“Haworth & Lexon Law Newsletter” is issued every month, mainly introducing the legal change in the fields of Corporate, Securities, Foreign investment, Intellectual property rights, International trade etc. with necessary comment. All the comments do not mean the legal opinion of our firm and the firm does not have any legal liability for such comment. Should you have any interest in any topics or any questions please feel free to contact the firm. You will be expected to have satisfactory response from the professional attorney of our firm.
★New Regulations were promulgated on Mainland Enterprises' Investing in Hong Kong
★ Law of the People's Republic of China on Electronic Signature
★ Notice on Issues concerning State-owned Assets Transfer
★ Latest Laws and Regulations:
• Regulation on Origin of Importing and Exporting Goods
• Guidelines on Risk Control of Real Estate Loans of Commercial Banks
• New Regulations on Fund in Currency Market
• Amendment to Company Law and Securities Law• Decision of the Standing Committee of the National People's Congress on Perfecting the People's Juror System
New Regulations were promulgated on Mainland Enterprises' Investing in Hong Kong
The Ministry of Commerce and the Hong Kong and Macau Affairs Office of the State Council promulgated Provisions on the Issues Concerning Approval for Mainland Enterprises' Investing and Establishing Enterprises in Hong Kong and Macau SAR in August 31, which will come into force on the same day.
According to the Regulation , all the mainland enterprises with all kinds of ownership and the foreign or Hong Kong or Macau enterprises invested by mainland enterprises can go to invest in Hong Kong . The scope of investment includes trade, construction contract, labor operation, manufacture, transportation, travel, service, research and development, investment, science and technology, and so on. The investment methods include establishment, purchase, M&A, share, capital investment, share transfer and etc.
The Regulation also gives a brief introduction to the procedure of investment in Hong Kong .
The Ministry of Commerce is the authority which approves the mainland enterprises investing and establishing companies in Hong Kong and Macau . The commercial administrative department of provincial government makes a preliminary examination and approval for its local enterprises' investment and establishment of companies in HK and Macau . If necessary, the authority shall inquiry the Hong Kong and Macau Affairs Office of the State Council or liaison office in HK and Macau for advice before the approval.
Except the investment and establishment of companies in HK and Macau for the overseas indirect listing and investment business which shall be approved by Ministry of Commerce, all the companies with other business shall be approved just by the provincial commercial department. The authority shall make the decision on whether to approve within 15 days.
However, the Regulation doesn't give provisions on the requirements of the investment enterprises such as capital and credit standing.
The Regulation gives an easy and loose measure for mainland enterprises' investing in HK and Macau , which reflects the government's active attitude in this issue.
Notice on Issues concerning State-owned Assets Transfer
Since Interim Measures for Administration for State-owned Assets Transfer was set out early this year, State-owned Assets Supervision and Administration Commission promulgated Notice on Issues concerning State-owned Assets Transfer in Aug. 25, in order to make clear several issues during the transfer of state ownership.
The Notice mainly regulates the issues concerning the operation of the change of state stocks of listing companies during the transfer and information disclosure of the transfer.
The Notice states that if the transfer of the state ownership may make change to the character of the stocks of the listing company, the company shall inquiry the State-owned Assets Supervision and Administration Commission for the ownership trade institution for the information disclosure. After the ownership transfer contract is signed, the transferer shall go apply to the State-owned Assets Supervision and Administration Commission for approval. Moreover, the thansferer shall disclose information according to relevant securities regulations.
In order to assure the full disclosure of the information, the Notice also sets out a system for information disclosure. For example, ownership transfer bulletin shall be issued by ownership trade institution; the trandferer can't at will change or cancel the information; the transferees shall get the equal chance.
The Notice makes the trade of state stocks more transparent and the trade methods more suitable to the market.
Regulation on Origin of Importing and Exporting Goods
The State Council issued Regulation on Origin of Importing and Exporting Goods in Aug. 18, which will come into force since May 1, 2005.
According to the Regulation , the country or region in which the product is gained is the origin; if the product is gained in more than two countries or regions, the one in which the substantial change has been made is the origin. “Totally gained in one country” means breeding, catching the animals in that country, or gaining plants or other natural goods in that country. “Substantial change” is based on the change of taxation type. “The change to taxation type” means that one country produces or processes the raw materials which are not originated from that country and the taxation type of the product has been changed.
This Regulation applies to activities of MFN, anti-dumping and anti-subsidy, safeguard measure, administration of origin symbols, limitation to states number, duty quota, and government purchase, trade statistics.
Guidelines on Risk Control of Real Estate Loans of Commercial Banks
In order to promote the control ability of real estate loans of commercial banks, China Banking Regulatory Commission promulgated Guidelines on Risk Control of Real Estate Loans of Commercial Banks in Sep. 2, which will be effective on the same day.
According to the Guidelines , the capital ratio of the development program of the real estate development company cannot be less than 35% which is higher than the past 25%, when the company applies to the commercial bank for loan.
The Guidelines also set out provisions on the loan for land reserve, the loan for individual housing, loan for commercial housing, and etc.
New Regulations on Fund in Currency Market
China Securities Regulatory Commission and the People's Bank of China issued Interim Regulation on Administration of Fund in Currency Market on Aug., 16, which will come into force on the same day.
The Regulation gives a clear definition to fund in currency market, and also detailed provisions on investment variety, ratio, and the variety which is prohibited. In the investment instruments, the fixed deposit and large amount deposit receipt in one year was added. The following investment instruments are prohibited: stocks, negotiable bonds, the bonds that still have more than 397 days before the due date, bonds of enterprise whose credit level is under AAA.
Amendment to Company Law and Securities Law
On Aug. 28, the Standing Committee of the National People's Congress promulgated Decision on Amending the Company Law of the People's Republic of China and Decision on Amending the Law of the People's Republic of China on Securities , which will be effective on the same day.
According to the new Securities Law , when the stock company issue stocks at a price higher than the pace value, the price doesn't need the approval of Securities Regulatory Commission, and can be agreed by the issuer and the securities company.
Moreover, the listing trade of company bonds doesn't need the approval of Securities Regulatory Commission. It is only required that the conditions and procedures shall be met.
The Company Law makes a responding amendment to the issuance of stocks at a higher price than the face value.
.Decision of the Standing Committee of the National People's Congress on Perfecting the People's Juror System
The Standing Committee of the National People's Congress set out Decision on Perfecting the People's Juror System in Aug., 28, which will come into force since May 1, 2005.
The Decision states that the people's juror can participate in the trial of criminal, civil or administrative cases. The defendant of criminal case, the plaintiff and defendant of civil case, and the plaintiff of administrative case can apply for the people's juror's participation in the trial. The people's jurors in one trial team cannot be less than 1/3 of the total members in the trial team. Furthermore, the people's juror has the term which shall be 5 years.