Laws of the Guangdong Province

Rules of the Shenzhen Municipality on the Administration of Collectively-Owned Enterprises in Cities and Towns

Order of the Shenzhen Municipal People' s Government

No. 91

       The Rules of the Shenzhen Municipality on the Administration of Collectively-Owned Enterprises in Cities and Towns was deliberated and adopted at the 132^nd Executive Meeting of the Second Session of the Municipal Government on May 6, 1999. It is promulgated now and shall take effect from the date of promulgation.

                                          Li Zibin

                                          Mayor

                                          December 21, 1999

Chapter I General Provision

       Article 1 In order to strengthen the administration of collectively-owned enterprises in cities and towns, protect and safeguard the legitimate rights and interests of the owners of collective assets, and to promote the development of the economy under collective ownership, these rules are hereby formulated in accordance with the law, regulations and in compliance with the practical conditions of Shenzhen.

       Article 2 The collectively-owned enterprises referred to in these rules (hereinafter referred to as collective enterprises) shall mean the collective enterprises which have registered at the municipal offices of industrial and commercial administration and are run and managed by the various departments of the municipal government, the municipality-level institutions, and the municipal state-owned enterprises.

       If collective enterprises are companies limited by shares, companies of limited liability, cooperative stock companies, they shall abide by the stipulations in the related law, regulations, if there is no stipulation in the related law, regulations, they shall abide by these rules.

      Article 3 The various people' s governments shall do a fine work in the general checkup of collective enterprises' assets, promote to establish the modern enterprise system, and explore the effective form to realize the collective ownership in cities and towns.

       The Shenzhen Municipal Office of Collective Assets Administration (hereinafter referred to as the municipal collective office) shall be responsible for the supervision over collective enterprises, and direct the various districts to supervise collective enterprises.

       Article 4 The operators of collective enterprises shall make sure of the safety of collective assets and promote the increase in the value of collective assets.

Chapter II General Checkup of the Assets and the Definition of the Property Right of Collective Enterprises

       Article 5 The municipal collective office shall organize collective enterprises, according to the related rules of the state, to have a general checkup of their assets, define the property right, and make sure who have the ownership of the assets.

       Article 6 The state investment in collective enterprises and the rights and interests resulted from the returns on such investment shall be owned by the state.

       The investment of legal persons, natural persons, or other organizations in collective enterprises and the rights and interests resulted from the returns on such investment shall be owned by investors.

       Individual workers and staff members' shares of collective enterprises and the rights and interests resulted from the returns on their shares shall be owned by the individual workers and staff members.

       The collective welfare facilities purchased and constructed by public welfare funds shall be owned collectively by the laborers of collective enterprises.

       Article 7 If the composition of an asset is relatively complicated and its property right is difficult to be clearly defined right away, the asset shall be listed as one to be defined, its occupant shall apply for special registration, the municipal collective office shall be the trustee of the asset and entrust an enterprise with the asset' s operation.

       Article 8 After the property right has been defined, a collective enterprise shall apply to the municipal collective office for the registration of the property right, the items of the property right registration shall include:

(1)   the names, addresses, and organizational forms of the owners of collective assets;

(2)   the name and position of the legal representative;

(3)   the paid-in capital of the owners of collective assets and the composition of the capital;

(4)   the total of collective assets;

(5)   the other necessary items.

Article 9 Anyone opening a collective enterprise shall register the property right

of collective assets.

       If there is a change of the names, addresses of the owners of collective assets, legal representative, and property right relationship, or there is an increase or decrease in the total of collective assets by more than 20%, the change of the property right of collective assets shall be registered.

       If a collective enterprise is bankrupt, disbanded, dissolved, or stopped in other way, the registration for cancellation of the property right of collective assets shall be done.

Chapter III Supervision and Administration of Collective Enterprises

       Article 10 The main duties of the municipal collective office shall be:

(1)   to enforce the law, regulations, and policies concerning the administration of collective enterprises, formulate the measures to implement and organize the implementation, supervise, inspect collective enterprises in their implementation of the related law, regulations, and policies;

(2)   to formulate the various regulations and rules for the administration of collective enterprises, and to supervise and inspect the implementation of these regulations and rules;

(3)   to be responsible for organizing a general checkup of assets, definition of the property rights, and registration of the property rights of collective enterprises, and to mediate the disputes on the property rights of collective assets;

(4)   to direct and supervise the assets valuations, conveyances of the property rights, and transactions of the property rights of collective assets;

(5)   to direct and supervise collective enterprises in establishing sound financial accounting systems, supervise and urge collective enterprises to complete the work on financial statements and their summaries;

(6)   to direct collective enterprises in their transformation into corporation and cooperative stock companies;

(7)   to direct the management of collective assets, organize the training for the personnel to manage collective assets;

(8)   to complete the other matters designated by the municipal government for the management of collective assets.

