Haworth & Lexon Law Newsletter
No.8, 2003 (Total:No.24) Sep.20th, 2003
Edited by Haworth & Lexon
Guidelines
★ Securities Company will be permitted to issue the bond since Oct.8th
★Implementations on foreign capital companies merging and purchasing state owned companies in Shanghai
★ Latest Laws and Regulations:
The reduction of the enterprises' reform taxation will be implemented since Oct 1.
The Supreme People's Court's reply on whether the two similar "Qian Xi Long" are the infringement of the trademark, which one was used in the TCL group's sales promotion and the other is the registered trademark of the Handu Company.
The Supreme People's Court's the regulation of the problems on hearing the personnel disputing cases of the government sponsored institution, which was implemented since Sept.5th 2003.
State Administration of Taxation of China issued the notice on the problems of the real estates development enterprise's income tax.
August 29th 2003, China Securities Regulatory Commission issued the Interim Provision of the security company bond management.
August 29th 2003, China Securities Regulatory Commission issued of the Interim Provision of the Security Company bond management. (Hereinafter "Interim Provision"), it regulates that the security company can issue the bond to the public in open or to the qualified organization investors on certain direction through the confirming. This way will be carried on since Oct.8th 2003. The Interim Provision has 7 charters and 59 items in total, specialized on the fields of the security company's issue, consign, trusteeship, transfer, information reveal, sinking measure and legal responsibility.
1.Qualification of the issuing bond subjects: first of all, security company should accord with the regulations in the Company Law. Second, security company should also match the regulations as followed: each risky control index should measure up the China Securities Regulatory Commission's regulations; not occur serious actions, which are concerning on transgressing the law and violating the regulations during the latest 2 years; owns sound operational mechanism of stockholders' conference and directorates, and the effective system of the inner management; owns proper business separation and inner controlling technology supporting system; the capital are not controlled by the natural person, legal body, other organizations and the relevant persons, who have actual control rights. In addition, Security Company issues the bond in public should be synthetic Security Company, the latest season net capital through audited are not less 1000 millions RMB, the latest year made profit, the security company which issue the bond at the direction the latest season net capital through audited are not less 500 millions RMB.
2.Guaranty: Issuers should provide as guaranty for the bond. And (1) The guarantors should have the ability of discharging the debt suppliantly, and guarantees should be related responsibility assure; (2) Providing the guaranty or impawn, the property should be evaluated by the qualified capital evaluation organization.
3.Information reveal: (1) Security Company's issuing the bond should accord with rules, which were regulated by the China Securities Regulatory Commission, to produce the prospectus and other informational revealing documents, to assure them reality, acute, complete and reveal all the practice effective information to the investors. (2) Issuers and related parties are not allowed to mislead the investors in buying the bond by any means.
4.Agents for creditors: According to the rules, the agents for creditors should be hired by the issuers and the agency agreement should be assigned. It specializes the rights, the duties and the liabilities for breach of contract between the issuers, the credit's holders and the credit's agents; issuers could employ the trust investment company, fund management company, Security Company, law firm, security investment consulting company and etc to as the agents. The agents should execute the major duties below: (1) When occurring the situations which are greatly influenced on the bondholders' vital interests such as not pay back the capital and interests in time and etc. The agents should promote to remind the issuers and inform the bondholders in no time; (2) According to the agreement, the agents should investigate the special redemption accounts and the utilize of the stock flotation fund and the guaranty; (3) According to the prospectus, the agents represent the bondholders to negotiate and dispute with the issuers; (4) Other items which are authorized by the bondholders' conference.
5.Bondholders' conference: Prospectus should specialize the rights of the bondholders' conference, the convening procedure and the entry-into-force conditions of the decision. Meanwhile, when occurring the situations below, bondholders' conference should be convened: (1) Issuers bring forward the imitate agreement on the exchanging prospectus; (2) Issuers can not pay the capital and interests in time; (3) Issuers decrease capital, corporate, subdivide, dissolve and apply for the bankrupt; (4) The great change of the guarantor or the collateral; (5) The bondholders whose bonds occupy more than 10% denomination tend to change the credit's agent.
6.Special redemption measures: During the period of the time that the special redemption account can not be picked up on time according to the agreement or not pay back the capital and interests of the bonds. Issuers should make decisions through the stockholders' conference to take action hereinafter: (1) Not share the profit to the shareholders; (2) Postpone capital payout items such as the great oversea investment, purchase and merge; (3) Reduce or cease paying the wages and bonus of the directors and advanced managers; (4) Major persons liable are not allowed to be stellenbosched. Meanwhile, issuers make an agreement that in the case of purchasing before the bound maturity or pay back before the promised conditions, they do not damage the profit of the bondholders and treat all of them equally.
