Rules and Regulations

4.  Rules and Regulations

(1)   Rules and regulations on industry and commerce administration

 Registration for starting a foreign-invested enterprise

1.    Application for registration to start the foreign-invested enterprise, including the Application Form of Registration for Starting a Foreign-invested Enterprise, Name List of the Chinese Investors, Name List of the Foreign Investors, the Application Form of the Enterprise’s Legal Representative, Certification of the Board Members and Managing Personnel and Documents certifying the foreign-invested enterprise’s right to residence and production site;

2.   The contract and the articles of association, and only the articles of association needed for sole foreign-invested enterprise;

3.   The official written reply by the administration of examination and approval, and the certificate of approval for the newly established foreign-invested enterprise (Copy 1);

4.   Letters certifying the legal qualifications for each investor;

5.  Form of Application for Pre-registration (Alteration) of the Names of Foreign-invested Enterprises, and Notification of Approval for Pre-registration of Foreign-invested Enterprises Names;

6.  Letter of Appointment (Commission);

7.   Application Form for Enterprise’s Contact;

8.    If the business scope covers the examination and approval projects previously mentioned, relevant documents of approval by the respective  administrations shall be submitted, if not, the enterprise shall hand in the letter of commitment.

Besides the above listed documents, applying enterprises ought to offer a printed name list of the shareholders and the name list of board members and managers.

 Alteration of registration

1.    Application for Alteration of Registration;

2.    Letter of appointment (commissioning) for the said alteration;

3.   Decision of the Board of Directors;

4.   Official and duplicate copies of the business license for the corporate entity;

5.   The following documents and certificates shall be supplied when  applying for alteration of the following items:

─         Alteration of the corporate name: (1) application for pre-approval for alteration of the corporate name and notice of approval; (2) comments from the organ of examination and approval and a duplicate copy of the application for pre-approval for alteration of corporate name; (3) the contract and agreement on revision of the articles of association.

─         In case of an increase in capital input and registered capital: (1) agreement on revision of the contract and articles of association; (2) report on assets assessment, comments from the organ of examination and approval; (3) duplicate copy of the certificate of approval for enterprise.

─         In case of a decrease in registered capital: (1) agreement on revision of the contract and articles of association; (2) comments from the organ of examination and approval and duplicate copy of the certificate of approval for enterprise; (3) hard copy of news published by at lowest a provincial press with the content of said decrease in capital; (4) letter of remarks signed by the board chairperson on the said decrease, announcing the reason, debt status, and the commitment of not to insult the creditors’ rights after the decrease; (5) report on account checking issued    by an accountant or auditing agency.

─         Alteration of the type of the enterprise: (1) agreement on revision of the contract and articles of association; (2) comments from the organ of examination and approval and duplicate copy of the certificate of approval for enterprise.

─         Alteration of shareholder(s): (1) agreement on transfer of stock right; (2) documents certifying the legal status and credit of the party to receive the said transfer; (3) agreement on revision of the contract and articles of association; (4) comments from the organ of examination and approval and duplicate copy of the certificate of approval for enterprise; (5) if any transfer concerning the municipal state-owned properties, the Form of Property Rights Transfer provided by Beijing Property Rights Exchange.

─         Alternation of the name(s) of the shareholder(s): (1) comments from the organ of examination and duplicate copy of the certificate of approval for enterprise; (2) agreement on revision of the contract and articles of association; (3) certificate of alternation of the names; (4) certificate of qualified shareholder(s).

─         Alteration of the period of operation: (1) agreement on revision of the contract and articles of association; (2) comments from the organ of examination and approval and duplicate copy of the certificate of approval for enterprise.

─         Alteration of the scope of business: (1) agreement on revision of the contract and articles of association; (2) comments from the organ of examination and approval and duplicate copy of the certificate of approval for enterprise; (3) Documents of approval issued by the proper authorities for new business items for which pre-examination is required, otherwise, the enterprise shall hand in the letter of commitment.

─         Applying for permission to set up a new branch or office outside Beijing: (1) after the registration capital invested on time, the said enterprise shall hand in the original or a duplicate copy of the business license to the administration, for the letter of examination and transition, with verbal application; (2) if the enterprises failed to pay it on time, enterprise to set up a new branch or office outside Beijing needs to submit the hardcopy of its business license with its official seal affixed; (3) no Decision of the Board of Directors needed if the enterprise applies for setting up a new branch or office in Beijing。

─         Cancellation of existing branches or offices, together with the business license, enterprise needs to offer: (1) certificate of the cancellation made by the administration; (2) the original or a duplicate copy of the business license.

