operation, and shall be reported to China Banking Regulatory Commission for archival purposes. No branch of a finance company may provide guarantee, undertake the inter-bank borrowing (lending) and the businesses as prescribed in Article 29 of the present Measures.

Chapter IV Supervision, Administration and Risk Control

Article 34

The finance company shall, when running its business, accord with the following requirements on asset-liability ratio:

(1)

Its capital adequacy ratio may not be lower than 10%;

(2)

The amount of the capital borrowed may not be more than the total amount of its capital;

(3)

The guarantee balance may not be more than the total amount of its capital;

(4)

The ratio of its short-term securities investments to the total amount of its capital may not be higher than 40%;

(5)

The ratio of its long-term investments to the total amount of its capital may not be higher than 30%; and

(6)

The ratio of its own fixed assets to the total amount of its capital may not be higher than 20%.

China Banking Regulatory Commission may, in light of business development of finance companies or the needs of prudent supervision, make adjustments to the above-mentioned ratios.

Article 35

The finance company shall, according to the principle of prudent operation, set down its business rules and procedures, establish and perfect its internal control system.

Article 36

The finance company shall establish respectively a risk management department and an auditing department which are responsible to the board of directors, and shall formulate risk control and auditing systems for various types of business, which shall be regularly reported to the board of directors each year and to China Banking Regulatory Commission.

Article 37

The board of directors of a finance company shall entrust a qualified intermediary institution each year to audit the company's business activities of the last year, and shall, before April 15 of each year, submit to China Banking Regulatory Commission the annual audit report which has been signed and confirmed by the chairman of the board.

Article 38

The finance company shall establish and improve its financial and accounting systems according to the relevant provisions of the state.

The finance company shall comply with the principle of prudent accounting, faithfully record and entirely reflect its business activities and financial situation.

Article 39

The finance company shall, according to the provisions, submit to China Banking Regulatory Commission its balance sheet, statement of profits and losses, statement of cash flow, statement of examination on its non-on-site supervision indicators, and other statements as required by China Banking Regulatory Commission, and shall, within 1 month as of the end of each fiscal year, submit the financial statements and documents of the last year.

The legal representative of the finance company shall be responsible for the authenticity of the above-mentioned statements submitted bearing his signature.

Article 40

The finance company shall, by the end of April each year, submit to China Banking Regulatory Commission the directory of the member entities under the enterprise group to which it belongs, and shall provide the information on the operating situation in the last year of the foresaid enterprise group and relevant data, as well.

The finance company shall, before starting business with a new member entity, be filed timely with China Banking Regulatory Commission for archival purposes, and shall provide the relevant information on the member entity. Where a member entity having business contacts with the finance company is separated from the enterprise group due to the change of equity, the finance company shall timely report it to China Banking Regulatory Commission for archival purposes; and if there is any remaining business, it shall meanwhile submit a solution to the remaining business.

Article 41

China Banking Regulatory Commission has the power to require a finance company at any time to submit reports and information on the relevant business and financial situation.

Article 42

When a finance company meets with bank run, failure to discharge debts due, large amount of overdue loans, advancement of money for providing guarantee, or serious computer breakdown, the case where it is robbed or deceived, or the involvement of any of its directors or senior mangers in such major events as serious violation of disciplines or criminal case and etc., it shall immediately take emergency measures and timely report to China Banking Regulatory Commission.

When an enterprise group or any of its member entities meets with a major organization change, a equity transaction or an operation risk, or other matters, which might impair the normal operation of the finance company, the finance company shall timely report to China Banking Regulatory Commission.

Article 43

The finance company shall pay deposit reserve and draw loss reserve according to the provisions of the People's Bank of China, and write off its losses according to the relevant provisions.

Article 44

The finance company shall comply with the relevant provisions of the People's Bank of China on interest rate management; those operating foreign exchange business shall comply with the relevant provisions of the state on foreign exchange control.

Article 45

China Banking Regulatory Commission has the power to take the following measures according to the relevant procedures and provisions to make on-site inspections on finance companies pursuant to the requirements of prudent supervision:

(1)

Entering a finance company for inspection;

(2)

Enquiring of employees of a finance company, and requiring them to explain the particulars related to inspection;

(3)

Consulting and reproducing documents of a finance company, which are related to the inspection, and sealing up the documents that might be transferred, concealed or damaged; and

(4)

Conducting an inspection of a finance company's management data computer system.

Article 46

Where a finance company provides to a single shareholder a loan with the balance exceeding 50% of the finance company's registered capital or exceeding the shareholder's capital contribution to the finance company, the provision of the loan shall be timely reported to China Banking Regulatory Commission.

Article 47

Where the liabilities of a finance company's shareholder to the finance company remains overdue for 1 year or more, China Banking Regulatory Commission may order the shareholders' meeting of the finance company to transfer the shareholder's capital contribution and other equity to discharge his/its liabilities to the finance company.

Article 48

China Banking Regulatory Commission may, pursuant to the needs in performing duties and the problems found in daily supervision, have talks on supervision and management with the directors and senior managers of the finance company, and require them to give explanations on the finance company's business activities and such major events as risk management and etc..

