Rules of Shenzhen Special Economic Zone on Requirements and Procedures for Incorporation of Joint-Stock Limited Company

(Discussed and adopted at the 90th standing committee of the municipal people' s government on September 17, 1994, and promulgated by Decree 39 on November 24, 1994.)

Chapter 1 General Provisions　　

Article 1  In order to implement the Company Law of the People' s Republic of China and the Regulations of Shenzhen Special Economic Zone on Joint-Stock Limited Company, define incorporation requirements of joint-stock limited company, and normalize incorporation procedures of joint-stock limited company, these rules are formulated.

Article 2  These rules shall be applicable to the incorporation of joint-stock limited company (hereinafter referred to as company) in the Shenzhen Special Economic Zone (hereinafter referred to as the Special Zone), and the incorporation of enterprise as legal person or other economic organization incorporated in the Special Zone.

Article 3  Incorporation of company shall accord with the requirements and procedures stipulated in the Regulations of Shenzhen Special Economic Zone on Joint-Stock Limited Company and these rules. If there are no corresponding provisions in the above regulations and rules, incorporation of company shall accord with the provisions stipulated in the Company Law of the People' s Republic of China, relevant laws or administrative regulations.

Chapter Two  Requirements for Company Incorporation

Section One   Requirements for Incorporation by means of sponsorship

Article 4    Incorporation by means of sponsorship means sponsors incorporate a company by means of subscribing all the shares to be issued, and register the company according to the Regulations of Shenzhen Special Economic Zone on Joint-Stock Limited Company and the Administrative Regulations of the People' s Republic of China on Company Registration.

Article 5  To apply for incorporation by means of sponsorship, the following requirements shall be satisfied:

  1. having more than five sponsors, of which more than half have their domicile within the territory of the People's Republic of China, and more than one has domicile within the Special Zone;

  2. the company' s registered capital shall not be less than 10 million yuan in RMB; in case that foreign investor participates in incorporation, the company' s registered capital shall not be less than 30 million yuan in RMB, and shares subscribed by the foreign investor shall not be less than 25% of that planed to be issued by the company.

  3. sponsors shall pay in full for their shares;

4. in case that sponsors use intangible assets, such as industry property right or non-patented technology, as capital to be contributed, the proportion of shares converted from the assets shall not be more than 20 percent of the company' s registered capital;

5. the name, organization structure and association articles of the company shall accord with the provisions stipulated in the Regulations of Shenzhen Special Economic Zone on Joint-Stock Limited Company. The company' s articles of association shall be stamped or signed by all sponsors;

6. having fixed location and necessary qualifications for production and operation;

7. operating project accords with industry policy of the country and the Special Zone.

Article 6 Enterprise' s owner of title may use his property in the restructed enterprise as capital if the enterprise incorporates a company by means of restruction. The sum of shares converted from the property shall not exceed that of the enterprise' s present net property.

Article 7 Chinese and foreign equity joint venture, or Chinese and foreign cooperative joint venture incorporated in the Special Zone, may incorporate company by means of restruction, but shall meet the following requirements:

1.enterprise' s investors have made capital contribution in full according to the provisions of laws and concluded contract;

2. the company' s registered capital is no less than 30 million yuan in RMB;

3. the proportion of shares subscribed by foreign investors is no less than 25 percent of that planned to be issued by the company;

4. other requirements stipulated in Article 5 of these rules.

Article 8 An agreement on incorporation with sponsors shall be made by sponsors and shall contain the following matters:

1. the title or name, and domicile of every sponsor;

2. the name, domicile and business scope of the company planned to be incorporated;

3. the sum of the company' s registered capital;

4. the category, sum and term of the capital contributed by every sponsor, and proportion of shares converted from it;

5. the agreement on conveying property right according to legal procedures, if property right or asset other than money is contributed as capital;

6. the method to share the expense for incorporation;

7. the composition and authority of provisional body during the company incorporation; the name, domicile and authorized matters of the sponsor jointly entrusted to undertake the incorporation, if there is no provisional body;

8. the liabilities of sponsor to the company and other sponsors, if he breaches the agreement on company incorporation;

9. division of liabilities among sponsors in case of failing to incorporate the company;

10. other agreed matters.

The agreement on incorporation shall be reached in consensus, and be signed or stamped by all sponsors.

Article 9  The currency contributed as capital by sponsor may be RMB or exchangeable foreign currency. If exchangeable foreign currency is contributed as capital, sponsor shall convert it into RMB under the foreign exchange quotation proclaimed by the people' s bank of china on paying day according to the agreement on incorporation.

Article 10 The material object contributed as capital by sponsor shall be building, machine, equipment or other material necessary for the company' s operation.

Article 11 In case of contributing industry property right or non-patented technology as capital, sponsor shall submit materials concerning the right, including: (1) copy and validity certification of patent certification or trademark registration certification; (2) materials on practical value of the industry property right or non-patented technology; (3) calculation basis of conversion; and (4) evaluation report made by property evaluation organization legally approved and registered.

