Laws of the People's Republic of China

    Article 1  These Procedures are formulated for the purpose of
strengthening the administration of Chinese financial institutions outside
China and ensuring the sound development of financial undertakings.

    Article 2  All banking and non-banking financial institutions inside China
(hereinafter collectively referred to as "domestic financial institutions"),
all non-financial corporations, enterprises and other organizations inside
China (hereinafter collectively referred to as "domestic non-financial
institutions"), all Chinese-invested banking and non-banking financial
institutions outside China (hereinafter collectively referred to as
"Chinese-invested financial institutions abroad"), and all Chinese-invested
non-financial corporations, enterprises and other organizations outside China
(hereinafter collectively referred to as "Chinese-invested non-financial
institutions abroad") that wish to invest in the establishment or purchase of
a financial institution abroad shall abide by these Procedures.

    The term "financial institutions abroad" referred to in the preceding
paragraph denotes institutions which are established or purchased abroad by
domestic financial institutions or non-financial institutions, or
Chinese-invested financial institutions or non-financial institutions abroad
and which engage in such financial business operations as deposits, loans,
discount of negotiable instruments, settlements, trust investment, financial
lease, guarantees, insurance and deals in securities.

    Article 3  The organ to examine, approve and administer the establishment
or purchase of financial institutions abroad is the People's Bank of China.

    Article 4  A domestic financial institution that applies for the
establishment or purchase of a financial institution abroad shall satisfy
the following requirements:

    1) it has been approved by the State Council or the People's Bank of
China, has been registered in accordance with the law and holds a Licence
of Financial Business Operations issued by the People's Bank of China;

    2) it has been permitted by the State Administration of Foreign Exchange
Control to handle foreign exchange operations, holds a Licence of Foreign
Exchange Operations issued by the State Administration of Foreign Exchange
Control and has the experience in handling foreign exchange operations for
over three years and the required specialized personnel;

    3) it possesses legitimate sources of funds in foreign exchange; and

    4) it possesses a foreign exchange fund of its own equivalent to no less
than 80 million Renminbi yuan.

    Article 5  A domestic non-financial institution that applies for the
establishment or purchase of a financial institution abroad shall satisfy
the following requirements:

    1) it is a large corporation or enterprise that has been established
upon approval by the department concerned and has been registered in
accordance with the law;

    2) it has a group corporation or group enterprise or other large
enterprise operating abroad with a relatively solid foundation and good
prospect of making profit;

    3) it has been permitted by the department in charge to establish a
financial institution abroad and possesses a foreign exchange fund of its own
equivalent to no less than 100 million Renminbi yuan; and

    4) it possesses the specialized personnel required for handling financial
and foreign exchange operations.

    Article 6  A Chinese-invested financial institution or non-financial
institution abroad that applies for the establishment or purchase of a
financial institution abroad shall satisfy the following requirements:

    1) it has been established abroad upon approval by the department in
charge in accordance with the law, possessing the official document of
approval and the documents certifying that it is engaged in legitimate
business operations in the locality;

    2) the Chinese-invested financial institutions in the locality where the
intended financial institution is to be established or purchased are in a
relatively weak position, which renders it necessary to establish the
financial institution; and

    3) the application submitted is in conformity with the law of the country
or region concerned.

    Article 7  The application for the establishment or purchase of a
financial institution abroad of shall be submitted for approval in accordance
with the following provisions:

     1) the application by a domestic financial institution for the
establishment abroad a representative agency, a branch office, or for the
establishment abroad of a Chinese-invested financial institution or a
Chinese-foreign joint financial institution, or for the purchase of a
financial institution abroad, shall be submitted to the People's Bank of
China for approval;

    2) the application by a domestic non-financial institution for the
establishment abroad of a Chinese-invested financial institution or a
Chinese-foreign joint financial institution or for the purchase of a financial
institution abroad shall, upon verification and consent by the department in
charge which has solicited the opinions of the Ministry of Foreign Economic
Relations and Trade, be submitted to the People's Bank of China for approval;
and

    3) the application by a Chinese-invested financial institution or non-
financial institution abroad for the establishment or purchase of a financial
institution abroad shall, after its domestic investing unit has solicited the
opinions of the Ministry of Foreign Economic Relations and Trade, be submitted
to the People's Republic of China for approval.

    Article 8  For the establishment or purchase of a financial institution
abroad, the domestic investing unit concerned shall apply to the People's
Bank of China. The application shall clearly state the name of the financial
institution to be established or purchased, its business scope, the
conditions, and the necessity therefor. After the content has been examined,
verified and filed as an item for processing by the People's Bank of China,
the application shall be submitted in accordance with the provisions of these
Procedures.

    The People's Bank of China shall examine the application submitted by the
applying unit and shall, within three months of receipt of the same, make the
decision as to whether or not it will grant the approval.

    Article 9  After the establishment or purchase of a financial institution
abroad has been approved, the domestic investing unit concerned shall, on
the strength of the document of approval by the People's Bank of China and
in accordance with the pertinent provisions, approach the State Administration
of Foreign Exchange Control and go through the procedures to remit abroad
the required foreign exchange.

    Article 10  A domestic financial institution that applies for the
establishment abroad of a representative agency shall submit the following
documents:

    1) an application duly signed by the chief person in charge of the
applying unit, which shall include the name of the proposed representative
agency, its address, the name of the chief representative and his/her
curriculum vitae; and

    2) the estimated expense of the proposed agency and the certificate of
its source of foreign exchange.

