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Interim Procedures of Shanghai Municipality on the Demarcation of the Property Right Over Enterprises' State-owned Assets
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| (Promulgated by the Shanghai Municipal People' s Government on February 11, 1998) Article 1 (Purpose and Basis) With a view to further defining the ownership of property right, safeguarding the lawful rights and interests of the possessors of State-owned assets and the subjects of other property rights, and promoting the establishment of a modern business system, the present Procedures are formulated in the light of actual situations in Shanghai. Article 2 (Definition) Some terms used in the present Procedures have respectively the meaning as follows: The term "State-owned assets" means the assets acquired and affirmed according to law by the State, or formed by State appropriation, state investment in the enterprises and income earned therefrom. The term " property right " means the title to the property and the operation right, use right and other rights related to the title. The term "property right demarcation" means a legal act by the State of demarcation the ownership of the title to assets, operation right, use right and other property right, and defining the scope of the property, over which all kinds of subjects of property right have the right, and the competence over its operation and management. Article 3 (Scope of Application) The present Procedures shall apply to the demarcation of the property right over the operational State-owned assets in the enterprises and other related administration activities in Shanghai. Article 4 (Principle for Property Right Demarcation) The property right demarcation shall follow the principle of "Whoever invests owns the property right" ¡£ In the course of demarcation the property right over State-owned assets, the lawful rights and interests of both possessors, operators and users of State-owned assets and the lawful rights and interests of the owners, operators and users of other property shall be upheld. Article 5 (Competent Authorities) The Shanghai Municipal State-owned Assets Administration Office (hereinafter referred to as the " SSAAO " is the competent authorities for demarcating the property right over state-owned assets in Shanghai. The district (county) State-owned assets administration departments are in charge of demarcating the property right over State-owned assets within the prescribed limits in accordance with the present Procedures . Article 6 ( Demarcation of Property Right Over Assets in State-owned Enterprises ) Assets in State-owned enterprises in Shanghai shall be demarcated as State-owned assets if they are in one of the following circumstances: 1. National capital fund and State-owned corporate capital fund that result from the investment made, according to law by the departments, organs and State-owned enterprises on behalf of the State in the form of money, material object, State-owned land-use right and/or intellectual property right in enterprises. 2. Increased capital fund that is invested by the State-owned enterprise by way of transfer of profit after tax in accordance with State regulations, and the surplus from accumulated fund , public welfare fund and undistributed profit that are drawn from the profit after tax.. 3. Net assets that are accumulated by the enterprise that is founded with all the loaned fund guaranteed in the name of State-owned enterprise or institution. 4. Donated assets that are to and accepted by the State-own enterprise. 5. Employee welfare fund and employee incentive fund that are drawn from the earnings retained in state-owned enterprises before the implementation of the General Provisions of Enterprise Finance and the Standards of Enterprise Accounting ( hereinafter referred to as " Two Sets of Rules" ) and the owner' s rights and interests accrued from the purchase or construction of collective welfare facilities with public welfare fund after the implementation of "Two Sets of Rules" . 6. Properties that are occupied by the Party organization, the Youth League and labor union in State-owned enterprises with the exception of assets purchased or built with party membership fees, League membership fees, labor union membership fees and activity fund allocated by the enterprise according to state provisions. 7. Assets in other circumstances that are to be demarcated as State-owned assets according to law. Article 7 ( Demarcation of Property Right Over Assets in Collectively-owned Enterprises) Assets in collective ownership enterprises in Shanghai shall be demarcated as State-owned assets if they are in one of the following circumstances: 1. Owner' s equity results from State investment in the collective ownership enterprise and the income earned therefrom. 2. The creditor' s right accrued as a result of being loaned by the collective ownership enterprise under guarantee by the state-owned enterprise and returned by the latter under joint liability because of the collective ownership enterprise' s failure to repay, and it can be converted into state-owned enterprise' s investment through mutual consultation. 3. The owner' s equity accrued after July 1, 1993 as a result of the collective ownership enterprise enjoying favorable policies such as return of loan with tax, return of loan before taxation and all sorts of tax privileges according to state law, rules and regulations, and policies. If its specific use is provided for State provisions, such provisions shall be followed; should there be no relevant State provisions, the corresponding portion of the owner' s equity shall become state assets in proportion to the State investment in the collective ownership enterprise. 4. Assets transferred, allocated to or invested in the collective ownership enterprise by the State, the State-owned enterprise and institution in support of the development of collective economy or for employment of persons. If the transfer is explicitly changeable, but the transfer fee (including material object) is short of the original asset value, the owner' s equity shall accrue from the shortage and the income earned therefrom; in case of free transfer being not explicitly defined, the two parties shall determine their legal relationship concerning free use, investment or lease through mutual consultation on the principle of contributing to collective economic development. If the consultation fails, SSAAO together with Collective Assets Administration Office shall conduct the demarcation. 