Laws of the People's Republic of China

The State Administration for Industry and Commerce

Official Reply of the State Administration for Industry and Commerce on the Issue of Whether the Shareholders of the Chinese Party to an Enterprise with Foreign Investment that Feign or Excavate Capital Contribution may be Punished by the Administration for Industry and Commerce at the County Level

GongShangWaiQiZi [2002] No.71

March 29,2002

The Administration for Industry and Commerce of Shandong Province:

The Request for Instructions on Whether the Shareholders of the Chinese Party to an Enterprise with Foreign Investment that Feign or Excavate Capital Contribution may be Punished by the Administration for Industry and Commerce at the County Level (LuGongShangWaiQiZi [2002] No.29) from your administration has been received. And the relevant issues are notified as follows after deliberation:

1.

According to the provisions of Article 208 and Article 209 of the Company Law, and Article 60 and Article 61 of the Regulations on the Administration of Company Registration, where the promoters or shareholders of a company feign or excavate the capital contribution, they shall be given administrative punishment by the organ of company registration.

Where the organ of company registration finds, during the investigation and handling of the aforesaid case, that the company has obtained the company registration by misstating registered capital, submitting false certifications or by other deceitful means, it shall impose administrative punishment on the company according to the provisions of Article 206 of the Company Law and Article 58 , Article 59 of the Regulations on the Administration of Company Registration.

2.

The organ of company registration shall order the promoters or shareholders to correct their acts of feigning or excavating capital contribution and to make up the registered capital of the company. Those refusing to correct shall be dealt with respectively according to the Reply on Whether the License of a Company shall be Revoked Whose Shareholders Excavate Registered Capital and Refuse to Correct the Act of the State Administration for Industry and Commerce (No.57 [2002] of the State Administration for Industry and Commerce).

3.

Where the promoters or shareholders of an enterprise with foreign investment in the form of company feign or excavate the capital contribution, the organ of registration of that enterprise with foreign investment shall give them the administrative punishment.

4.

Where the promoters or shareholders of a company are enterprise with foreign investments, they shall be given administrative punishment uniformly by the registration organ of that company for their acts of feigning or excavating capital contribution.

5.

In the execution of the aforesaid decisions on administrative punishment, the organ of company registration may deliver a written notification for assistance in execution to the registration organ of the place of residence of the person subject to administration who lives in other place. The registration organ of that place shall actively cooperate and assist in the execution according to law.

If any previous provisions or reply opinions on the aforesaid issue conflict with this Reply, this Reply shall prevail.