Laws of the People's Republic of China

The State Administration for Industry and Commerce

Reply of the State Administration for Industry and Commerce Concerning the Issue on Business Operation Period

GongShangQiZi [2000] No.160

August 3, 2000

Yunnan Administration for Industry and Commerce:

We have studied your request for instructions on your reply to the Letter of the Intermediate People's Court of Kunming, Yunnan Province (YunGongShangZi[2000] No.35) and now reply as follows:

I.

In accordance with related business registration administration provisions stipulated in the Regulations on Company Registration Administration, the Regulations for Controlling the Registration of Enterprises as Legal Persons, and the Implementing Opinions on Related Issues of Business Registration Administration of the State Administration for Industry and Commerce (GongShangQiZi[1999]No.173), the corporate capacity or operation qualifications of enterprises should be terminated as of the approval of registration cancellation or suspension of the business license. Enterprises failing to pass the annual examination are deprived of the qualifications for continuance of operation prior to the approval of registration cancellation or suspension of the business license; however, their corporate capacity or qualifications as operating units still continue to exist. Enterprises without the registration approval possess neither the corporate capacity nor the operation qualifications.

II.

In accordance with Article 9 of the Regulations on Company Registration Administration, Article 9 of the Regulations for Controlling the Registration of Enterprises as Legal Persons as well as Article 33 of its Implementing Provisions, companies, enterprises with foreign investment and joint-operation enterprises should operate within the operating period (term of business) stated in their respective business license approved by competent administrative authorities of industry and commerce. In case of operation beyond the stated operating period (term of business), companies may be considered in violation of the related regulations and should apply for registration alteration or cancellation and be dealt with in accordance with Article 63 or 66 of the Regulations on Company Registration Administration; non-corporate enterprises may be considered operating without a business license and should be punished in accordance with Items 1 and 3 of Article 66 of the Implementing Provisions of the Regulations for Controlling the Registration of Enterprises as Legal Persons. In most cases, enterprises not included in the above-mentioned two categories are not limited to any specified operating period while registering with competent authorities; however, if an operating period is specified in compliance with the state laws and administrative regulations, the enterprise in question should also follow the principles set forth above.