Shanghai issued the Implementations on Foreign Capital Company Merging and Purchasing State Owned Companies
August. 4th 2003, according to the advices on foreign capital companies's merging and purchasing the state owned companies (shanghai state owned asset [2002] No.77), associating with shanghai state owned asset [2003] No15, Shanghai Municipal State owned Assets Administrative Office, Shanghai Foreign Investment Committee and Shanghai Administration for Industry and Commerce promulgated the implementations. Its content:
1.Scope of application: Through using the foreign capital to purchase the stock rights of the native state owned company, make it turn to be a foreign-funded enterprise; or foreign merchant purchase the state owned asset to establish a foreign-invested enterprise on the means of investment.
2.The detailed procedures for the foreign capital to merge and purchase the native state owned enterprises:
(1) Application (2) Asset valuation
(3) Sign by authorization
(4) Transferring property rights and its registration
3.The way of merge and purchase: The way such as invest bids, auction and transfer by agreement, and it also could accord with the related regulations in Shanghai.
4.Employee allocation: When the enterprise's control right is transferred or all or main part of the prosecution property sold to the foreign-funded company, the two parties of the merging and purchasing should constitute the schemes of adjust and reform the enterprise and the employee allocation, which should be passed by the workers' congress after reviewing. The recompenses such as dissolving the labor relationship and terminating the contract, reducing the staff and non-negligent canceling the contract, which should accord with Shanghai's regulations on labor contract.
5.The examination and approval by Foreign Capital Committee and the registration of Administration for Industry and Commerce: After receiving the property rights transaction certificates, two parties' related documents should be send to Shanghai Foreign Capital Committee to examine and approve. During the 10 working days, if qualified, the document of approval and the instrument of ratification should be issued; After examining and approving, the parties should go through the procedures, which is concerning on the applying for changing the registration in the regulated time. During the 10 working days, the management department of Administration for Industry and Commerce should accord with the related regulations to issue the business license.
6.The tax and the other related change for the Sino-foreign equity joint venture: After merging and purchasing the state-owned company by the foreign capital, if the foreign part's actual payment exceeds the 25% of the company's registered capital, it would enjoy the policy for Sino-foreign equity joint venture. During the period of the merging and purchasing the state-owned company by the foreign capital, the policies on the related tax, fee should accord to the national or Shanghai related laws, regulations, and rules. In addition, the implementations also specialized on the payment of the purchase fund.
The taxation for the enterprise's reform and adjustment will be reduced since Oct 1
Finance Ministry, National Tax Bureau issued Notice on the taxation policy for the enterprise's reform and adjustment on August 20th 2003. It made a decision that since Oct 1. The taxation should be reduced if matching the condition mentioned below: 1. No corporate enterprise reform to be corporate limited company or corporate limited company reform to be stock company; 2. Turn to be corporate joint stock limited partnership. 3. No corporate solely state-owned company or solely state-owned company use some of its property to reform a new one and it owns more than 50% stock in it; 4. Company merge. 5. Company subdivided. 6. State-owned collective enterprises are sold. Its legal person is cancelled and it arranges for all the employees. (If more than 30% employees are arranged, reducing half tariff of the legacy enterprise's state and house; 7. If the creditors take over the bankrupt company's right of the state and house (If no-creditors arrange for more than 30% employees, reducing half tariff; if all employees are arranged, tax exemption); 8. The new established company, which is permitted to implement on the credit turn to stock right by the State Council, the new one legacy the former one 's rights of the state and house. In addition, the change of the rights of the state and house in the administrative adjustment of state-owned asset and allocation by the government departments and in the enterprise's reform and modify the institution, the enterprises belong to the same invest subject. Their rights of state and house are gratuitous allot, which are exempt for tax.
The Supreme People's Court's reply on whether the two similar "Qian Xi Long" are the infringement of the trademark, which one was used in the TCL group's sales promotion and the other was the registered trademark of the Handu Company.
The reply point out: judging whether it infringe the right to the exclusive use of a trademark using the same or similar words with other registered trademark in the sale promotion, the norms should be whether the condition is easy to cause the misunderstand of the source of the products and service by the related public; whether taking use of the other's registered trademark to earn the illegal profit for himself; or whether making other damages for the exclusive right of the registered trademark.
The Supreme People's Court's the regulation of the problems on the court hearing personnel disputing cases of the government sponsored institution, which will be implemented since Sept.5th 2003.
According to the regulation, the personnel dispute on the resign, discharge and implement the employ contract between the government sponsored institution and its employee, which are application of People's Republic of China Labor Law.
State Administration of Taxation of China issued the notice on the problems of the real estates development enterprise's income tax
In order to enforce the tax collection management of enterprises on the real estates development income tax. The notice specialized on the fields of how to identify the sale income, advance sale income, deemed to sale income, the income of build replace and provide labor service, reduce cost and fee. It carried out on July 1.
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