Measures for the Supervision and Administration of the Transactions of State-Owned Assets of Enterprises

Measures for the Supervision and Administration of the Transactions of State-Owned Assets of Enterprises Order of the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance (No. 32) The Measures for the Supervision and Administration of the Transactions of State-Owned Assets of Enterprises, as deliberated and adopted at the executive meeting of the chairman of the State-owned Assets Supervision and Administration Commission of the State Council, with the approval of the State Council, are hereby issued, and shall come into force on the date of issuance. Chairman of the State-owned Assets Supervision and Administration Commission of the State Council: Xiao Yaqing Minister of Finance: Lou Jiwei June 24, 2016 Measures for the Supervision and Administration of the Transactions of State-Owned Assets of Enterprises Chapter I General Provisions Article 1 These Measures are issued for purposes of regulating the trading of state-owned assets of enterprises, enhancing the supervision and administration of the trading of state-owned assets of enterprises, and preventing the state-owned assets of enterprises from erosion, under the Law of the People's Republic of China on the State-Owned Assets of Enterprises , the Company Law of the People's Republic of China , the Interim Measures for the Supervision and Administration of State-Owned Assets of Enterprises , and relevant laws and regulations. Article 2 The trading of state-owned assets of enterprises shall be in conformity with the state laws, regulations, policies and provisions, help the adjustment and optimization of the distribution and structure of the state-owned economy, make full use of the role of the market in resource allocation, conform to the principle of compensation for equal value, openness, fairness and impartiality, and be conducted openly at property rights trading institutions, unless it is otherwise provided by the state laws and regulations. Article 3 For the purpose of these Measures, trading of state-owned assets of enterprises shall include: (1) the act that institutions performing the powers and duties of capital contributors, state-owned and state-controlled enterprises, and actually state-controlled enterprises transfer rights and interests formed by various forms of capital contributions made by them to enterprises (hereinafter referred to as "transfer of enterprise property rights"); (2) the act of increasing capital of state-owned and state-controlled enterprises, and actually state-controlled enterprises (hereinafter referred to as "enterprise capital increase"), save where government invests in state-funded enterprises by the means of increasing capital; and (4) the act of transferring significant assets by state-owned and state-controlled enterprises, and actually state-controlled enterprises (hereinafter referred to as "transfer of enterprise assets"). Article 4 For the purpose of these Measures, state-owned and state-controlled enterprises, and actually state-controlled enterprises shall include: (1) solely state-owned enterprises (companies) established by government departments, institutions, or public institutions that contribute capital, and wholly state-owned enterprises in which the total shares directly and indirectly held by any of the above-mentioned entities or enterprises are 100%; (2) enterprises to which entities or enterprises as specified in (1), this Article solely or jointly contribute capital, hold a total of more than 50% property rights (shares), and one of them is the largest shareholder; (3) subsidiary enterprises at all levels to which any enterprise as specified in (1), (2), this Article contributes capital externally, and holds more than 50% equities; and (4) enterprises which government departments, institutions and public institutions, or single state-owned or state-controlled enterprises directly and indirectly hold not more than 50% shares, and, as the first largest shareholder, are able to actually control through a shareholders' agreement, bylaws, a decision of the board of directors or any other scheme of arrangement. Article 5 The ownership of the subject matters of trading of state-owned assets of enterprises shall be clear and shall not fall under the circumstances where the laws and regulations prohibit or limit the trading. The trading of state-owned assets on which a security interest has been established shall be in conformity with the Property Law of the People's Republic of China , the Guarantee Law of the People's Republic of China , and other relevant laws, regulations and provisions. In the case of any government, social or public administration matter involved, submission shall, in accordance with the law, be made to relevant government departments for review. Article 6 The state-owned assets supervision and administration institutions shall be responsible for the supervision and administration of the trading of state-owned assets of enterprises administered and supervised by them; state-funded enterprises shall be responsible for the administration of the trading of state-owned assets of subsidiary enterprises at all levels administered by them, and regularly make reports on the trading of state-owned assets to the state-owned assets supervision and administration institutions at the same level. Chapter II Transfer of Enterprise Property Rights Article 7 The state-owned assets supervision and administration institutions shall be responsible for the review of the transfer of property rights of state-funded enterprises. In particular, where the transfer of property rights causes that the state no longer owns the controlling shares of such enterprises as it contributed capital to, the state-owned assets supervision and administration institutions shall submit the transfer to the people's governments at the same level for approval. Article 8 A state-funded enterprise shall develop an administration system for the transfer of the property rights of its subsidiary enterprises, and determine the powers of approval and administration. In particular, the transfer of property rights of a subsidiary enterprise