Measures Governing the Registration of Registered Capital of Companies, amended according to the decision adopted by the Minister's Meeting of the State General Administration of Industry and Commerce of the People's Republic of China, is now promulgated and shall enter into force as of 1 January, 2006.
 
Decree No. 22 of the State General Administration of Industry and Commerce of the People's Republic of China

Director: Wang Zhongfu

December 27, 2005

Article 1. This set of measures is formulated in line with the Company Law of the People's Republic of China (hereinafter referred to as "company law"), Regulations of Company Registration of the People's Republic of China (hereinafter referred to as "company registration regulations") and other related regulations to strengthen the administration over registration of registered capital and actually paid-in capital of companies and standardie the company registration.

Article 2. The registered capital of a limited liability company shall be the amount of capital contributed by all shareholders that have registered according to law with the company registration authority.

In the case of a company limited by shares established by means of an offer, the registered capital shall be the total of shares subscribed by all initiating parties that have registered with the company registration authority.

In the case of a company limited by shares established in the form of fund raising, the registered capital shall be the total of shares actually paid in and registered according to law with the company registration authority.

Article 3. The actual paid in capital of a company shall be the total amount of capital contribution or total amount of shares actually paid in by all shareholders or initiators and having been registered with the registration authorities according to law.

Article 4. The company registration authority shall, in line with the provisions of laws, administrative regulations and related rules of the State on registered capital and actually paid in capital, handle registration for those that meet the terms and conditions set, and refuse to register for those who fail to do so.

Article 5. The amount of the registered capital and actually paid in capital, the timing and way of capital contribution by shareholders or initiators shall conform to the related provisions of laws and administrative regulations.

Article 6. The first capital contribution made by shareholders or initiators at the establishment of the company, the changes made to the registered as well as actually paid in capital of the company, shall be subject to evaluation by legally established capital evaluation agencies and provided with proof of capital evaluation.

Article 7. Property not in the form of cash contributed by shareholders or initiators shall be subject to evaluation and pricing by assets evaluation agencies that have the qualifications to undertake evaluation, and be subject to capital evaluation by capital evaluation agencies.

Article 8. Shareholders or initiators may contribute in the form of cash, or kind, intellectual property right, land use right, and other non-cash property that may be valuated in the form of cash and be transferable according to law.

In cases where shareholders or initiators contribute in forms other than cash, kind, intellectual property right, land use right, this shall be carried out in a manner that conforms to the related rules jointly drafted by the State General Administration of Industry and Commerce and other relevant agencies of the State Council.

Shareholders or initiators are not allowed to contribute in the form of labour, credit, name of natural persons, business reputation, franchise, or property on which pledge had been made.

Article 9. Shareholders or initiators shall contribute in their own names.

Article 10. The minimum level of registered capital of a limited liability company is RMB30,000, that of a one-person limited liability company is RMB 100,000, and that of a company limited by shares being RMB5 million. In cases where laws or administrative regulations have had higher requirements for the registered capital of a limited liability company or company limited by shares, such provisions shall apply.

The contribution in cash by all the shareholders or initiators of a company shall be no less than 30% of the registered capital of the company.

Shares subscribed by initiators of a company limited by shares established by means of offering or fund raising shall not be less than 35% of the total shares of the company, unless otherwise specified by laws or administrative regulations.

Article 11. The first time contribution by all shareholders of a limited liability company shall not be less than 20% of the registered capital of the company, or lower than the legitimate minimum requirements of registered capital, with the remainder being paid in within 2 years, starting from the day the company is established. An investment company may pay the capital within five years.

The initial contribution by all initiators of a company limited by shares established by way of offering or fund raising shall not be less than 20% of the registered capital of the company, with the remainder being paid within 2 years, starting from the day of the establishment of the company. An investment company may pay the capital within five years.

Article 12. Shareholders or initiators shall pay the amount subscribed or committed as per the charter of the company in full amount and on schedule. In the form of contribution in cash, the cash contribution shall be deposited in the account opened by the company with a bank in full amount. In cases where the contribution is made in non cash property, the formalities of transfer of property right shall be handled according to law.

In cases where at the time of registration and establishment of the company, the initial contribution by the shareholders or initiators is non-cash property, the testifying documents showing that the formalities of transfer of property right have been completed shall be provided.

When the company is officially established and the shareholders or initiators make their contribution according to the time of contribution specified in the charter of the company, an application for modification of registration to the actually paid in capital shall be filed after the formalities of transfer of property right has been completed according to law.

Article 13. Proof of assets evaluation for the establishment of a company shall specify the following:

1. name of company

2. type of company

3. name of shareholders or initiators

4. amount of registered capital of the company, amount of capital subscribed or committed by shareholders or initiators, time of contribution, way of contribution; in the case of a company limited by shares established through fund raising, the shares subscribed by initiators and the percentage accounted by the shares subscribed by initiators in the total shares of the company shall also be provided

5. amount of actually paid in capital, the percentage accounted by the actually paid in capital in the total registered capital, amount of actual contribution made by shareholders or initiators, timing and way of contribution. In terms of contribution in cash, the timing and amount of contribution by shareholders or initiators shall be made clearly, together with the account opening bank, name and number of account opened. In terms of contribution not in cash, evaluation conditions and results shall be specified, as well as the transfer of ownership of contribution not in the form of cash.

6. percentage accounted by all cash contribution in the registered capital

7. others

Article 14. In cases where a company increases its registered capital and the shareholders of the limited liability company subscribe newly increased capital or shareholders of the company limited by shares subscribe new shares, this shall be done in line with the provisions regarding payment of capital contribution in the case of a limited liability company and purchase of shares in the case of a company limited by shares of the company. In cases where a company limited by shares increases its registered capital by means of issuing publicly new shares or a listed company issues news shares not publicly, the company shall provide ratification documents issued by the securities regulatory authority of the State Council.