    Article 11  A domestic financial institution that applies for the
establishment abroad of a branch office shall submit the following documents:

    1) an application duly signed by the chief person in charge of the
applying unit, which shall include the name of the proposed branch office,
its address, the amount of its operating funds, the type(s) of business
operations, the curriculum vitae of the chief person in charge;

    2) the statements of assets and liabilities, the statements of loss and
profit, and the financial reports of the applying unit for the three years
prior to the submission of the application;

    3) the feasibility study report; and

    4) other relevant documents required by the People's Bank of China.

    Article 12  A domestic financial institution or non-financial institution
or a Chinese-invested financial institution or non-financial institution
abroad that applies for the establishment abroad of a Chinese foreign joint
financial institution shall submit the following documents:

    1) an application duly signed by the chief person in charge of the
applying unit, which shall include the name of the proposed Chinese-invested
financial institution, its address, its registered capital and the actual
capital, the source(s) of funds, the type(s) of business operations and the
curriculum vitae of the chief person in charge;

    2) the statements of assets and liabilities, the statements of loss and
profit, and the financial reports of the applying unit for the three years
prior to the submission of the application;

    3) the feasibility study report; and

    4) other relevant documents required by the People's Bank of China.

    Article 13  A domestic financial institution or non-financial institution
or a Chinese-invested financial institution or non-financial institution
abroad that applies for the establishment abroad of a Chinese-foreign joint
financial institution shall submit the following documents:

    1) an application duly signed by the chief person in charge of the
applying unit, which shall include the name of the proposed Chinese-foreign
joint financial institution, its registered capital and the actual capital,
the type(s) of business operations, the names of the respective investing
parties and the percentage of their respective capital contributions, the
source(s) of funds of the Chinese investor(s), and the curriculum vitae of
the chief person in charge;

    2) the statements of assets and liabilities, the statements of loss and
profit, and the financial reports of the applying unit for the three years
prior to the submission of the application;

    3) the agreement, the contract and the articles of association of the
joint financial institution initialled by the respective investing parties
thereto;

    4) the feasibility study report; and

    5) other relevant documents required by the People's Bank of China.

    Article 14  A domestic financial institution or non-financial institution
or a Chinese-invested financial institution or non-financial institution
abroad that applies for the purchase of a financial institution abroad shall
submit the following documents:

    1) an application duly signed by the chief person in charge of the
applying unit, which shall include the name of the financial institution that
is to be purchased, its address, the articles of association, the total
capital and total assets, the state of affairs of the institution and its
personnel, its financial position, the reasons of the purchase and the
objectives thereof, the amount of the fund needed for the purchase, and the
source(s) of the fund;

    2) the statements of assets and liabilities, the statements of loss and
profit, and the financial reports of the applying unit for the three years
prior to the submission of the application;

    3) the feasibility study report; and

    4) other relevant documents required by the People's Bank of China.

    Article 15  If a financial institution abroad is to make any one of the
following changes, its domestic investing unit shall in advance submit an
application to the People's Bank of China for examination and approval:

    1) if a representative agency is to be upgraded to a branch office;

    2) if a representative agency, or a branch office, or a Chinese-invested
financial institution or a Chinese-foreign joint financial institution is to
be disbanded; and

    3) if the percentages of the shares held by the respective investing
parties to a Chinese-foreign joint financial institution are to be adjusted
or if the capital is to be increased.

    Article 16  The domestic investing unit of a financial institution abroad
shall, prior to the date of July 31 every year, submit to the provincial
branch bank of the People's Bank of China in the locality where it is situated
the work report of the financial institution abroad for the first half of
the year, which shall include the changes in the personnel of the institution,
a breakdown of the deposits and loans, a breakdown of the money sent abroad
or received therefrom; a breakdown of the import and export settlements, an
analysis of the projects of investment and an analysis of the business
transactions in foreign exchange, securities and gold. The afore-said report
shall then be transmitted to the People's Bank of China, by its provincial
branch bank.

    Article 17  The domestic investing unit of a financial institution abroad
shall, prior to the date of March 31 every year, submit to the provincial
branch bank of the People's Bank of China the statement of assets and
liabilities, the statement of loss and profit, and the annual work report of
the financial institution abroad for the previous fiscal year, which shall
then be transmitted to the People's Bank of China by its provincial branch
bank.

    Article 18  The People's Bank of China and its various provincial branch
banks shall have the right to exercise supervision over the work of the
financial institutions abroad.

    Article 19  If any party, in violation of the provisions in Article 7 of
these Procedures, establishes or purchases a financial institution abroad
without the approval of the People's Bank of China, the People's Bank of China
shall have the right to freeze a corresponding amount of the foreign exchange
of the domestic investing unit thereof or of its Renminbi deposits, order it
to disband the financial institution abroad or set a deadline for it to make
up for the procedures of application for examination and approval, and conduct
close investigations into the liability of the chief person in charge of
the unit and of those who are directly responsible therefor.

    If any party violates the provisions in Article 15 of these Procedures,
the People's Bank of China shall have the right to freeze a corresponding
amount of the foreign exchange of the domestic investing unit thereof or of
its Renminbi deposits and order it to stop the business operations of the
financial institution abroad for rectification.

    If any party violates the provisions in Articles 16 and 17 of these
Procedures, to a serious extent, the People's Bank of China may impose a fine
of 100,000 Renminbi yuan or less on the domestic investing unit thereof.

    Any party violates the regulations concerning foreign exchange control
shall be penalized in accordance with the pertinent provisions of the State.

    Article 20  If any party has, before these Procedures go into effect,
established or purchased a financial institution abroad without approval of
the People's Bank of China, it shall, within the time limit prescribed by
the People's Bank of China, make up for the procedures of application for
examination and approval.

    Article 21  These Procedures shall not apply to the enterprises with
foreign investment inside China.

    Article 22  The People's Bank of China shall be responsible for the
interpretation of these Procedures.

    Article 23  These Procedures shall go into effect as of the date of
promulgation.