DETAILED RULES AND REGULATIONS FOR THE IMPLEMENTATION OF THE LAW OF THE PEOPLE'S REPUBLIC OF CHINA ON SINO-FOREIGN CONTRACTUAL COOPERATIVE ENTERPRISES

Chapter 4 - Investment, Co-operative Conditions

Article 17
The co-operative parties shall contribute capital into or provides co-operative conditions to the CCE in accordance with the stipulations of the relevant laws, administrative regulations and the arrangement in the CCE contract.

Article 18
Capital to be contributed or co-operative conditions to be provided to the CCE by the co-operative parties can take the form of cash, or property rights such as tangible properties or industrial property rights, proprietary technology, rights, land use rights, etc,

When the capital contribution or co-operative conditions provided by the Chinese partner is State-owned property, asset valuation shall be performed in accordance with the provisions of the relevant laws and administrative regulations.

The investment from the foreign partner in the CCE that obtain the Chinese legal person status by law generally shall not be lower than 25% of the CCE's registered capital. The detailed requirements for capital contributed or co-operative conditions provided by co-operative parties in the CCE without the status of legal person shall be regulated by the MOFTEC.

Article 19
Co-operative parties shall use their own properties or property rights as capital contribution or co-operative conditions and the said capital contribution or co-operative conditions shall not be pledged under charge or any other form of security.

Article 20
In accordance with the production and operation needs of the CCE and the provisions of the relevant laws and administrative regulations, the co-operative parties shall stipulate in the CCE's contract the time limit of capital contribution or provision of co-operative conditions by the co-operative parties to the CCE,

If the co-operative parties do not comply with the contribution of the capital or provision of co-operative conditions as stipulated in the CCE contract, the authorities for the administration of industry and commerce shall set a time limit for compliance. When the imperative parties do not comply upon expiry of the time limit, the examining and approving authorities shall rescind the approval certificate of the CCE, the authorities for the administration of industry and commerce

shall set a time limit for compliance. When the co-operative parties do not comply upon expiry of the time limit, the examining and approving authorities shall rescind the approval certificate of the CCE, the authorities for the administration of industry and commerce shall revoke the CCE's business license and announce to the public.

Article 21
The co-operative party who does not contribute the capital or provide the co-operative conditions according to the stipulations the CCE contract, shall bear the liabilities for breach of contract the other parties who contribute the capital or provide the co-operative conditions according to the provisions of the CCE contract.

Article 22
After the capital has been contributed or the co-operative conditions have been provided by the co-operative parties, a Chinese certified public accountant shall verify and issue a verification report and base on which the CCE shall issue to the co-operative parties a certificate of capital contribution. The certificate of capital contribution shall include the following items:

(1) The name of the CCE;

(2) The date of the establishment of the CCE;

(3) The name of the co-operative partners;

(4) The contents of the capital contributed or the co-operative conditions provided by the co-operative parties;

(5) The date when the capital is contributed or co-operative conditions are provided by the co-operative parties;

(6) The serial number and date of issuance of the certificate of capital contribution.

A copy of the verification report shall be submitted to the examining and approving authorities and the authorities for the administration of industry and commerce.

Article 23
The assignment of the whole or part of the interest in the CCE between the co-operative parties or by one co-operative party of the CCE to a third party shall obtain the written consent of the other co-operative party(ies) and report to the examining and approving authorities for approval.

The examining and approving authorities shall decide whether to approve or disapprove within 30 days upon receiving the relevant documents of assignment.