Laws of the People's Republic of China

Ministry of Justice

Order of the Ministry of Justice of the People' s Republic of China

No. 83

The Measures for the Management of Associations Formed by Law Firms of the Hong Kong Special Administrative Region or the Macao Special Administrative Region and Mainland Law Firms were deliberated and adopted at the ministerial executive meeting on November 27th, 2003. They are hereby promulgated and shall come into force as of January 1st, 2004.

Zhang Fusen, Minister of the Ministry of Justice

November 30th, 2003

The Measures for the Management of Associations Formed by Law Firms of the Hong Kong Special Administrative Region or the Macao Special Administrative Region and Mainland Law Firms

Chapter I. General Provisions

Article 1

The present Measures are formulated with a view to carrying out the Mainland and HK Closer Economic Partnership Arrangement and the Mainland and Macao Closer Economic Partnership Arrangement and to regulating the associations formed by law firms of Hong Kong or Macao and the Mainland law firms.

Article 2

The term "association" as mentioned in the present Measures means that a law firm of Hong Kong or Macao with a representative office in the Mainland cooperates with a Mainland law firm where the representative office is located, by means of which both parties may, in accordance with the contractual rights and obligations, operate in the Mainland, respectively providing Hong Kong, Macao or Mainland legal services to the clients.

Article 3

The association formed by a Hong Kong or Macao law firm with a Mainland law firm shall not be in the form of partnership or legal person.

During the period of association between a Hong Kong or Macao law firm and a Mainland law firm, the legal status, name and financial affairs of one party shall be separate from those of the other party. Each party shall bear separate civil liabilities.

Article 4

An association formed by a Hong Kong or Macao law firm and a Mainland law firm form shall abide by the laws, regulations and rules of the state, shall scrupulously comply with the attorney ethics and disciplines, and shall not impair the security of the state or the public good.

Chapter II. Application for Association

Article 5

Any law firm in Hong Kong or Macao may file an application for association if it meets the following conditions:

(1)

It has been registered and established according to relevant law and regulation of Hong Kong or Macao;

(2)

It has been engaged in substantial commercial business for 3 full years by using its own business place or by renting a business place in Hong Kong or Macao;

(3)

The sole proprietor or all partners shall be certified practicing attorneys of Hong Kong or Macao;

(4)

Its main business scope shall be limited to providing legal services in Hong Kong or Macao;

(5)

The law firm and the sole proprietor or all its partners shall pay Hong Kong profit tax, or Macao income supplement tax or occupation tax;

(6)

It has been allowed to establish a representative office in the Mainland;

(7)

Before an application for association is filed, it has no record of punishment by any regulatory institutions of Hong Kong or Macao within 2 years.

Article 6

If a Mainland law firm meets the following conditions, it may file an application for association:

(1)

It has been for at least 3 years since its establishment;

(2)

There are not less than 20 full-time attorneys;

(3)

Before an application for association is filed, it hasn't been given any administrative punishment or guild sanction within 2 years.

No branch of a Mainland law firm may file an application for association as one party to the association.

Article 7

Where a Hong Kong or Macao Law Firm and a Mainland law firm file an application for association, they shall jointly submit the following application materials to the provincial administrative organ where the Mainland law firm is located:

(1)

The application for association signed by both parties;

(2)

The draft agreement on association concluded by both parties;

(3)

A photocopy of the valid registration certificate, which indicates the establishment of a law firm of Hong Kong or Macao upon approval, the name of the sole proprietor or persons-in-charge, the name list of all the partners, a photocopy of the license of the representative office based in the Mainland and the name list of the representatives;

(4)

A certification issued by the relevant department of Hong Kong Special Administrative Region or Macao Special Administrative Region, which indicates that the law firm of Hong Kong or Macao meets the requirements for the legal service providers;

(5)

A photocopy of the license of Mainland law firm, the name of the persons-in-charge, all of the partners or cooperators,

(6)

Other materials as required by the judicial administrative organ on the provincial level.

The photocopies of the valid registration certificates as listed in Item (3) of the preceding paragraph shall be subject to the notarization of a Mainland acknowledged notary.

The application materials shall be in Chinese and in triplicate. Where any material among them is in a foreign language, it shall be accompanied by a Chinese translation.

Article 8

The judicial administrative organ on the provincial level shall, within 20 days from receiving the application materials for association, make an decision to approve or disapprove of the association. In case it is unable to do so within 20 days, the time limit may be extended by 10 days upon the approval of the responsible person of this organ, and the applicant shall be notified of the reason for the extension of the time limit.

Any applicant who meets the requirements as provided for in the present Measures shall be allowed to form an association, and shall be issued a license of association; any applicant who doesn't meet the requirements as provided for in the present Measures shall be disapproved, and to whom a written notice shall be given.

With regard to any applicant who is allowed to form an association, the judicial administrative organ on the provincial level shall, report the approval documents and the materials in relation to association to the Ministry of Justice for archival purposes within 30 days as of the issuance of the association license.

