Laws of the People's Republic of China

Ministry of Commerce

Official Reply of the Ministry of Commerce on Several Issues Concerning the Liquidation Termination and Operation Resumption of Foreign Funded Enterprises in the Course of Their Liquidation

Shang Fa Han [2004] No.45

Guangzhou Foreign Trade and Economic Cooperation Bureau:

In response to your Request for Instructions to Several Issues Concerning the Application Filed by the Guangzhou Anwang Rubber Tyre Co., Ltd for Continuous Operation (Hui Wai Jing Mao Zi [2004] No. 28), related issues are hereby replied as follows:

Where a foreign funded enterprise goes through such formalities as to during its operation period apply for early termination of its contract and articles of association followed by its dissolution, then to enter a liquidation procedure after approved by the examination and approval authority, and lastly to apply to the said authority for liquidation termination and operation resumption in the course of its liquidation, the said authority shall, without prejudice to the interests of any creditor of the enterprise, third person or the public and in no violation of policies concerning the utilization of industries with foreign investment, approve the said enterprise under the liquidation to terminate its liquidation and resume operation.

An enterprise applying for termination of liquidation and resumption of operation must comply with relevant Chinese laws and regulations and meet the following requirements:

1.

Its investors unanimously agree to terminate its liquidation and resume the operation;

2.

Its authoritative organ decides to terminate its liquidation and resume the operation;;

3.

The liquidation committee agrees on the termination of liquidation and resumption of operation and submits statements to the progress of liquidation activities;

4.

It hasn't nullified its registration with the administration for industry and commerce;

5.

Its period of operation hasn't expired;

6.

It satisfies all requirements of laws and regulations in terms of the business premise of a legal person;

7.

It hasn't have its property distributed yet or a shareholder having shared the said property has returned or undertakes to return such property within a specified period; and

8.

Neither investors nor it has any committed act in violation of laws, regulations and rules.

Whereas, the examination and approval authority shall demand an applicant submit the following documents:

1.

an application letter signed and sealed by all the investors with respect to the termination of liquidation and resumption of operation;

2.

a resolution adopted by the enterprise authoritative organ in terms of the termination of liquidation and resumption of operation;

3.

a letter of the liquidation committee on approving the termination of liquidation and resumption of operation;

4.

statements of the liquidation committee on the progress of liquidation activities;

5.

the articles of association, contract, approval certificates and business license of the enterprise;

6.

a certificate showing any shareholder having shared the property of the enterprise has returned such property or a letter of such shareholder undertaking to return the enterprise's property in the possession of him within a specified period; and

7.

other documents as required by departments of commerce.

An official reply is hereby given that the examination and approval authority may, after the aforesaid documents undergo its examination and are found correct, directly reply to whether or not approve the application filed by an enterprise for its liquidation termination and operation resumption. Should the liquidation termination and operation resumption be granted, a prior official reply on approving an application for early termination of the contract and articles of association and the dissolution of the enterprise shall not be required to be revoked. The approval reply shall be copied to enterprise's department in charge, the Customs, authorities for foreign exchange control, authorities responsible for the registration of enterprises and tax authorities at the same time.

Ministry of Commerce of the People's Republic of China

July 15, 2004