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China
Law Newsletter
25 May 2004 |
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Shenzhen Stock Market
to establish new SME Second Board within its main board
On May 17, 2004 with the approval of
the State Council, the China Securities Regulatory Commission
(CSRC) officially approved the establishment by the Shenzhen
Stock Exchange of a new SME (Small to Medium Enterprise)
second board within the main board of the Exchange.
On May 17, 2004, the SASAC promulgated
the Measures for the management of legal counsel of
state-owned enterprises ("Administrative Measures"),
stipulating that all bankruptcy matters, any increase or
reduction in capital, material financing plans and other
material matters which are submitted to the SASAC for approval
must be accompanied by a legal opinion prepared by the legal
counsel of the relevant state-owned enterprise.
Ministry of Finance
issues Accounting system for small enterprises,
scheduled for implementation next year
To regulate the accounting practices of small enterprises,
the Ministry of Finance recently issued an Accounting
system for small enterprises, which will apply to all
small enterprises in China when it comes into effect on
January 1, 2005.
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| CAPITAL MARKETS |
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| INSURANCE |
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| TAXATION |
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| CORPORATE & COMMERCIAL |
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| FOREIGN INVESTMENT |
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| REAL ESTATE |
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| OTHER |
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Legal
opinion required for material issues concerning state-owned
enterprises
On May 17, 2004, the SASAC promulgated the Measures for
the management of legal counsel of state-owned enterprises
("Administrative Measures"), stipulating that all bankruptcy
matters, any increase or reduction in capital, material financing
plans and other material matters which are submitted to the
SASAC for approval must be accompanied by a legal opinion
prepared by the legal counsel of the relevant state-owned
enterprise. The legal opinion should contain an analysis of
the relevant legal risks, and specify the legal responsibilities
involved. The Administrative Measures will come into force
on June 1, 2004.
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| CAPITAL MARKETS |
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Measures
for the administration and supervision of SME Board issued
On May 19, 2004, the Shenzhen Stock Exchange issued Special
regulations governing trading on the SME board, Special regulations
governing listing on the SME board, and an Agreement
on securities listing on the SME board. These regulations
came into force on the same day.
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First
companies will be listed on the new SME Board within a month
According to the CSRC, the Shenzhen Stock Exchange SME board
is preparing for the first batch of enterprises to be listed
on the SME board within the next 20 to 30 days. The CSRC has
also stated that SME stocks currently listed on the main board
will not be moved to the SME board.
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First
registered sponsor institution participates in an issue of
new shares - sponsorship system operational
Since the CSRC published the list of the first registered
sponsor institutions and sponsor representatives in relation
to stock exchange listings in China, Jiangxi Province Hongcheng
Hydro Limited Liability Stock Corporation issued 50 million
new A-shares to the public with Hantang Securities as its
sponsor institution (main underwriter), making the sponsorship
system operational.
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Ministry
of Labour and Social Security sets standards for institutions
responsible for the administration of pension funds
Recently, the Ministry of Labour and Social Security issued
a circular stating that it will draft and supervise the implementation
of standards and rules to be used by relevant departments
in their examination and approval of institutions managing
corporate pension funds. A list of qualified institutions
will be published, and their activities supervised by relevant
government authorities.
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| INSURANCE |
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China
Insurance Regulatory Commission (CIRC) issues newly revised
Administrative regulations for insurance companies
The CIRC has issued the Administrative regulations for
insurance companies ("Administrative Regulations")
on May 13, 2004. The Administrative Regulations regulate five
major insurance areas:
- Insurance institutions;
- Terms of insurance and premiums;
- Insurance business activities;
- Insurance funds and reserves of insurance companies;
- Supervision and inspection within the industry.
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Provisional
regulations for insurance asset management companies
to be implemented on June 1, 2004
The CIRC issued Provisional measures on insurance asset
management companies ("Provisional Measures")
and a Guide for risk control in the use of insurance funds
("Guide"), which will come into force on June
1, 2004. The Provisional Measures specifiy details of the
conditions for setting up insurance asset management companies,
their legal standing, operations, and supervision. The Guide
will apply to insurance asset management companies and insurance
companies, and will provide detailed rules as to the purpose
and operation of insurance funds.
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| TAXATION |
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State
Administration of Taxation (SAT) revises the Tentative
operating procedures for comparing official receipts with
the results generated by the electronic VAT verification system
Recently the SAT revised the Tentative operating procedures
for comparing official receipts with the results generated
by the electronic VAT verification system. The tentative
procedures will come into force on June 1, 2004.
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SAT,
Ministry of Finance and four other departments jointly issue
circular requesting taxpayers in the commercial and retail
sectors to use cash registers with automated tax deduction
functions
Recently the SAT, Ministry of Finance, the Ministry of Information
Industry, and the State Administration of Quality Supervision
and Quarantine jointly issued a circular making the use of
cash registers with automated tax deduction functions compulsory
for all taxpayers of a certain size and with a fixed physical
operating location in the commercial, retail, food and beverage,
entertainment, service, and transportation sectors.