Article 15. A company reducing its registered capital shall conform to the procedures set in the Company Law and the registered capital and actually paid in capital after the reduction shall meet the minimum level of registered capital as specified in laws or administrative regulations and have gone through evaluation by assets evaluation agencies.

In cases where a company applies to reduce its registered capital after all of its shareholders or initiators have paid in capital and shares in full amount, it shall at the same time handle modification of registration of actually paid in capital.

Article 16. In cases where a limited liability company purchases the share rights of its shareholders in line with the provisions of article 75 of the Company Law, it shall apply for reduction in the registered capital and handle the modification of registration of actually paid in capital correspondingly at the same time.

Article 17. In cases where a non-company enterprise is restructured into a company according to the provisions of the Company Law, or a limited liability company is regrouped into a company limited by shares, the total actually paid in shares converted shall not be higher than the net assets of the company. In cases where a limited liability company is changed into a company limited by shares and intends to issue shares to increase its capital, this shall be done in accordance with the law.

The net assets of a non-company enterprise or limited liability company shall be evaluated and priced by assets evaluation agencies having evaluation qualifications, and be subject to capital evaluation by evaluation agencies.

Article 18. The registered capital, amount of capital contribution by shareholders or amount of subscription of initiators, timing and way of contribution or subscription shall be specified by the charter of the company. In cases where changes have been made to the registered capital, amount of capital contribution by shareholders or amount of subscription of initiators, timing and way of contribution or subscription, the charter of the company shall be modified and an application shall be filed to the company registration authority for modification of the registration according to law.

Article 19. Proof of assets evaluation for modified registered capital or actually paid in capital shall include the following items:

1. name of company,

2. type of company,

3. names of shareholders or initiators, amount of contribution, and timing and way of contribution before and after the modification,

4. amount of registered and actually paid in capital before and after the modification,

5. actually paid in capital of the increased registered capital. In terms of contribution in cash, the amount and timing of contribution of shareholders or initiators, account opening bank, name and number of capital receiving account shall be provided.

In cases where contribution is made in the form of kind, intellectual property right, land use right and other non-cash property that may be evaluated in terms of cash and transferred according to law, the status of formalities of transfer of property right conducted by shareholders and evaluation shall also be provided.

In cases where capital reserve, reserve from profits and from profits yet to be distributed are transferred into increased registered capital or actually paid in capital, the amount of transferred and increased capital, baseline time of transfer and increase, adjustment made to the financial statement, the public reserve kept after the transfer being no less than 25% of the registered capital of the company before the increase in the registered capital, the actual conditions of related items of the financial statement before and after the transfer and increase, and the amount of capital contribution by shares after the transfer and increase shall also be specified.

6. In cases where a reduction has been made to the registered capital or actually paid in capital, explanation shall be given as to the implementation by the company of the procedures specified in the Company Law and the conditions of payment or pledge by shareholders or initiators for the debts of the company.

Article 20. In cases where the actual price of kind, intellectual property right, land use right and other non-cash property contributed by shareholders or initiators is found to be significantly lower than the amount specified by the charter of the company after the company is established, the shareholders or initiators making such contribution shall make up the balance. The kind, intellectual property right, land use right and other non-cash property contributed originally shall be re-evaluated and priced. The actual paid in capital of the company shall also be re-evaluated and the evaluation agency shall produce new proof of evaluation.

Article 21. In cases where the company registration authority discovers after the company is established that the company is suspected of cheating in the collection of actual paid in capital, it may request the company to undergo evaluation with the appointed assets evaluation agency and ask the agency to provide proof of assets evaluation within a specified period of time.

Article 22. In the case of obtaining company registration through falsifying registered capital, the company registration authority shall punish the violator according to the provisions of article 68 of the Regulations of Company Registration.

Article 23. In cases where shareholders or initiators of a company falsify capital contribution, fail to deliver or deliver on schedule cash or non-cash property as contribution, the company registration authority shall punish the company according to the provisions of article 70 of the Regulations of Company Registration. In cases where shareholders or initiators refuse to rectify, the company registration authority shall request the company to handle the modification registration of registered capital or period of contribution within a specified period of time. In cases where the company fails to undergo modification registration within the specified period of time, punishments will incur as per article 73 of the Regulations of Company Registration. When a company has been established for two years, for an investment company, five years, and the shareholders or initiators of the company fail to deliver or deliver in full amount their contribution, and the company fails to handle modification registration, the company will be subject to punishments in line with the provisions of article 68 of the Regulations of Company Registration.

Article 24. Shareholders or initiators withdrawing contribution after the company is established will be subject to punishment imposed by the company registration authority in line with provisions of article 71 of the Regulations of Company Registration.

Article 25. In cases where changes have been made to the registered capital and actual paid in capital of the company, and the company fails to handle modification registration in a timely manner, the company registration authority shall impose punishment onto the company in line with the provisions of article 73 of the Regulations of Company Registration.

Article 26. In cases where capital evaluation agencies or assets evaluation agencies are found to have produced false testifying documents, the company registration authority shall impose punishment onto the violators in accordance with the provisions of article 79 of the Regulations of Company Registration.

Article 27. In cases where cancellation of modification of registration involves changes to the registered capital of the company and the amount and way of contribution by shareholders or initiators, the registration status of the company before the modification shall be restored.

Article 28. This set of rules shall be applicable to the registration administration of registered capital and actual paid in capital of foreign invested enterprises, unless otherwise specified.

Article 29. This set of rules shall enter into force as of January 1, 2006, and the Regulations Governing Registration of Registered Capital of Companies issued by the State General Administration of Industry and Commerce on June 14 2004 will be abolished at the same time.