Article 12 In case of contributing land-use right as capital, sponsor shall accord with relevant provisions of laws, regulations and rules of the municipal government.

Article 13 In case of agreeing to contribute property right other than land-use right, industry property right or non-patented technology as capital, sponsor shall refer to relevant national regulations. The sponsor shall pay corresponding compensation if the said property right can not be actualized entirely or partially.

Section 2  Requirements for Incorporation by means of Share Offer

Article 14  Incorporation by means of share offer means incorporation of a company by means of subscription by the sponsors for a portion of the shares to be issued by the company and offer of the rest to the general public.

Article 15 To apply for incorporation by means of share offer, the following requirements shall be satisfied:

1. sponsors shall meet the requirements stipulated in paragraph1, 4, 5 and 6 of Article 5 of these rules;

2. proportion of shares subscribed by sponsors are more than 35 percent of that issued by the company;

3. company' s registered capital is no less than 50 million yuan in RMB;

4. operating project accords with the industry policy of the State and the Special Zone, and is anticipated to have steady profits;

Article 16 Enterprise shall meet the following requirements if it offers shares to incorporate company by means of restruction:

1. having been continuously profitable for the last three years;

2. at the end of last year, the proportion of the enterprise' s net assets is no less than 30 percent of its total assets; the proportion of its intangible assets is no more than 20 percent of its net assets. As regard to high science and technology enterprise recognized by the State or the Special Zone, proportion of its intangible assts to its net assets may accords with other relevant provisions;

3. the enterprise' s owner of title shall supplement investment and make up the margin, if the sum of shares converted from the original enterprise' s property exceeds the sum of its net assets;

4. other requirements stipulated in Article 15 for incorporation by means of share offer.

Article 17  When a state-owned enterprise offer shares to incorporate company by means of restruction, the number of sponsors may be less than five. Proportion of the sponsors' shares converted from their original net assets shall be 35 percent or above of the total sum of shares to be issued by the company. The other shares shall be collected from society publicly.

Article 18 Foreign investor may be one of the sponsors to incorporate company by share offer, and may offer shares to society publicly jointly with Chinese sponsor.

Article 19 Chinese and foreign equity joint ventures, and Chinese and foreign cooperative joint ventures incorporated in the Special Zone may offer shares and incorporate company by means of restruction, but shall meet the following requirements:

1. proportion of the total sum of the enterprise' s net assets shall be no less than 35 percent of the sum of the company' s total capital;

2. proportion of shares subscribed by foreign investors (including stocks floated abroad publicly) shall be no less than 25 percent of the total amount of shares planned to be issued by the company;

3. requirements stipulated in Article 16 of these rules.

Chapter 3 Procedures for Company Incorporation

Section 1 Procedures for Incorporation with Sponsors

Article 20 Sponsors shall apply directly to the company registration organ (namely the municipal administrative department for industry and commerce, hereinafter the same) for company incorporation registration, after the director and supervisor are elected and dominated.

Article 21 Sponsor shall submit the following documents or materials to the company registration department when applying for company incorporation registration:

1. application for company incorporation signed by the company' s chairman of board;

2. agreement on company incorporation made by sponsors;

3. the company' s articles of association;

4. pre-approval notification of the company' s name;

5. financial audit report of making preparations for company incorporation;

6. copy of sponsor' s business license;

7. certification on verification of capital issued by statutory capital verification institution; evaluation report issued by statutory evaluation institution, if sponsor contributes equipment, industry property right or non-patented technology as capital;

8. use certification of business location of the company' s main business organ;

9. document containing the name and domicile of the company' s director, supervisor and manager, and certification concerning designation, election or employment;

10. tenancy and identity document of the company' s legal representative.

Company operating special business, which shall be examined and approved by the competent department of government according to provisions of laws or regulations, shall submit its approval document when applying for incorporation registration.

Article 22  Application for company incorporation shall contain the following items:

1. sponsor' s general situation;

2. name of the joint-stock limited company to be incorporated, and the serial number of the pre-approval notification of the company' s name;

3. analysis of the company' s capital composition;

4. business scope of the company, and feasibility analysis of its main operating project;

5. explanation of capital application;

6. the settings of the company' s department and structure, the name and domicile of the company' s director, supervisor and manager;

7. abstract of the company' s important system of operation and administration;

8. other items ought to be contained

Article 23  In case that a state-owned enterprise applies for incorporation with sponsors by means of restruction, it shall submit the following documents and materials to its competent department of property:

1. application for company incorporation by means of restruction;

2. scheme of restruction;

3. plan for employee to hold shares;

4. balance sheet, category of property and list of credit and debt;

5. copy of the restructed enterprise' s business license;

    The competent department of property named in these rules, as regard to municipal state-owned enterprise, refers to the operation organization of state-owned property authorized by the municipal administrative committee of state-owned property, or the administrative department of state-owned property to which the enterprise affiliated in property; as regard to district state-owned enterprise, refers to the operation organization of state-owned property authorized by the district people' s government, or administrative department of state-owned property.