Article 11 If there is one of the following situations, an assets evaluation shall be

conducted according to prescribed standards, procedures, and methods:

(1)   the auction and assignment of assets;

(2)   the merger, split, sale or incorporating transformation of enterprises;

(3)   the establishment of a joint venture or a cooperative stock enterprise with others by using movables, immovables, and intangible assets;

(4)   the termination, liquidation of an enterprise;

(5)   the other situations that need an assets evaluation according to the law, regulations.

The result of an assets evaluation shall be confirmed by the congress of workers and staff members (representatives) and reported to the municipal collective office for record.

The municipal government shall work out the standards, procedures, and methods of an asset evaluation.

Article 12 The conveyance of the property right of collective assets shall be discussed and adopted at the congress of workers and staff members (representatives), and reported to the municipal collective office for record. The proceeds of the conveyance shall be used for the development of the collective enterprise.

Article 13 If a collective enterprise is going to be reorganized into a company limited by shares, company of limited liability, cooperative stock company, or a company with shares held by operators, workers and staff members, it shall be discussed and adopted at the congress of workers and staff members (representatives), and reported to the municipal collective office for record.

Article 14 Collective enterprises shall establish sound financial accounting systems, regularly report to the municipal collective office their financial statements such as balance sheet, statement of profits and losses, statement of cash flow, etc. The financial statements such as balance sheet, statement of profits and losses, statement of cash flow, etc. of the collective enterprises of the various districts shall be reported to the municipal collective office by the district offices of the supervision and administration of collective assets.

 Article 15 If the legal representative of a collective enterprise no longer holds this position because of the expiration of a tenure, or discharge, resignation, dismissal, transfer, retirement, the auditing of the economic responsibilities during the tenure shall be conducted by an accounting firm under the supervision of the municipal collective office, the items of auditing shall include:

(1)   the implementation of law, regulations, rules, and policies;

(2)   the achievement of value-guarantee, value-increase, and other business goals during the tenure;

(3)   the assets, liabilities, profits and losses, and the execution of the financial accounting system;

(4)   the major decisions on production, operation, investment;

(5)   the other items that need auditing.

The legal representative of a collective enterprise who has not passed the

auditing of the economic responsibilities during the tenure shall not be relived of the economic responsibilities during the tenure.

Chapter IV Senior Management Personnel of Collective Enterprises

       Article 16 The candidates for the senior management personnel of collective enterprises may be recommended jointly by the workers and staff members of these enterprises, and may be also recruited from the society by public invitation for application.

       The senior management personnel of collective enterprises shall have the qualifications for such posts, and the measures to examine and confirm the qualifications shall be formulated by the municipal collective office.

       Article 17 The senior management personnel of an incorporated collective enterprise shall come up according to law, the senior management personnel of non-incorporated collective enterprises shall be elected at the congress of workers and staff members (representatives), and if there are different stipulations in the law, regulations, these stipulations shall be honored.

       The candidates for the senior managers assigned by a collective enterprise to a collectively-holding or collectively-participating company shall be elected at the congress of workers and staff members (representatives).

       Article 18 The tenure of the senior management personnel of collective enterprises shall be set by the constitution, but no more than 4 years per tenure. If the tenure expires, a reappointment may be made after being reelected. If there has been no election after the tenure expired, the municipal collective office shall urge the collective enterprise to hold an election.

Chapter V Congress of Workers and Staff Members (Representatives)

       Article 19 A collective enterprise shall establish, improve the system of the congress of workers and staff members (representative) according to law.

       The collective enterprises with less than 200 employees shall establish the system of the congress of workers and staff members, the collective enterprises with more than 200 employees shall establish the system of the congress of workers and staff members (representatives).

       The representatives of workers and staff members shall be elected by workers and staff members, the measures to elect the representatives of workers and staff members shall be formulated by the municipal collective office.

       Article 20 The congress of workers and staff members (representatives) of a collective enterprise may establish a permanent body in charge of the work during the period when the congress of workers and staff members is adjourned.

       The personnel composition, formation, authority, and name of the permanent body shall be determined by the congress of workers and staff members (representatives), and reported to the municipal collective office for record.

