GongShangQiZi [2000] No.261 November 8, 2000

Fujian Administration for Industry and Commerce:

We have studied your Request for Instructions on Applicable Regulations for Punishing Enterprises with Foreign Investment for Forging Reports on the Verification of Capital (MinGongShangWaiQiZi [2000] No.498) and now reply as follows:

1. The Law of the People's Republic of China on Foreign-capital Enterprises, the Rules for the Implementation of the Law of the People's Republic of China on Foreign-capital Enterprises, the Company Law of the People's Republic of China and the Regulations of the People's Republic of China on Company Registration Administration are applicable to enterprises with foreign investment operating in the form of companies (hereinafter referred to as enterprises with foreign investment) for violation of registration administration laws and regulations.

2. Enterprises with foreign investment that fail to contribute their due capital within the prescribed time should be handled in accordance with Article 9 of the Law of the People's Republic of China on Foreign-capital Enterprises and Articles 31 and 32 of the Rules for the Implemenation of the Law of the People's Republic of China on Foreign-capital Enterprises.

3. Foreign-capital enterprises that fail to contribute their due capital and submit falsified reports on the verification of capital in exchange for the extension of legal capacity should be handled in accordance with Article 58 of the Regulations of the People's Republic of China on Company Registration Administration.

In Article 58 of the Regulations of the People's Republic of China on Company Registration Administration, the phrase "applying for company registration" should contain procedures and process of registration for company establishment, alteration and other registered-capital related cases. And the phrase "obtaining the company registration" should cover the procurement of corporate legal capacity, completion of the alterations of company registration and the acquisition of such recorded registration results as the extension of corporate legal capacity.

4. While foreign-capital enterprises that fail to contribute their due capital may be punished in accordance with the Rules for the Implementation of the Law of the People's Republic of China on Foreign-capital Enterprises, shareholders that fail to contribute their due capital may be punished in compliance with Article 60 of Regulations of the People's Republic of China on Company Registration Administration.

Promulgated by The State Administration for Industry and Commerce on 2000-11-8