Laws of the People's Republic of China

The State Administration for Industry and Commerce

Provisions on Several Issues Concerning Registration Administration of Companies

Decree [1998] No.83 of the State Administration for Industry and Commerce

January 7, 1998

Article 1

These Provisions are formulated in accordance with the Company Law of the people's Republic of China (hereinafter referred to as the Company Law) and the Regulations of the People's Republic of China Governing the Registration of Companies (hereinafter referred to as the Regulations Governing the Registration of Companies) for the purpose of standardizing the registration administration of companies.

Article 2

The establishment of a company shall conform to the requirements and procedures as stipulated in the Company Law and the Regulations Governing the Registration of Companies. Where the establishment does not conform to the requirements and procedures as stipulated in the Company Law and the Regulations Governing the Registration of Companies, it cannot be registered as a limited liability company or a joint stock limited company, nor may it be named as a "company".

The registration of enterprises other than companies (hereinafter referred to as non-company enterprises) shall be administered in accordance with the Regulations of the People's Republic of China on Administration of the Registration of Enterprise Legal Persons (hereinafter referred to as the Regulations on Administration of the Registration of Enterprise Legal Persons).

Article 3

Company registration authorities shall be the State Administration for Industry and Commerce and administrative departments for industry and commerce of provinces (including autonomous regions and municipalities directly under the Central Government, the same below), cities (including autonomous prefectures, the same below) and counties. The administrative departments for industry and commerce of prefectures, leagues and districts under the jurisdiction of large or medium-sized cities, and the administrative departments (sub-departments) for industry and commerce of bonded areas or development zones established with the approval of the people's governments at various levels shall have no authorities in company registration and shall not have a company registered.

A company that has its domicile located in a district under the jurisdiction of a municipality directly under the Central Government shall, except that which shall be registered by the State Administration for Industry and Commerce, be registered by the administrative departments for industry and commerce of the municipality directly under the Central Government.

The jurisdiction of company registration of the administrative departments for industry and commerce of cities and counties shall, by referring to the principles of dividing the jurisdiction of company registration between the State Administration for Industry and Commerce and the administrative departments for industry and commerce of provinces as stipulated in the Regulations Governing the Registration of Companies, be formulated in details by the administrative departments for industry and commerce of provinces based on the actual circumstances of these provinces.

Article 4

An administrative department for industry and commerce of a bonded area or a development zone, as well as a sub-department that is reorganized from an administrative department for industry and commerce of a district under the jurisdiction of a city in accordance with the Document No.[1994] 67 issued by the General Office of the State Council, may be authorized in writing by an administrative department for industry and commerce of a city to verify and approve the registration of a limited liability company, and to verify and issue a business license of enterprise legal person affixed with the stamp of the administrative department for industry and commerce of the city.

Article 5

To establish a company, except as otherwise provided by the laws and administrative regulations of the State, the shareholders shall directly make an application for registration to a company registration authority.

As stipulated in the Interim Regulations on Procedures for Formulation of Administrative Regulations promulgated by the State Council, administrative regulation is a general term for various types of regulations on politics, economy, education, science and technology, culture and foreign affairs, etc. that are formulated, on the basis of the Constitution and laws, by the State Council in accordance with the provisions of these Regulations for the purpose of directing and administering administrative work of the State. The tide for an administrative regulation may be regulations, provisions or measures.

Special examination and approval by the competent departments in charge of the relevant industries as stipulated in local regulations, departmental rules, local rules and other normative documents shall not be taken as prerequisite requirements for company registration.

Article 6

Where laws or administrative regulations stipulate that the establishment of a company shall be examined and approved or where any of the items of an company's business scopes must, as stipulated by laws or administrative regulations, be examined and approved, except those that shall be examined and approved by the State Council or the relevant departments of the State Council, the approval shall be obtained according to law from the examination and approval organ of the place where the company is located. For a joint stock limited company established with the approval of the people's government of a province, its establishment approval document thereof shall be affixed with the stamp of the people's government of the province.

Article 7

To apply to establish a wholly State-owned company, approval documents of an authorized investment institution or a department authorized by the State Council or the people's government of a province shall be submitted to the company registration authority. An authorized investment institution or a department authorized by the people's government below the province level shall handle the matter in accordance with the provisions of the State Council.