5. Assets in other circumstances are to be demarcated as State-owned assets according to law. Article 8 (Demarcation of Property Right Over Assets in Sino-Foreign Equity Joint Ventures and Cooperative Joint Ventures) Assets in Sino-Foreign equity joint ventures and cooperative joint ventures in Shanghai that are organized and set up jointly by State-owned enterprises and foreign businessmen shall be demarcated as State-owned assets if they comply with one of the following circumstances: 1. Assets that are formed by contributions made by the State-owned enterprise in cash, in kind, in land -use right and intangible assets. 2. Assets that are formed by State-owned enterprises' reinvestment in the venture with the profit distributed in accordance with the agreement of both parties or by the preemptive purchase of the other party' s share . 3. The portion of distributable profit and the portion of various funds drawn from the after-tax profit, with the exception of funds for encouraging and rewarding employee or for their welfare, etc., distributed for personal consumption, shared by the State-owned enterprise according to the distribution ratio agreed upon by the parties, if there is such an agreement, or if there is not such an agreement, the State-owned enterprise shall receive a portion in proportion to its amount of investment 4. All sorts of assets accepted by the State-owned enterprise, upon the liquidation or dissolution of the joint venture enterprise, as a gift or left behind for the State-owned enterprise to use them further gratuitously. 5. Assets in other cases that are demarcated as State-owned assets according to law. Article 9 (Demarcation of Property Right Over Assets in Joint-stock Enterprise) Assets in companies with limited liability, joint-stock companies limited, and joint-stock cooperative enterprises in Shanghai (hereinafter referred to as joint-stock enterprises)shall be demarcated as State-owned assets if they are in one of the following circumstances: 1. State-owned shares in joint-stock enterprises. 2. In reserve fund, public welfare fund and undistributed profit in the joint stock enterprise, the corresponding portion held by the State or State-owned enterprise to its investment . 3. State-owned shares already generated by the fund of joint-stock enterprises that enjoy preferential policies according to law in Shanghai such as tax refund. 4. Assets in other cases demarcated as State-owned assets according to law. Article 10 (Cases of Demarcation of Property Right) Enterprises involving the State-owned assets that have not attended to property right registration of state-owned assets, but have occupied state-owned assets or the ownership of the occupied assets is not clear (hereinafter referred to as occupancy enterprises), shall have their property right over State-owned assets demarcated in accordance with the present Procedures if one of the following circumstances occurs: 1. Those which make joint investment or cooperate with other enterprises, economic organizations and individuals. 2. Those which establish or are restructured into joint-stock enterprises or other economic organization. 3. Those transfer the property right. 4. other circumstances that require the property right to be demarcated according to the regulations of the State and this Municipality. Article 11 (General Procedures for Property Right Demarcation) The demarcation of property right over State-owned assets shall follow the following procedures: 1. The occupant enterprise shall conduct check-up and demarcation on its own and according to the financial relationship of subordination, submit the result of the check-up and demarcation and relevant materials to the State-owned assets administration department at the same level. 2. The State-owned assets administration department shall, within 15 days after receipt of the demarcation result and relevant materials submitted by the occupant enterprise, make a decision on whether it affirms the result and issues an affirmation document. 3. The occupant enterprise shall adjust its accounting items according to the affirmation document issued by the State-owned assets administration department and attend to the property right registration of state-owned assets. Article 12 (Special Procedures for Property Right Demarcation) The occupant enterprise shall attend to the demarcation of property right over State-owned assets according to the following procedures if it has difficulty in conducting the check-up and demarcation on its own because of any dispute over the property right: 1. The occupant enterprise shall submit an application to SSAAO for the demarcation of property right over State-owned assets. 2. SSAAO shall entrust a qualified intermediary agency to conduct investigation and rectification before affirming the demarcation of the State-owned assets with disputed property right and issuing the affirmation document. 3. The occupant enterprise shall adjust its accounting items according to the affirmation document issued by SSAAO, and attend to the property right registration of state-owned assets. Article 13 (Materials to be Submitted) While reporting the results of the check-up and demarcation made on its own or applying for the demarcation of property right over the State-owned assets, the occupant enterprise shall submit to the State-owned assets administration department the following materials: 1. Corporate Business License. 2. Current Balance Sheet. 3. Capital Verification Report at start-up or other relevant documentary evidence at its start-up. 4. Relevant certification of the right over the land and buildings. 5. Other relevant documents and materials. Article 14 (Investigation into Law Enforcer' s Unlawful Practice) Law enforcers at the State-owned assets administration departments shall observe discipline, abide by laws, and act with justice. Those who neglect their duties, abuse their power, act wrongly for selfish ends, or seek or take bribes to the degree serious enough to constitute a crime shall be prosecuted for criminal liability , and those whose wrong dose not constitute a crime shall be given disciplinary sanction. Article 15 (Property Right Demarcation for Institutions) The demarcation of property right over state-owned assets in institutions in Shanghai shall be handled by reference to the present Procedures. Article 16 (Department Responsible for Interpretation in Application SSAAO shall be responsible for the interpretation of the present Procedures in their specific application. Article 17 (Date of Implementation) The present Procedures shall become effective on May 1, 1998. |
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