Chapter 3 Approval and Registration

Article 21 Where a foreign investor merges a domestic enterprise by equity merger, it shall, pursuant to the total investment amount of the foreign investment enterprise under planned establishment, the type of the enterprise and the industry it engages in, submit the following documents to the approval authority with the corresponding approval power in accordance with the laws, administrative regulations and departmental rules on establishment of foreign investment enterprises:

(1) the resolution of the shareholders of the merged domestic limited liability company on unanimous consent of the foreign investor's equity merger, or resolution of the shareholders' meeting of the merged domestic stock limited company on consent of the foreign investor's equity merger;

(2) the application for the merged domestic company to be modified in accordance with the law into and be established as a foreign investment enterprise;

(3) the contract and articles of association of the foreign investment enterprise established after the merger;

(4) the agreement on the foreign investor's purchase of the shareholders' equity of the domestic company or on the subscription of the domestic company to increase capital;

(5) the financial auditing report of the merged domestic company in the previous accounting year;

(6) the identification certificate or incorporation certificate and the credit certificate of the investor notarized and attested according to law;

(7) the statement on the enterprises invested by the merged domestic company;

(8) the business licenses (duplicates) of the merged domestic company and of the enterprises it invests in;

(9) the plan for re-settlement of the merged domestic company's employees;

(10) the documents required in articles 13, 14 and 15 hereof.

Where the business scope, scale and obtainment of land use right of the foreign investment enterprise established after the merger involves permits from other relevant governmental departments, the relevant permit documents shall be submitted along with those provided for in the preceding paragraph.

Article 22 The equity purchase agreement, capital increase agreement for domestic company shall be governed by Chinese laws, and shall include the following contents:

(1) information regarding each party to the agreements, including its name, domicile, and the name, position and nationality, etc. of its legal representative;

(2) the proportions and price of the purchased equity or the capital increased from subscription;

(3) the term and method for performance of the agreements;

(4) the rights and obligations of each party to the agreements;

(5) the liabilities for breach of the agreement and settlement of disputes;

(6) the date and place for conclusion of the agreements.

Article 23 Where a foreign investor merges a domestic enterprise by asset merger, it shall, pursuant to the total investment amount of the foreign investment enterprise under planned establishment, the type of the enterprise and the industry it engages in, submit the following documents to the approval authority with the corresponding approval power in accordance with the laws, administrative regulations and departmental rules on establishment of foreign investment enterprises:

 (1) the resolution of the property holders or authority of the domestic enterprise on agreeing to sell the assets;

(2) the application for the establishment of the foreign investment enterprise;

(3) the contract and articles of association of the foreign investment enterprise to be established;

(4) the agreement concluded between the foreign investment enterprise to be established and the domestic enterprise on purchase of assets, or, the agreement concluded between the foreign investor and the domestic enterprise on assets purchase;

(5) the articles of association and business license (duplicates) of the domestic enterprise subject to the Merger and Acquisition;

(6) the evidence of notice and public announcement to creditors by the domestic enterprise subject to the Merger and Acquisition and statement on whether or not any objection being made by creditors;

(7) the identification certificate or incorporation certificate and the credit certificate of the investor notarized and attested according to law;

(8) the plan for employees re-settlement of the domestic enterprise subject to the Merger and Acquisition;

(9) the documents required to submitted in Article 13, Article 14 and Article 15 hereof.

Where the assets of the domestic enterprise purchased and operated in accordance with the preceding paragraph involves permits from other relevant governmental departments, the relevant permit documents shall be submitted along with those provided for in the preceding paragraph.

Where a foreign investor purchases the assets of a domestic enterprise by agreement and invests such assets in establishing a foreign investment enterprise, it shall not, prior to the establishment of the foreign investment enterprise, operate any business with such assets.

Article 24 The assets purchasing agreement shall be governed by the laws of China, and shall include the following contents:

(1) information of each party to the agreements, including its name and domicile, and the name, position and nationality, etc. of its legal representative;

(2) the list and price of the assets under planned purchase;

(3) the term and method for performance of the agreements;

(4) the rights and obligations of each party to the agreements;

(5) the liabilities for breach of the agreement and settlement of disputes;

(6) the date and place for conclusion of the agreements.

Article 25 Where a foreign investor merges a domestic enterprise to establish a foreign investment enterprise, the approval authority shall, unless otherwise provided for in the present provisions, decide on, in accordance with the law, whether or not to grant the approval within thirty (30) days as of the receipt of all the documents submitted. If the approval authority decides to grant the approval, it shall issue a certificate of approval.

Where the approval authority decides to approve a foreign investor to purchase by agreement the shareholders' equity of a domestic company, it shall simultaneously make copies of the relevant approval documents separately to the foreign exchange administrative authority at the equity transferor's locality and that at the domestic company's locality. The foreign exchange administrative authority at the equity transferor's locality shall issue the relevant certificate on registration of share transference foreign exchange earnings and foreign exchange from foreign investment, which is the valid document to prove that the foreign investor has paid the consideration for equity subscription.

Article 26 Where a foreign investor merges a domestic enterprise by asset merger, it shall, within thirty (30) days as of the receipt of the approval certificate of foreign investment enterprise, apply to the administrative authority of registration for making registration of establishment, and obtaining the foreign investment enterprise's business license.

Where a foreign investor merges a domestic enterprise by equity merger, the merged domestic company shall, in accordance with the present provisions, apply to the original registration administrative authority for registration of modification, and obtaining the foreign investment enterprise's business license. If the original registration administrative authority has no jurisdiction of registration, it shall, within ten (10) days as of the receipt of the application documents, transfer them to an administrative authority of registration with the jurisdiction for handling the registration, and meanwhile attach the domestic company's registration files. The merged domestic company shall, when applying for registration of modification, submit the following documents, and be responsible for their genuineness and validity:

(1) the application for registration of modification;

(2) the agreement on the foreign investor's purchase of the shareholders' equity of the domestic company or on the subscription of the domestic company to increase capital;

(3) the amended articles of association of the company or the amendment to the original articles of association, and the contract of the foreign investment enterprise that needs to be submitted in accordance with the law;

(4) the foreign investment enterprise's approval certificate;

(5) the subject qualification certificate or the natural person's identification certificate of the foreign investor;

(6) the amended name list of the board of directors, the documents stating the names and domiciles of the newly increased directors, and the documents on the positions held by the new directors;

(7) other relevant documents and certificates provided for by the State Administration for Industry and Commerce.

The investor shall, within thirty (30) days as of the receipt of the foreign investment enterprise's business license, make registration in the departments of taxation, customs, land administration and foreign exchange control, etc.