 Cancellation of registration

In going through the procedure, the aforesaid enterprise shall submit the following documents:

1.   Application for cancellation of foreign-invested enterprise registration;

2.   The relevant decision of the board of directors;

3.   Report on settlement of the creditor’s rights and debts, or documents  certifying responsibility for settlement of the creditor’s rights and debts;

4.   Letter of approval issued by the authorities of examination and approval;

5.    Documents issued by the taxation authorities and customs certifying    complete payment of taxes and customs duties;

6.    Page proof (90 days after when would the cancellation be handled) for the public notice on the cancellation of registration;

7.   Letter of authority for enterprise registration;

8.    The business license (original and duplicates included) of the enterprise     

9.  Official seal of said enterprise.

 (2) Rules and regulations on foreign exchange control

 

Issuing a foreign exchange certificate for foreign-invested enterprises

 

Within 30 days of the issuance of the business license, a foreign-invested enterprise should apply to the local foreign exchange control administration for going through the procedures of foreign exchange registration. In going through the procedure, the said enterprise shall fill in the application form for foreign exchange registration.

Applying for a foreign exchange account 

After foreign exchange registration, a foreign-invested enterprise shall open a foreign exchange capital fund account and a foreign exchange current account.

The income range for a foreign exchange capital fund account of a foreign-invested enterprise is the capital input of spot exchange by both foreign and Chinese investors, while the outcome range is foreign exchange outcome under the current account and items classified by the local administration for foreign exchange control as under the capital account.

When the report on the verification of capital is ready, the commissioned certified public accountant office shall request confirmation at the local foreign exchange administration and bank of deposit for the enterprises’ capital fund account.

 Registration procedures for import-export

A newly established foreign-invested company authorized to engage in import and export shall apply to the proper authorities of foreign exchange administration for entry into the Directory of Companies Engaging in Import with Payment Made in Foreign Exchange.

After establishment and before delivery of the first shipment for export, the aforesaid enterprise shall undergo the procedure for opening record for export cancel after verification by the proper authorities of foreign exchange administrations. It shall at the same time apply to the Customs Card Center for the China Electronic Port IC Cards for the legal person and company operator.

 Foreign debt registration

With 15 days after a contract on overseas borrowing is signed, the aforesaid foreign-invested enterprise shall, with the contract and other documents, go through the procedures for foreign debt registration with the proper authorities of foreign exchange administration. The special account includes credit sub-account and repayment sub-account. When the borrowing is realized, the borrower shall, with the foreign debt registration certificate, open an account with the appointed bank. The exchange settlement and capital repayment of the foreign debt, capital plus interest, shall be examined and approved by the proper authorities of foreign exchange administration transaction by transaction.

 Declaration of international revenue and payments   

In case of involvement in international revenue and/or payments, foreign-invested companies shall, through the appointed banks, make a declaration to this effect, and submit a statistical report on direct investment to the proper authorities of foreign exchange administration semi-annually. 

Foreign exchange

 Foreign exchange used by foreign-invested trade enterprises or by foreign-invested non-trade enterprises for business operation may be paid through their foreign exchanges accounts or designated banks, for which production of the valid commercial invoices and other documents shall be required.

Remittance out of China of the after-tax profits and dividends by the foreign investor(s) of a foreign-invested enterprise may be honored at the designated banks, for which production of the relevant documents shall be required. Remittance out of China of the after-tax wages in renminbi and/or foreign currencies and other legitimate incomes by overseas Chinese and Hong Kong, Macao and Taiwan compatriots working in foreign-invested enterprises may be honored at the designated banks, for which production of the relevant certification shall be required.

The following items of expenditure in foreign exchange shall be honored through bank accounts of the involved enterprises at designated banks after verification by the proper authorities of foreign exchange administration;

       a. Whereas covert commission exceeds 2 percent of the contractual value or    5 percent in case of overt commission, the real value for both cases being more than US$10,000;

       b. Whereas foreign debts are repaid, capital plus interests;

       c. Whereas an amount of foreign exchange equivalent to US$10,000 in     value is drawn.

With approval from the proper authorities of foreign exchange administration, foreign-invested enterprises may remit their incomes obtained through stock rights transfer or upon business termination provided such incomes are verified by the proper authorities of foreign exchange administration.

