Rules On Procedures For Examination and Approval Of Foreign Investments On Inventory Assets

(Effective Date:1997.12.09--Ineffective Date:)

(Issued by Ministry of Electric Power Industry on December 9,1997)

In order to standardize the procedures of examination and approval of foreign investment as a result of making use of the inventory assets of the power industry, definite obligations and improve efficiency, rules are made as following.

The joint ventures mentioned in this rule are those who import foreign capitals and other forms of cooperations by taking advantage of the inventory assets.

1. Making applications

To import foreign investments by use of the national assets, the National Electricity enterprise should apply to the Ministry of Electric Power Industry. The applications include the purpose of the joint venture; the scope, state and affiliated relations of the property rights of the utilized inventory assets; the scale of the cooperation, ratio of the capital and forms of the capital.

2. Making a letter of proposition on the joint venture project.

Once the application is approved, the enterprise should make a letter of proposition to the Ministry of Electric Power Industry on the joint venture project.

The proposition should include:

2.1 The necessity and aim of the joint venture.

2.2 Form and term of the joint venture.

2.3 Ratio and form of the capital.

2.4 The settlement of claims and debts.

2.5 Explanation of the attribution of the utilized inventory assets and proposition of the threshold.

2.6 The elemental situations of the both sides of the joint venture.

2.7 Fundamental proposition on scope and scale of the operation, forecast efficiency and financial analysis, price level of electricity, ability to balance foreign currency, feedback of the investment, and etc.

2.8 The examination and approval of new project and the capital input.

2.9 The approval file of the application of the joint venture.

2.10 The approval file of the proposition of the new project.

2.11 The credit certificate of the foreign enterprise.

2.12 The letter of intention of the joint venture.

3. Setting up and confirming assets appraisement

Once the proposition of the joint venture project is approved, the enterprise can apply for assets appraisement.

3.1 Application of the setting up of the asset appraisement.

The said application should be sent for the examination and approval of the department in charge according to the affiliated relationship of the national assets. Those who own some national assets supervised by the State should apply for setting up by the Bureau of National Assets Administration of the State. And those enterprises which belong to the Ministry of the Electric Power Industry (including proprietary enterprises) should apply for the examination and approval of the Ministry of the Electric Power first, and then apply for the setting up of the Bureau of National Assets Administration of the State; those who own some national assets supervised by the State but controlled by the local government should apply for the examination and approval of the local department of the national assets first and then apply for the setting-up of the Bureau of the National Assets Administration of the State through the Ministry of Electric Power Industry.

The applications of the assets appraisement include:

3.1.1 The aim of the assets appraisement.

3.1.2 Registration license of the industrial and commercial administration.

3.1.3 Registration certificate of the proprietary rights of the national assets of the investors or reorganisors.

3.1.4 The accounting report of the appraisement of the standard year.

3.1.5 The approval file of the proposition of the joint venture project.

3.2 Have the assets appraised.

Once the application of the assets appraisement is approved, the enterprise should entrust a marching appraising institution to have the assets appraised.

3.3 Apply to have the results of the appraisement authorized. Once the assets be appraised by the appraising institution and examined by the entrusted unit, the appraisement results and the examination opinions on the results should be authorized step by step in according to the appraisement schedule.

4. composing the feasibility study report of the joint venture.

Once the assets appraisement results be authorized, compose the feasibility study report of the joint venture.

The feasibility study report should include:

4.1 the basic information of each side of the joint venture.

4.2 Financing plan;

4.3 Report of economic evaluation;

4.4 The files of examination and approval made by the department concerned of national grade or province-level on land, water, environmental protection, fuel, transportation, facilities;

4.5 The acceptance files made by the provincial bureau of commodity prices concerned of purchasing electricity;

4.6 Certificate of capital and workable financing files, the usage of capital at both home and abroad and settlement plan of income and expenses;

4.7 The relevant agreements and contracts;

4.8 The views of antecedent trial had by electric administrative departments at different levels on feasibility study report;

4.9 The copy of the business license, a application of the legal representative, financial annual report each side of jointly owned enterprises;

4.10 The confirming files of assets evaluation.

After a feasibility study report is certified, it is submitted to the State Planning Commission or the State Economic and Trade Committee respectively according to the project nature, it is handed over to State Council to approve by the two commissions respectively on important projects.

5. Apply for building jointly owned enterprises

After the feasibility study report is certified, the Chinese side of jointly owned applies to the department in charge for building jointly owned enterprises, and hands over the following files:

5.1.1 Set up the application of jointly owned enterprises;

5.1.2 Both sides of jointly owned enterprises commonly work out the feasibility study report and the reply views of the State Council or the authorized department;

5.1.3 contracts and articles signed by representatives delegated by

both sides of jointly owned enterprises;

5.1.4 Chairman of the board of directors, vice chairman of the board, list of directors selected who all are assigned by each side of jointly owned enterprises.

5.2 Extend of authority of examination and approval concerning setting up jointly owned enterprises. In accordance with relationship of administrative subordination, all these have central capital, total amount of investment of joint owned enterprises is below norm, is reported to the state electric department in charge to approve, total amount of investment is above norm, is reported to Ministry of Foreign Economic Relations and Trade to approve by the national electric department in charge.

5.3 After jointly owned enterprises are approved, they could handle industrial and commercial register to the Industrial and Commercial Bureau of the local province, autonomous region, municipality directly under the Central Government, and take out business licenses.

6. The provision applies for electric departments utilizing stock capital to absorb foreign capital projects including new projects, technical transformation projects and projects of tertial industry with increment led by stock.

The transfer procedure of stock capital outside jointly owned enterprises, could enforced according to the provision in principle.