Laws of the People's Republic of China

    Article 1  These Measures are formulated for the purpose of meeting the
needs of opening to the outside world and the economic development of the
Shanghai Municipality, strengthening and perfecting the administration of
foreign-capital financial institutions and Chinese-foreign equity joint
financial institutions.

    Article 2  The term "foreign-capital financial institutions and
Chinese-foreign equity joint financial institutions", referred to in these
Measures, denotes the following institutions which are established with
approval and registered to engage in business operations in accordance with
these Measures and with the pertinent provisions of other laws and regulations
of the People's Republic of China:

    1) foreign-capital banks with their head offices established in the
Shanghai Municipality (hereinafter referred to as "foreign bank");

    2) branches of foreign banks established in the Shanghai Municipality
(hereinafter referred to as foreign branch bank");

    3) banks established in the Shanghai Municipality with joint capital and
operation by foreign financial institutions and Chinese financial institutions
(hereinafter referred to as "joint bank"); and

    4) financial companies established in the Shanghai Municipality with
joint capital and operation by foreign financial institutions and Chinese
financial institutions (hereinafter referred to as "joint financial company").

    Article 3  Foreign-capital financial institutions and Chinese-foreign
equity joint financial institutions shall abide by the laws and regulations of
the People's Republic of China and their legitimate business activities and
lawful rights and interests shall be protected by Chinese laws.

    Article 4  The People's Bank of China is the competent authority in charge
of examining and approving, administering, and supervising foreign-capital
financial institutions and Chinese-foreign equity joint financial institutions.
The People's Bank of China authorizes its Shanghai Branch to exercise
day-to-day administration and supervision of foreign capital financial
institutions and Chinese-foreign equity joint financial institutions.

    Chapter II  Establishment and Registration

    Article 5  Any party applying for the approval to set up a foreign bank
shall satisfy the following requirements:

    1) the investor is a financial institution;

    2) the applicant has a representative office of more than three years'
standing inside China; and

    3) the applicant possesses total assets of more than US$ 10 billion at
the end of the year prior to the submission of such an application.

    Article 6  Any party applying for the approval to set up a foreign branch
bank shall satisfy the following requirements:

    1) the applicant has a representative office of more than three years'
standing inside China;

    2) the applicant possesses total assets of more than US$ 20 billion at
the end of the year prior to the submission of such an application; and

    3) in the home country or region of the applicant, there is a sound system
for financial administration and supervision.

    Article 7  Parties applying for the approval to set up a joint bank or a
joint financial company shall satisfy the following requirements:

    1) each investing party to a joint bank or joint financial company is a
financial institution; and

    2) the foreign investor has a representative office inside China.

    Article 8  For a foreign bank to be set up, the foreign investor shall
apply to the people's Bank of China and submit the following documents and
data:

    1) an application for the establishment thereof, which shall include the
name of the intended bank, the registered capital and the amount of the
paid-in capital, and the types of business operations the bank intends to
engage in;

    2) a feasibility study report;

    3) the statements of assets and liabilities of the investor during the
three successive years prior to the submission of such an application,
together with the relevant certifying documents;

    4) the draft articles of association of the intended bank;

    5) a copy of the business licence of the investor approved and issued by
the competent authority concerned in the home country or region of the
investor and;

    6) other documents and data as required by the People's Bank of China.

    Article 9  For a foreign branch bank to be set up, the head office of the
foreign bank concerned shall apply to the People's Bank of China and submit
the following documents and data:

    1) an application duly signed by the chairman of the board of directors
or the general manager of the bank, which shall include the name of the
intended branch bank, the amount of operating funds approved and allocated
by the head office, and the types of business operations the branch bank
intends to engage in;

    2) annual reports for the three successive years prior to the submission
of such an application;

    3) a copy of the business licence of the applying bank approved and
issued by the competent authorities of the home country or region of the
applying bank; and

    4) other documents and data as required by the People's Bank of China.

    Article 10  For a joint bank or a joint financial company to be set up,
all the parties thereto shall jointly apply to the People's Bank of China
and submit the following documents and data:

    1) an application for the establishment thereof, which shall include the
name of the intended joint financial institution, the name of each investing
party thereto, the registered capital and the amount of the paid-in capital,
the respective percentage of contributions by the parties, and the types of
business operations the joint financial institution intends to engage in;

    2) a feasibility study report jointly prepared by the parties thereto;

    3) the agreement, the contract and the draft articles of association of
the joint financial institution initialled by the authorized representative
of each of the parties thereto;

    4) the statements of assets and liabilities of each of the parties
thereto during the three successive years prior to the submission of such
an application, together with relevant supporting documents;

    5) copies of the respective business licences of all the parties thereto
approved and issued by the competent authorities concerned of the home
country of region of each of the parties; and

    6) other documents and data as required by the People's Bank of China.

    Article 11  Any of the documents and data prescribed in Articles 8,9 and
10 of these Measures, with the exception of the annual reports, if written
in a foreign language, shall be submitted together with a Chinese translation
thereof.

    Article 12  After the application for the approval of such establishment
has been examined and approved by the People's Bank of China, an official
application form shall be issued to the applicant(s).

    The applicant(s) shall, after filling in the official application form,
formally apply to the People's Bank of China and shall submit the following
documents for the application:

    1) the official application form duly signed by the legal
representative(s) of the applicant(s) or the representative(s) authorized by
the applicant(s) (which shall be submitted in triplicate);

    2) a list of the principal persons in charge of the institution to be set
up and their respective curriculum vitae;

    3) power(s) of attorney for the principal persons in charge of the
institution;

    4) where a foreign branch bank is to be set up, letters of undertaking
issued by the head office assuming for its branch office the obligations for
tax payment and debt repayment; and

    5) other relevant data.

    Article 13  A foreign-capital financial institution or a Chinese-foreign
equity joint financial institution shall, within 30 days of receipt of the
certificate of approval issued by the People's Bank of China, undertake the
procedures of registration for the issuance of business licence with the
administrative department for industry and commerce in accordance with the
pertinent laws and regulations of the People's Republic of China and shall,
within 30 days of commencement of business operations, undertake the
procedures for tax registration with the tax authorities in accordance with
the law.

    Article 14  A foreign-capital financial institution or a Chinese-foreign
equity joint financial institution whose establishment has been approved
shall, after obtaining the business licence, apply to the State Administration
of Foreign Exchange Control for the approval and issuance of a Licence for
Business Operations in Foreign Exchange.

    Article 15  In the event that a foreign-capital financial institution or
a Chinese-foreign equity joint financial institution should fail to commence
its business operations within 12 months of receipt of the certificate of
approval issued by the People's Bank of China, the certificate of approval
shall automatically become null and void.

    Article 16  A foreign-capital financial institution or a Chinese-foreign
equity joint financial institution shall apply to the People's Bank of China
for verification and approval in respect of any one of the following items:

    1) adjustment and transfer of the investment capital stock;

    2) change of the business site;

    3) change of the chairman (or the vice-chairman) of the board of
directors, or the president (or the vice-president), the general manager
(or the deputy general manager), or the president (or vice-president) of a
branch office; and