Article 8

To establish a company, the applicant shall apply for pre-approval of a company name to a registration authority that has the jurisdiction over verification of name.

Where the industry shown in the pre-approved company name is not approved by the department concerned, the company name shall be re-verified by the original name verification authority, or the applicant shall reapply for pre-approval of a company name.

Article 9

A "limited liability company" may be referred to as a "limited company" for short.

A company shall not be referred to as a "corporation" or a "group company". Where a company meets the requirements for an enterprise group, its core enterprise may be registered as a "group limited company", "group limited liability company" or "group joint stock limited company".

Article 10

A statutory capital verification institution that has the right to produce a capital verification certificate shall be a public accounting firm or an audit firm registered by an administrative department for industry and commerce. For a company into which State-owned assets are contributed as shares, the property registration of State-owned assets shall not be a document that must be submitted for company registration.

Article 11

Where the amount of capital contributions in the form of high and new technology achievements exceeds 20 per cent of the registered capital of a limited company, they shall be confirmed by a State or provincial administrative department of science and technology, and appraised and evaluated by a legally registered appraisal institution.

Where a shareholder makes its capital contributions in the form of land-use right, he shall obtain the approval from an approving department concerned, and shall undertake the procedures for property transfer in accordance with the relevant provisions of the State.

Article 12

Where the contents of the articles of association of a company violate the provisions of the laws or administrative regulations of the State, the company registration authority shall require the applicant to make amends. Where the applicant refuses to make such amends, the application for company registration shall be rejected.

Article 13

The enterprise type of companies shall be classified into limited liability company and joint stock limited company. Wholly State-owned companies shall belong to limited liability company, and the enterprise type thereof shall be "limited liability company (wholly State-owned) ". The enterprise type of listed joint stock limited company shall be "joint stock limited company (listed)".

Article 14

The establishment of a subsidiary shall conform to the requirements and procedures as stipulated in the Company Law and the Regulations Governing the Registration of Companies. Except that a State-authorized investment company may invest to establish a sole-investor subsidiary (i.e. wholly State-owned subsidiary), no company may establish a sole-investor subsidiary.

A company shall not establish any non-company enterprise legal persons, and shall not make investments as shares to any non-company enterprises, except for those companies restructured from non-company enterprises or those companies that merger non-company enterprises and standardize them as branches or subsidiaries in accordance with the Company Law.

Article 15

For an operating unit established by a company but not qualified as an enterprise legal person, the word "branch" may not be include in its name, but it shall undertake registration according to the procedures for branch registration.

The business scope of a branch shall not go beyond that of a company. Where a branch engages in any items that shall be subject to approval as stipulated by laws or administrative regulations, the matter shall be reported to the relevant departments of the State for approval.

Article 16

A company shall be issued with a Business License for Enterprise Legal Person and a Business License in 1994 version and a non-company enterprise shall be issued with a Business License for Enterprise Legal Person and a Business License in 1989 version. The stamp affixed to the business license shall be the official stamp of the registration authority, and shall not be replaced by the stamp specially used for registration.

Article 17

Where a State organ legal person, an association legal person, or an institution legal person acts as a shareholder or sponsor of a company, the matter shall be governed in accordance with the relevant provisions of the State.

An institution operated as an enterprise shall undertake enterprise legal person registration, and then it may make investments as shares in the name of enterprise legal person.

A "share-holding meeting of staff members" or any other similar organization that has already undertaken registration for association legal person may become a shareholder of a company.

Article 18

Where, in rural areas, a collective economic organization performs the functions of collective economic administration, the rural collective economic organization shall be act as an investing entity; Where there in no a collective economic organization, the functions of collective economic administration are performed by a villagers committee as a substitute, the villagers committee, as an investing entity, may make investments to establish a company. Where a villagers committee intends to make investments to establish a company, the villagers committee shall make a resolution on this matter.

Article 19

A urban residents committee with investing capability may invest to establish a company.

Article 20

Where an enterprise with foreign investment becomes a shareholder, it shall conform to the relevant laws, administrative regulations and policies. The relevant specific provisions shall refer to the Several Provisions of the State Administration for Industry and Commerce on Registration Administration of Enterprises with Foreign Investment Becoming Company Shareholders or Sponsors.

