Laws of the People's Republic of China

The State Administration for Industry and Commerce

Reply of the State Administration for Industry and Commerce on Issues Concerning How to Handle Enterprises with Foreign Investment that do not Conduct Liquidation After the Expiration of their Agreed Operating Periods

GongShangQiZi [2000] No.268

November 15, 2000

Hebei Administration for Industry and Commerce:

We have studied your Request for Instructions on How to Handle Enterprises with Foreign Investment that do not Conduct Liquidation after the Expiration of their Agreed Operating Periods ([2000] No.185) and now reply as follows:

1.

Enterprises with foreign investment should conduct liquidation in accordance with Measures on Liquidation of Enterprises with Foreign Investment upon expiration of their agreed operating periods. The liquidation should be verified by authorized departments of the enterprises and reported to competent examination and approval authorities for file-keeping purpose. Enterprises should apply to competent registration authorities for cancellation of the registration within the prescribed time limit.

2.

Non-company enterprises with foreign investment that fail to apply for registration as provided for in related regulations shall be handled by competent registration authorities in accordance with the 3rd Subparagraph of Paragraph 1 of Article 30 of the Regulations of the People's Republic of China for Controlling the Registration of Enterprises as Legal Persons.

3.

Foreign-invested companies (hereinafter referred to as companies) that fail to submit liquidation report to competent registration authorities as required in related regulations shall be ordered to rectify in accordance with Article 218 of the Company Law of the People's Republic of China and Article 65 of the Regulations of the People's Republic of China on Company Registration Administration. As for companies that fail to apply for cancellation of the registration upon completion of the liquidation, competent registration authorities shall treat them in accordance with Article 66 of the Regulations of the People's Republic of China on Company Registration Administration.

4.

As for companies that fail to conduct liquidation or complete required liquidation procedures within the prescribed time limit upon expiration of their agreed operating periods, competent registration authorities may, judging from the severity of specific cases, report the situation that these companies have lost their qualifications for operation due to the expiration of their agreed operating periods to the Customs, administrations of taxation and foreign exchange, and the Ministry of Foreign Trade and Economic Cooperation and other departments as well as the opening banks of these companies. Penalties on these companies may be conducted in combination with the annual examination of the next year and in accordance with Article 68 of the Regulations of the People's Republic of China on Company Registration Administration.

5.

Companies whose operating periods expired should conduct no other business activity other than liquidation. Those that conduct new business activities should be handled in accordance with Article 71 of the Regulations of the People's Republic of China on Company Registration Administration.