       Article 21 The congress of workers and staff members (representatives) of a non-incorporated collective enterprise shall be the organization of authority of the enterprise, and exercise the following functions and powers according to law:

(1)   to formulate, revise the constitution of the collective enterprise;

(2)   to elect, recall, appoint, dismiss manager, deputy managers, and chief finance officer;

(3)   to deliberate the various motions introduced by manager, make decisions on the major issues of operation and management such as the enterprise' s major investment, distribution of profits, conveyance of property rights, providing security for others, confirmation of assets evaluation, etc.;

(4)   to make resolutions on the merger, split, dissolution, and liquidation of the enterprise;

(5)   to deliberate and adopt the plan of wages, bonus of workers and staff members, the plan of dividends, the plan of housing assignments of workers and staff members, and other major matters concerning the lives and welfare of workers and staff members;

(6)   to determine the income of an enterprise' s manager, including the basic salary and the pay based on beneficiary results, in accordance with the achievement of the financial goals set by the enterprise' s plan;

(7)   to deliberate and adopt the enterprise' s measures to reward and punish its workers and staff members and other important regulations and rules;

(8)   to deliberate and decide on the donation of more than 50,000 RMB;

(9)   the other functions and powers prescribed by the law, regulations, and the constitution of enterprises.

The constitutions of collective enterprises shall be reported to the municipal

collective office for record.

       This article shall not apply to the assets which are not owned collectively by the laborers of collective enterprises.

       Article 22 To formulate the plan of wage, bonus of workers and staff members shall follow the principle that the range of increase in the total of wages should be below the range of increase in the economic beneficial results of the enterprise, and the range of increase in the real wages of workers and staff members shall be below the range of increase in the productivity of the enterprise.

       Article 23 The congress of workers and staff members (representatives) of a non-incorporated collective enterprise shall be held regularly according to the constitution of the enterprise, but no less than twice a year; if the congress of workers and staff members which should be held has not been held, the municipal collective office shall supervise and urge the holding of such a congress.

       If there is a situation that the congress of workers and staff members (representatives) should exercise functions and powers, a provisional congress of workers and staff members (representatives) shall be held.

       The congress of workers and staff members (representatives) shall be convened by the legal representative of a collective enterprise, if there are more than 10% of workers and staff members (representatives) who have moved that the congress be held, the congress of workers and staff members (representatives) shall be held; if the legal representative of the enterprise does not convene the congress, the workers and staff members (representatives) who have moved the motion shall convene the congress.

       Article 24 The congress of workers and staff members (representatives) shall take one person, one vote as its voting formula.

       The congress of workers and staff members (representatives) shall have more than half of the workers and staff members (representatives) to attend, the resolutions of the congress of workers and staff members (representatives) shall be adopted by votes of more than half of the workers and staff members (representatives) who attend the congress; but the revision of the enterprise' s constitution or the resolution on merger, split, dissolution, and liquidation shall be adopted by votes of no less than two thirds of the workers and staff members (representatives) who attend the congress.

       The congress of workers and staff members (representatives) shall have its minutes.

       Article 25 The representatives of the collective share-holders of a collectively-holding or collectively-participating incorporated enterprise shall be elected by the congress of workers and staff members (representatives) of the collective enterprise.

       The matters which should be presented to the general meeting of share-holders for discussion and decision according to the law, regulations and the enterprise' s constitution shall be reported to the congress of workers and staff members (representatives) of the collective enterprise by the representatives of collective share-holders, the congress of workers and staff members (representatives) shall make a resolution on these matters, the representatives of collective share-holders shall vote at the general meeting of share-holders according to the resolution of the congress of workers and staff members (representatives).

Chapter VI Legal Liabilities

       Article 26 If one of the following acts has been taken, the municipal collective office shall order correction and circulate a notice of criticism of the related responsible persons; if there is any damage to collective assets, the related responsible persons shall be held liable for compensation; if a crime has been constituted in encroaching upon collective assets, the criminal responsibility shall be investigated into according to law:

(1)   to fail to conduct an assets evaluation according to the rules or to practice fraud in the assets evaluation;

(2)   to fail to register the property right of collective assets in violation of these rules or to practice fraud in the registration of the property right;

(3)   to convey the property right of collective assets in violation of these rules.

Article 27 The conveyance of the property right of collective assets in violation

of these rules shall be invalid.

Chapter VII Supplementary Provision

       Article 28 These rules may be referred to for the administration of the collective enterprises run by districts, townships (sub-district offices).