Beginning April 2003, foreign investors who have not set up a foreign-invested enterprise in China but intend to do so or engage in direct investment-related activities in China may apply to the proper authorities of foreign exchange administration for opening special accounts for investment, procurement, payment of fees and honest money for deposit of funds related to investment payments. These accounts are meant for entry of spot exchange only. Account settlement and transfer of funds covered by these accounts must go through verification by the proper authorities of foreign exchange administration transaction by transaction. For details, see the Public Notification of the State Administration of Foreign Exchange.

 

Beijing Municipal Administration of Foreign Exchange

Address: F6, 7, Xijin Tower, No. 3, Shifangyuan, Haidian District, Beijing, 100036

Tel: 0086 10 6855 9699

WWW: http//www.safe.gov.cn/110000/110000e0263009.html

E-mail: bjsafesupport@bj.pbc.gov.cn

 (3)    Rules and regulations regarding financial administration

Registration

A foreign-invested enterprise should, within 30 days after receiving the business license, go through the procedures of financial registration at the relevant financial body of the place of its registration (foreign-owned enterprises shall go to Beijing Municipal Finance Bureau). When registering, the enterprise needs to fill in the Financial Registration Card for Foreign-Invested Enterprises, and submit the following documents (copies acceptable):

1.   Certificate of approval;

2.  A duplicated copy of the business license;

3.   The enterprise’ feasibility studies report, contract and articles of association;

4.   Official remarks on the enterprise’s contract and articles of association and the organization of its board of directors.

The financial body responsible should grant the applicant the original and transcript of the financial registration card for the foreign-invested enterprise.

If the enterprise makes changes to the contract or changes the name, address, legal representative, and/or business scope, it should, within 30 days after completing the procedures for registration of alteration, go through the procedure of alteration for financial registration.

 After closure and liquidation and before it applies to cancel registration at the relevant administration for industry and commerce, the enterprise should go through the procedures for cancellation of financial registration.

 Management, inspection and supervision

Foreign-invested enterprises should supply the following documents to the district-county finance bureaus:

1.   The enterprise’s annual balance sheet, along with an explanatory report of its financial status;

2.   Audit report by an accounting firm;

3.   A duplicated copy of the financial registration certificate.

In addition to the annual financial inspection, the financial authorities shall select some enterprises for special or full inspection mid-year, covering such areas as the establishment and implementation of financial and accounting systems, turnover of financial revenue, the submission of accounting report forms and the implementation of the financial legislation.

 

Beijing Municipal Finance Bureau

Address: No.15, Fucheng Road, Haidian District, Beijing  

Tel: +86 10 8854 9114

WWW: http://www.bjcz.gov.cn  

E-mail: bgs@bjcz.gov.cn

 The district-county Finance Bureaus (+86 10):

District/ County	Telephone Number	District/ County	Telephone Number	District/ County	Telephone Number
Dongcheng District	6415 3606	Shijingshan District	6887 6247	Pinggu District	6996 2503
Xicheng District	6621 8029	Mentougou District	6984 4108	Fangshan District	6937 7943
Xuanwu District	8315 4208	Fengtai District	6381 2909	Huairou District	6964 3467
Chongwen District	6715 1041	Tongzhou District	8153 7202	Changping District	6974 5080
Chaoyang District	6509 0346	Daxing District	6923 4980	Miyun County	6902 2909
Haidian District	8848 8447	Shunyi District	6946 8461	Yanqing County	6910 2960
Yizhuang Development Area	6788 0047

 

 (4)     Rules & regulations on labor and social security administration

 

Labor

 

Employment: As recruiting Chinese employees, foreign-invested enterprises (the Employer) shall go through the normal procedures of employment in the job and labor service centers of the districts or counties where they are based.

In employing personnel from Taiwan, Hong Kong and Macao for jobs in Beijing, foreign-invested enterprises shall apply to the Beijing Municipal Bureau of Labor and Social Insurance for work permits on their behalf. For more information, please log on the website of the Bureau and the download section.

 Create a contract: The employer should sign a work contract with the employees. If hiring the workers provided by another entity, the employer should sign contract with the labor provider.

Change a work contract: On the basis of agreement from the employer and the employee, the work contract can be changed.

End a work contract:

In the execution of a work contract, the signers of the contract can end the contract after negotiation.