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Ministry
of Finance and SAT issue circular relating to tax collection
with respect to securities investment funds
The Ministry of Finance and SAT recently issued the Circular
relating to tax collection policies for securities investment
funds. The Circular provided that as of January 1, 2004,
income earned on securities investment funds (open-ended or
closed-ended) derived as a result of the price differentiation
between the purchase price and sales price of securities or
bonds purchased with investment funds will continue to be
exempt from business and enterprise income taxes.
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| CORPORATE & COMMERCIAL |
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Jiangsu
Province issues Implementation opinions on the regulation
of the restructuring of provincial state-owned enterprises
Recently, the State-owned Assets Supervision and Administration
Commission ("SASAC") Jiangsu branch issued the Implementation
opinion on regulating the restructuring of provincial state
owned enterprises ("Implementation Opinion").
According to the Implementation Opinion, the restructuring
of enterprises under the supervision of SASAC's Jiangsu branch
into companies with multiple shareholders, or the restructuring
of their state-owned or state-controlled subsidiaries into
non-state controlled enterprises (including situations where
state-owned shares and legal person shares owned by the State
amount to approximately 50% of the total outstanding shares
of a company) shall be conducted in accordance with a restructuring
plan prepared by the relevant state-owned assets supervision
and administration department.
A restructuring plan must include general information about
the enterprise, basic guidelines for restructuring, disposal
of shares, employee placement and treatment of assets, as
well as post-restructuring development plans.
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Ministry
of Construction allows enterprises with legal person status
to engage in franchising business in the public transport
sector
The Ministry of Construction stated its intention to further
break up the existing monopoly in the public transport sector
by allowing enterprises with legal person status to engage
in franchising business in the public transport sector. According
to the Ministry of Construction, qualified enterprises are
required to follow the procedures as set out in the PRC
Tender Law to obtain such franchising rights.
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Administration
for Industry and Commerce outlines six focus areas for market
reform
The State Administration for Industry and Commerce recently
decided to focus reform work on the following six areas this
year:
- Prohibiting non-licensed business activities or business
activities above and beyond the permitted business scope;
- Imposing sanctions regarding private assembling of
motor vehicles and the sale thereof;
- Strengthening the supervision of the grain and agricultural
products market;
- Imposing sanctions regarding industrial or regional
monopolistic activities;
- Continuing to impose sanctions regarding smuggling
activities; and
- Imposing sanctions regarding illegal publications and
inappropriate publication content.
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State
Administration of Radio, Film and Television implements "Various
opinions on the development of the Chinese motion picture,
television, and animation industries"
Recently the State Administration of Radio, Film and Television
implemented Various opinions on the development of the
Chinese motion picture, television and animation industries
("Opinions"). In the Opinions, the Central Government
expresses support and encouragement for the development of
the Chinese motion picture, television and animation industries
by implementing favourable structural and policy changes,
as well as future market administration measures.
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| FOREIGN INVESTMENT |
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China
Banking Regulatory Commission (CBRC): Narrowing the gap in
services permitted to be provided by Chinese and foreign banks
The CBRC is currently revising the Detailed implementation
rules with respect to the regulations for the administration
of foreign invested financial institutions of the PRC,
which will be promulgated in the near future. According to
a CBRC spokesperson, although foreign invested banks are currently
not permitted to provide services such as issuing bankcards,
the Central Government will continue to narrow the gap between
the types of services that domestic banks and foreign-invested
banks may provide.
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| REAL ESTATE |
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Ministry
of Land Resources implements Implementation plan to further
strengthen land market control
Recently, the Ministry of Land Resources implemented an Implementation
plan to further strengthen land market control ("Implementation
Plan"). According to the Implementation Plan, the Ministry
of Land and Resources will conduct inspections and strengthen
controls in the following areas relating to land:
- Conduct inspections on current land use to identify
and penalise non-approved land use, or land use above
and beyond the permitted scope;
- Conduct inspections on the quantity and quality of
agricultural land;
- Collection of compensation fees paid in exchange for
the use of land for construction purposes;
- Compensation paid by the government for government-sponsored
expropriation of agricultural land; and
- Sale of land use rights by way of tender, auction or
publicity.
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Ministry
of Construction issues circular on quality control with respect
to property management companies
On May 18, 2004, the Ministry of Construction issued a Circular
on quality control with respect to property management enterprises
("Circular"). According to the Circular, the government
departments responsible for conducting and approving quality
control with respect to property management companies shall
strictly abide by the Administrative Permits Law,
and the Measures for the administration of property management
enterprises. The Circular also sets out the procedures
relating to quality control by property management companies,
and the rules governing the printing and issuance of quality
control certificates to property management companies.
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| OTHER |
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Ministry
of Public Security promulgates four new transportation regulations
including Regulations for the application and use of motor
vehicles driver's licence
The Ministry of Public Security recently promulgated the Regulations
for the application and use for motor vehicles drivers' licences,
Regulations for the registration of motor vehicles, Regulations
with respect to the procedures for the treatment of conduct
contravening road safety laws and regulations, and Regulations
with respect to the procedures for dealing with road accidents.
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This newsletter is for information purposes
only. Its contents do not constitute legal advice and it should
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Translated from Charltons Chinese Language Weekly
Newsletter No.56
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