Where the Chinese investor obtains the whole share ownership of an enterprise as a result of a change of share ownership of an enterprise with foreign investment, when applying for modification of registration, the enterprise shall submit the relevant documents to the registration authority in accordance with the requirements of establishment registration for the type of enterprise to which it intends to change. After the verification of the registration authority, the Business License for Enterprise Legal Persons of the People's Republic of China shall be handed in for cancellation, and a Business License for Enterprise Legal Persons shall be issued as a replacement.

Article 21

No public accounting firms, audit firms, law firms and assets assessment authorities shall, as investing entities, invest into other industries to establish companies.

Article 22

Legal persons may jointly invest to establish companies and shall not be subject to the restrictions of existence or inexistence of property rights.

Article 23

Where family members jointly invest to establish a limited liability company, they shall take their self-owned properties as registered capital, and shall respectively bear their corresponding liabilities, and when undertaking registration, a written certification or agreement on partition of properties shall be submitted.

Article 24

A legal representative of an enterprise legal person shall not become a shareholder of the limited liability company established with the investment made by the enterprise in which he holds a post.

Article 25

Except as otherwise provided by laws or administrative regulations, the investment ratio of a shareholder of a limited liability company shall, in principle, not be subject to any restrictions; however, where laws are obviously sidestepped with the result of establishing a sole-investor company in a disguised form, the company registration authority shall not grant the registration.

Article 26

The director or manager of a company shall not concurrently serve as the director or manager of a company in the same industry that has no investment relationship with the company in which he holds a post.

Article 27

A person other than a shareholder may be elected or engaged as the director or manager.

Article 28

A limited liability company with a small number of shareholders or in a small size shall not have a board of directors, which shall be stipulated by the articles of association of the company.

Article 29

When a joint stock limited company is to be established, the "Financial Auditing Report on Preparing for the Establishment of a Company" submitted to the company registration authority shall be the auditing report on the expenditures for the establishment of the company submitted by the sponsor and adopted upon deliberation by the inaugural meeting of the company.

Article 30

When an announcement concerning the registration of establishment, modification or cancellation of a company is to be published, it shall be clearly stated that the basis on which the company is registered is the Company Law and the Regulations Governing the Registration of Companies.

Article 31

After the term of business of a company has expired, where the term needs to be extended or the business needs to be terminated, modification of registration or cancellation of registration shall be undertaken. Where the term of business is exceeded but no modification of registration or cancellation of registration is undertaken, the company shall be punished in accordance with Article 63 and Article 66 of the Regulations Governing the Registration of Companies respectively.

Article 32

Where a company establishes a branch without authorization, it shall be ordered to make corrections; where there any illegal earnings, a fine of not more than three times the illegal earnings shall be imposed, but the maximum of the fine shall not exceed 30,000 yuan; where there are no illegal earnings, a fine of not more than 10,000 yuan shall be imposed.

Article 33

Where a branch violates the regulations on administration of company registration, if there are any illegal earnings, a fine of not more than three times the illegal earnings shall be imposed, but the maximum of the fine shall not exceed 30,000 yuan; where there are no illegal earnings, a fine of not more than 10,000 yuan shall be imposed. Where the business license of a branch is forged, altered, leased, lent or transferred, or the business license of a branch is not placed in an eye-catching position at its domicile, it shall be punished in accordance with the provisions of Article 69 and Article 70 of the Regulations Governing the Registration of Companies respectively.

Article 34

Where the registration is cancelled or the business license is revoked in accordance with the provisions of Articles 58 and 59 of the Regulations Governing the Registration of Companies, the company shall have no qualifications for a legal person from the beginning.

Article 35

These Provisions shall enter into force as of February 1, 1998. The Opinions on Certain Issues Concerning the Implementation of the Regulations of the People's Republic of China Governing the Registration of Companies (Gongshangqizi [1994] No. 185) and the Reply and Opinions on Several Specific Issues Concerning Administration of the Registration of Companies (Gongshangqizi [1995] No.303) promulgated by the State Administration for Industry and Commerce shall be nullified simultaneously.