Procedure for state-owned enterprise to incorporate company with sponsors by means of restruction shall accord with the Measures of Shenzhen Special Economic Zone on Alteration from State-owned Enterprise to Joint-Stock Limited Company or Limited Liability Company.

Article 24 Non-state-owned enterprise shall refer to the provisions stipulated in Article 20,21 and 22 of these rules when applying for incorporation with sponsors by means of restruction.

Article 25 Applicant shall submit the following documents and materials to the company registration department, and apply for incorporation registration after accomplishing restruction preparation:

1. written decision of restruction approval made by the competent department of property;

2. net value verification report of the restructed enterprise' s assets, and evaluation report of its assets;

3. scheme of restruction;

4. documents and materials listed in article 21.

Article 26  When the Chinese and foreign equity joint venture or the Chinese and foreign cooperative joint venture applies for incorporating joint-stock limited company by means of restruction, it shall submit the following documents and materials to the company registration department, besides those stipulated in Article 21 and in item 2 and 3 of Article 25:

1. agreement on joint adventure or joint operation signed by all investors;

2. certification of foreign investor' s situation of credit standing;

3. certification of that all sponsors have contributed all capital according to regulations of law or contract.

Section 2 Procedures for Incorporation by Means of Share Offer

Article 27  Sponsor shall submit application and the following documents and materials to the municipal competent department of stocks for share offer:

1. application for share offer;

2. certification of sponsor' s qualification, including copy of business license or business registration certification, and certification of credit standing;

3. the company' s articles of association;

4. prospectus on share offer;

5. verification certification of sponsor' s contributed capital;

6. letter of operation estimation;

7. name and address of the bank to collect money paid for shares;

8. name of underwriting organization and relevant agreement;

9. other documents and materials stipulated in law or regulation.

Article 28  In case of applying for incorporating company by share offer by means of restruction, applicant shall submit application and the following documents and materials to the municipal competent department of stock for share offer:

1. application for share offer by means of restruction;

2. if the restructed enterprise is state-owned, approval decision made by its competent department of property; if not, approval decision made by its owners of title;

3. copy of restructed enterprise' s business license.

The municipal competent department of stocks shall make written decision on whether or not approving restruction preparation and reply the applicant by letter, within 30 days from receipt of the documents and materials stipulated in the preceding paragraph.

Article 29  Applicant shall submit the following documents and materials to the municipal competent department of stocks besides those listed in Article 28 after accomplishing the restruction preparation:

1. statement of the restructed enterprise' s general situation;

2. audit report of operation achievement in the recent three years, verification report of net value of assets, and evaluation report of assets;

3. scheme of restruction;

4. feasibility report of main operating project and plan for finance application;

5. plan for employees to hold shares;

6. other documents and materials listed in article 27.

Article 30  When applicant applies for incorporating company by share offer or for incorporating company by share offer by means of restruction, the municipal competent department of stocks shall make written examination opinion according to the national plan of stock issuance, within 45 days from receipt of documents and materials listed in Article 28 or Article 29, and then give an official written reply to the applicant after submitting it to the municipal government for approval.

Article 31 Procedure of applying for share offer to society publicly for incorporating joint-stock limited company with sponsors shall accord with the regulations stipulated in Article 28, 29 and 30.

Chapter 4 Registration

Article 32 The company registration department shall directly examine and approve the application for incorporation by means of sponsorship, and register the company' s incorporation according to the Regulations of the People' s Republic of China on Company Registration Administration for the applicant.

Article 33  The company registration department shall register the alteration for state-owned enterprise applying for incorporation with sponsors by means of restruction, according to the written approval decision made by the competent department of property and the municipal competent department of stocks, as well as the Administrative Regulations of the People' s Republic of China on Company Registration.

Article 34 Applicant, applying for incorporating company by share offer or incorporating company by share offer by means of restruction, shall apply to the company registration department for incorporation registration or alteration registration after the shares are all subscribed, according to the Administrative Regulations of the People' s Republic of China on Company Registration.

Chapter 5 Supplementary Provisions

Article 35 The company registration department, the municipal competent department of stocks and the competent department of property may lay down specific working instructions and supporting measures in their terms of reference according to these rules.

Article 36 Applicant, who disagrees the decision of not approving his application made by the company registration department, the municipal competent department of stocks, or the competent department of state-owned property, or considers that the departments above give no reply in due time although his application meet legal requirements, may apply to the administrative review organ of Shenzhen municipal people' s government for review, and may bring litigation to the people' s court.

Article 37  These rules shall go into effect as of the date of promulgation.