Under any of the following circumstances, the employing party has the right to terminate the work contract without paying recompense to the employees:

 

1)        During the internship, the hired workers prove not qualifying the employment requirements;

2)        The employers can terminate work contracts with the employees if the latter violate the working disciplines or other regulations. If the employer-set disciplines are in contradiction with China’s laws or regulations, the employer cannot dismiss the workers.

3)        The workers can be dismissed if they commit severe delinquency and malpractice and incur considerable losses to the employer.

4)        The workers can be dismissed if they commit crimes.

 

Under any of the following circumstances, the employer can end the contract with the worker but has to notify the worker in 30 days’ advance.

The workers, who have recovered from diseases or non-job-injury, are not able to continue with the previous job or any other alternative jobs arranged by the employers.

1)              The workers are not capable of the work assigned, even after training or work adjustment.

2)              The conditions that the work contract was based on have changed considerably so that the execution of contract cannot continue and the signers of the contract cannot agree on new ones.

Economic workforce trimming: Under any of the following circumstances, the employing entities can reduce workforce after report to the labor’s union in 30 days’ advance and notify the governmental department on labor and social security.

1)        The enterprise is on verge of bankruptcy and is in the course of government-directed sorting-up;

2)        The enterprise moves to new site to prevent environmental pollution;

3)        The operation of the enterprise is in miserable condition.

If the enterprises plan to hire new workers within six months, they should give priority to the workers previously laid off.

Economic indemnity and compensation

The enterprise shall, in accordance with the relevant state and municipal legislation, pay the employee indemnity for cancellation of the labor contract not due to error on the part of the employee.

In a given enterprise, the party that acts in violation of the PRC Labor Law and thus causes economic losses to the other should compensate the victimized party.

 Work hours and vacation

The system of work hours and vacation

The employee shall, under normal circumstances, work for not longer than eight hours per day, and 40 hours per week.

With approval by the Municipal Labor and Social Security Bureau, enterprises may practice the system of integrated work hours or the system of irregular work hours.

The New Year’s Day, the Spring Festival (the New Year’s Day by China’s lunar calendar), the International Labor Day and the National Day are statutory holidays for the public.

 Protection of females and minors

The employee shall go through the regulations of China and Beijing on the protection of females and minors.

 Wages

Foreign-invested enterprises may independently decide their own ways of distribution and the rates and scales of wages paid to their employees.

Wages paid to the laborers who engage in full-time work must on no account be lower than the lowest rates prescribed by the municipal government, that is, 3.26 yuan per hour and 545 yuan per month.

As regards the laborers who engage in full-time work, the wages paid to them shall not be less than RMB 6.8 per hour. For work during the statutory holidays, the rate of payment shall not be lower than 15.5 yuan per hour.

In 2003, wages and salaries averaged 24,045 yuan per worker in Beijing.

Social Security

Item	Paid by the Enterprises	Paid by the Employees	Base Value of the Charge
Pension Fund	20%	8%	Average wages per month of the insurant last year
Unemployment Insurance Charge	1.5%	0.5%	Average wages per month of the insurant last year
Industrial Injury  Insurance	0.2%-3%	N/A	Average wages per month of the insurant last year
Basic Medical Insurance	9%+1%	2%+RMB 3 yuan	Average wages per month of the insurant last year

 

 Welfare

The enterprises shall pay 10 percent of the housing fund for their employees, and the employees, another 10 percent. In both cases, the monthly average wages for the previous year are taken as the base for calculation.

Beijing Labor and Social Insurance Bureau

Address: No.5, Dongnei Xijie, Xuanwu District, Beijing, 100050

Tel: +86 01 6316 7906

Service Line: +86 10 12333

WWW: http://www.bjld.gov.cn

 (5)    Rules on inspection and quarantine control for import & export goods

Compulsory inspection and quarantine control

Compulsory inspection and quarantine control cover all goods listed in the Catalogue of Import and Export Goods Subject to Inspection and Quarantine Control. These include food, animals and plants and animal and plant products, packaging, cargo holds and containers for dangerous goods, cargo holds and containers for food and frozen and easily perishable goods, as well as goods prescribed in other Chinese laws and international conventions for such procedures.

Details are found in: 

1.    Commodity Inspection Law, Articles 4, 5, 6, 7, 17 and 18;

2.    Implementation Regulations for Animal-plant Quarantine Law, Item 2, Article 5;

3.   Food Hygiene Law, articles 30 and 31;

4.   Implementation Specifications for Border Hygiene Quarantine Law, Article 54.

 Inspect