Article 49

The directors and senior managers of a finance company shall have experiences in centralized management of finance company funds.

When a candidate is to hold the post of director or senior manager, the relevant documents of him shall, according to the provisions, be reported to China Banking Regulatory Commission for examination on his qualifications for the post. If his qualifications for the post have not been examined or he is examined as unqualified for the post, he may not hold the post of director or senior manager of the finance company. The specific measures on the administration of qualification for such posts shall be formulated separately.

If a director or any of the senior managers of a finance company leaves his post, an audit on such leaving shall be made by the parent company according to the relevant provisions, and the audit report shall be submitted to China Banking Regulatory Commission.

Article 50

Where a finance company violates the principle of prudent operation, China Banking Regulatory Commission shall, according to the procedures, order it to make corrections within a time limit. If it fails to make corrections within the time limit, or its behavior seriously endangers the stable operation of the finance company, or damages the legitimate rights and interests of depositors or other clients, China Banking Regulatory Commission may take the following measures according to the relevant procedures:

(1)

Ordering it to suspend part of its business, and stopping approving it to run new business;

(2)

Restricting its distribution of dividends and other incomes;

(3)

Restricting the transfer of its assets;

(4)

Ordering the controlling shareholder to transfer its equity or restricting the rights of the relevant shareholders;

(5)

Ordering it to adjust its directors and senior managers or restricting their rights; and

(6)

Stopping approving it to establish any new branch.

Article 51

Finance companies may establish an industrial self-disciplinary organization. And China Banking Regulatory Commission shall provide business guidance to the industrial self-disciplinary organization of finance companies.

Chapter V Rectification, Takeover and Termination

Article 52

Where a finance company is under any of the following circumstances, China Banking Regulatory Commission may order it to make rectification:

(1)

It meets with serious payment crisis;

(2)

Its loss in the current year exceeds 30% of the registered capital or it has been in a situation for 3 consecutive years where its loss exceeds 10% of the registered capital;

(3)

It seriously violates the laws and administrative regulations of the state or the relevant rules.

The time for rectification may not be longer than 1 year.

Article 53

During the rectification of a finance company, part or all of its businesses shall be temporarily suspended.

Article 54

If a finance company meets the following conditions after rectification, it may resume its normal business:

(1)

It has restored the solvency;

(2)

Its loss has been made up; or

(3)

It has corrected its irregularities.

Article 55

When a finance company has met with or is possible to meet with payment crisis, and thus seriously impairs creditors' benefits or the stability of financial order, China Banking Regulatory Commission may take over the finance company or help the finance company with institution restructuring according to law.

The takeover or institution restructuring shall be decided on and organized by China Banking Regulatory Commission.

Article 56

Where a finance company is under any of the following circumstances, it shall be dissolved upon approval of China Banking Regulatory Commission:

(1)

The enterprise group which formed the finance company is dissolved, and the finance company is unable to be merged or restructured;

(2)

Any of the causes as prescribed in the articles of association for dissolution occurs;

(3)

The shareholders' meeting decides to dissolve the finance company; or

(4)

There is no need for the existence of the finance company because of division or merger.

Article 57

Where a finance company is involved in any illegal operation, ill management and etc., ,which will seriously endanger the financial order and public interests if the finance company is not cancelled, China Banking Regulatory Commission shall have the power to cancel it.

Article 58

Where a finance company is taken over, restructured or cancelled, China Banking Regulatory Commission shall have the power to require the directors, senior managers and other employees of this finance company to perform their duties pursuant to the requirements of China Banking Regulatory Commission.

Article 59

Where a finance company is dissolved or cancelled, its parent company shall lawfully form a liquidation group pursuant to the legal procedures, which shall be publicized by China Banking Regulatory Commission.

China Banking Regulatory Commission may directly designate the members of the liquidation group and supervise the liquidation process.

Article 60

When the liquidation group finds in the course of liquidation that the assets of the finance company are insufficient to pay off its debts, it shall immediately cease the liquidation and report it to China Banking Regulatory Commission. Upon the approval of China Banking Regulatory Commission, it shall apply, according to law, to the people's court for declaring bankruptcy of the finance company.

Chapter VI Supplementary Provisions

Article 61

Whoever violates the relevant provisions of the present Measures shall be punished by China Banking Regulatory Commission according to the "Banking Regulatory Law of the People's Republic of China" and other relevant provisions.

In case a finance company refuses to accept the decision of China Banking Regulatory Commission on punishment, it may apply for administrative reconsideration or lodge an administrative lawsuit in the people's court according to law.

Article 62

Any finance company, which has been established prior to the promulgation of the present Measures and does not comply with the relevant provisions of the present Measures, shall make rectifications within the prescribed time limit, and shall, within the rectification period, comply with the provisions of the present Measures on prudent supervision in respect of paid-up capital, capital adequacy ratio and etc. The specific requirements shall be separately formulated by China Banking Regulatory Commission.

Article 63

The power to interpret the present Measures shall reside in China Banking Regulatory Commission.

Article 64

The present Measures shall go into effect as of September 1, 2004. The former "Measures for the Administration of Enterprise Group Finance Companies" (No. 3 [2000] of the People's Bank of China) shall be simultaneously abolished.