of which the principal business is in an important industry or key field relating to the national security or lifelines of the national economy, or which mainly undertakes significant special tasks, shall be submitted by the state-funded enterprise to the state-owned assets supervision and administration institution at the same level for approval. Where the transferor is an enterprise of which multiple state-owned shareholders jointly hold shares, the state-owned shareholder with the largest proportion of shares thereof shall be responsible for fulfilling relevant approval procedures; or, where all the state-owned shareholders hold equal shares, relevant shareholders shall, upon consultation, designate one shareholder thereof to be responsible for the fulfillment of relevant approval procedures. Article 9 In respect of transfer of property rights, the transferor shall, according to enterprise's bylaw and enterprise's internal management system, make a decision and form a resolution in writing. The shareholders' representatives appointed by state-owned shareholders of state-controlled or actually state-controlled enterprises shall, according to the provisions of these Measures and the instructions of appointment entities, express opinions, exercise the voting right, and make timely reports on the performance of duties and results to the appointment entities. Article 10 A transferor shall, according to the development strategies of the enterprise, effectively conduct feasibility research and plan argumentation of the transfer of property rights. Where the transfer of property rights involves employee relocation, the relocation plan shall be deliberated and adopted at the assembly of the representatives of the employees or the employees' assembly; and, where the disposition of debts is involved, it shall conform to the provisions of relevant laws and regulations. Article 11 A transferor shall, upon the approval of the transfer of property rights, authorize an accounting firm to audit the enterprise of the subject matter of the transfer. Where the transfer of the right to hold shares is involved, making it inappropriate to separately conduct special audit, the transferor shall obtain the annual audit report of the recent period of the enterprise of the subject matter of the transfer. Article 12 In respect of the transfer of property rights for which assets shall be appraised according to relevant laws, regulations and requirement, the transferor shall authorize an appraisal institution with corresponding qualifications to appraise the assets of the subject matter of transfer, and the price of the transfer of property rights shall be determined on the basis of the approved or recorded appraisal results. Article 13 The transfer of property rights shall, in principle, be made openly through the property right markets. A transferor may, based on the enterprise actuality and work progress and arrangements, and by adopting both information pre-disclosure and official disclosure, disclose by phase the information on the transfer of property rights through the website of the property rights trading institution, and publicly seek a transferee. In particular, the period of official information disclosure shall not be less than 20 working days. Where the transfer of property rights causes the transference of actual control over the enterprise of the subject matter of the transfer, the transferor shall, within 10 working days upon the approval of the transfer, pre-disclose the information through property rights trading institution, and the period shall not be less than 20 working days. Article 14 The transfer of property rights shall, in principle, not establish qualifications and conditions in respect of transferee, or, such establishment, if indeed necessary, shall not contain any content with clear orientation or violating the principle of fair competition, relevant content of the qualifications and conditions so established shall, prior to the information disclosure, be submitted to the state-owned assets supervision and administration institution at the same level for recordation, and, the failure of the state-owned assets supervision and administration institution to offer opinions within 5 working days shall be deemed as consent. Article 15 The information disclosed by a transferor shall include but not limited to: (1) the basic information of the subject matter of the transfer; (2) the shareholder structure of the enterprise of the subject matter of the transfer; (3) the information on the decision making on and approval of the transfer of property rights; (4) major financial indicator data in the audit report of the recent year and the financial statement of the recent period of the enterprise of the subject matter of the transfer, including but not limited to total assets, total liabilities, ownership interest, business income, net profit, etc. (in the case of the transfer of the right to hold shares, corresponding data in the audit report of the recent year shall be disclosed); (5) the qualifications and conditions of the transferee (applicable to the circumstance where there are special requirements for the transferees); (6) trading conditions and reserve price of transfer; (7) whether the enterprise management participated in the transfer, and whether the former shareholders of the limited liability company waived the right of first refusal; (8) bidding methods, and relevant evaluation criteria chosen by transferee; and (9) other matters required to be disclosed. In particular, the information pre-disclosed shall include but not limited to the content of preceding (1), (2), (3), (4) and (5). Article 16 A transferor shall, according to requirement, provide to the property rights trading institution hard copy of documents with content of information disclosure, and shall be responsible for the authenticity, completeness and accuracy of the disclosed content and the documents so provided. The property rights trading institution shall be responsible for the standard of the information disclosure. Article 17 The reserve price of the transfer in the first information disclosure of the project of the transfer of property rights ......