Chapter III. Provisions on Associations

Article 9

Where a law firm in Hong Kong or Macao forms an association with a Mainland law firm, an written association agreement shall be reached by both parties. An association agreement shall cover the following:

(1)

Each party's name, address, the name of the sole proprietor, the name of the partners or cooperators;

(2)

The name and logo of the association;

(3)

Duration of the association;

(4)

The business scope of the association;

(5)

The arrangement of the office and equipment in common use;

(6)

The arrangement of the administrative staff, secretaries and other supporting staff;

(7)

The arrangements on sharing the income from association and the apportionment of operational expenses;

(8)

The arrangements on the insurance and the way of bearing responsibilities;

(9)

Termination and liquidation of association;

(10)

Liabilities for breach of contract;

(11)

Solutions to disputes; and

(12)

Other matters.

An agreement on association shall be in conformity with the relevant laws of the Mainland.

An agreement on association shall come into effect upon approval of the judicial administrative organ.

Article 10

The duration of association as stipulated by a Hong Kong or Macao law firm and a Mainland law firm in their association agreement shall be at least 1 year. At the expiration of the duration of association as stipulated in their association agreement, it may be extended upon negotiation of both parties. An application for the extension of the duration for association shall be handled according to the procedures as provided for in Articles 7 and 8 of the present Measures.

Article 11

Where a Hong Kong or Macao law firm and a Mainland law firm form an association, they may use the name and logo for association upon the negotiation of both parties and the approval of relevant organs.

The name and logo for the association shall comprise the names of the Hong Kong or Macao law firm and the Mainland law firm plus the word "association".

Article 12

Where a Hong Kong or Macao law firm and a Mainland law firm form an association, they may, in the name of association, accept the entrustment of any party concerned or other law firms, and they may handle the legal affairs as approved in Hong Kong, or Macao, or the Mainland, or any country other than China by way of cooperation.

Any lawyer of Hong Kong or Macao who participates in association may not handle Mainland legal affairs.

Article 13

Both parties under association shall avoid the conflict of interest between their respective clients, when they handle legal affairs upon entrustment.

Article 14

Where a Hong Kong or Macao law firm and a Mainland law firm handle legal affairs in the name of association, they may charge clients fees uniformly and distribute the income in light of their association agreement; or charge clients fees separately according to the legal affairs handled by each as well, but the clients shall be informed in advance.

Article 15

Where a Hong Kong or Macao law firm and a Mainland law firm form an association, they may jointly carry out business promotion activities, but shall disclose the following facts:

(1)

The association between both parties differs from the form of partnership or that of legal person;

(2)

The Hong Kong or Macao law firm under association and its lawyers shall not engage in Mainland legal services;

(3)

The name of lawyer who carries out the activities of business promotion shall give a clear demonstration of the name of the law firm where he holds a position.

Article 16

Both parties of association and the lawyers who participate in the association shall, according to the relevant regulations of Hong Kong, Macao and the Mainland, buy lawyers' practice insurance in their respective name.

Article 17

During the period of association, if any losses are caused to a client because of offences or faults of either party, the compensations shall, in light of their association agreement, be made by the faulty party solely or by both parties jointly.

Article 18

Where a Hong Kong or Macao law firm and a Mainland law operate in the form of association, they may share the same office and equipment and the apportionment of relevant expenses shall be stipulated in their association agreement.

Article 19

Where a Hong Kong or Macao law firm and a Mainland law firm form an association, they may share administrative personnel and secretaries and other supporting personnel. The apportionment of relevant expenses shall be stipulated in their association agreement.

Article 20

Where a Hong Kong or Macao law firm and a Mainland law firm operate in the form of association, each party shall keep separate accounting system and accounting books.

Article 21

With regard to a Hong Kong or Macao law firm and a Mainland law firm that operate in the form of association, they shall terminate the association if they are under any of the following circumstances:

(1)

At the expiration of the association period, both parties fail to file an application for an extension;

(2)

Both parties discontinue the association pursuant to the contractual stipulations;

(3)

Either party doesn't exist any longer or is bankrupt; or

(4)

Other circumstances in which the association shall be terminated in jure.

The termination of association shall be subject to the cancellation formalities in the judicial administrative organ of the provincial level.

Chapter IV. Supervision and Administration

Article 22

Where a Hong Kong or Macao law firm and a Mainland law firm operate in the form of association, before the date of March 31 of each year, they shall jointly submit the report about the association of the previous year to the judicial administrative organ on the provincial level where the Mainland law firm is located and accept examination. The failure to submit a report without justifiable reason shall be regarded as automatic termination of association.

Article 23

With regard to a Hong Kong or Macao law firm and a Mainland law firm that operate in the form of association, if they are in violation of any of the laws, regulations or rules of the Mainland or the provisions of the present Measures, they shall be given a warning by the judicial administrative organ on the provincial level and shall be ordered to correct within a time limit; if they fail to correct within a time limit, they shall be imposed on a fine of not more than 10, 000 Yuan; if there are illegal income, they shall be imposed on a fine of not less than the same amount up to 3 times the amount of the illegal income, but which shall not exceed 30, 000 Yuan.

Article 24

Any of the functionaries of the judicial administrative organ in violation of any of the laws, regulations or rules in the administrative activities shall be given an administrative punishment in accordance with the law. If any crime is constituted, the offenders shall be subject to the criminal liabilities.

Chapter V. Supplementary Provisions

Article 25

The responsibility to interpret the present Measures shall remain with the Ministry of Justice.

Article 26

The present Measures shall come into force as of January 1st, 2004.