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Sunday, December 10, 2006

Provisions on the Administration of Telecommunications Enterprises

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Decree [2001] No.333 of the State Council Provisions on the Administration of Telecommunications Enterprises with Foreign Investment have been passed at the 49th executive meeting of the State Council on December 5, 2001 and are hereby promulgated for implementation as of January 1, 2002.

Chapter I General Provisions

Article 1
The present Provisions have been formulated according to relevant laws and administrative regulations concerning foreign investment and the Telecommunications Regulation of the People's Republic of China for the purpose of satisfying the demand of opening the telecommunications industry to the outside world and promoting the development of the telecommunications industry.
Article 2
A foreign-funded telecom enterprise is one established by foreign investors and Chinese investors within the territory of the People's Republic of China by way of a sino-foreign equity joint venture for engagement in the telecom services.

Article 3
Foreign-funded telecom enterprises shall, apart from observing the present Provisions in their telecom business activities, abide by the provisions of the Telecommunications Regulation and other relevant laws and administrative regulations.

Article 4
Foreign-funded telecom enterprises may be engaged in the basic telecom services and value-added services, the specific business classifications shall be implemented according to the provisions of the Telecommunications Regulation. The geographical areas in which foreign-funded telecom enterprises may do business shall be provided by the administrative department of the information industry under the State Council according to relevant provisions.

Article 5
A foreign-funded telecom enterprise shall meet the following provisions in terms of its registered capital: 1. If the enterprises is engaged in the basic telecom business of the whole country or involving more than 1 province or autonomous region or municipality directly under the Central Government shall have a registered capital of not less than 2 billion yuan; if it is engaged in the value-added telecom businesses, it shall have a registered capital of not less than 10 million yuan; 2. If the enterprise is engaged in the basic telecom business of a province or autonomous region or municipality directly under the Central Government, it shall have a registered capital of not less than 200 million yuan; if it is engaged in the value-added businesses, it shall have a registered capital of not less than 1 million yuan;

Article 6
The ultimate proportion of contribution of the foreign investors of a foreign-funded telecom enterprise that is engaged in the basic telecom services (except the radio paging services) shall not be more than 49%. The ultimate proportion of contribution of the foreign investors of a foreign-funded telecom enterprise that is engaged in the value-added services (including the radio paging business in the basic telecom services) shall not be more than 50%. The different proportions of contribution of the Chinese and foreign investors in a foreignfunded telecom enterprise at different stages shall be determined by the administrative department of the information industry under the State Council according to relevant provisions.

Article 7
In order to engage in the telecom businesses, a foreign-funded telecom enterprise shall not only meet the conditions as mentioned in Articles 4, 5 and 6 of the present Provisions but also those as provided in the Telecommunications Regulation for engaging in the basic telecom businesses and 1/5 value-added telecom businesses.

Article 8
The major Chinese investor of a foreign-funded telecom enterprise that is engaged in the basic telecom businesses shall meet the conditions as mentioned below: 1. It is a legally established company; 2. It has capitals and a staff that suit its business operations; 3. It satisfies the requirements of the administrative department of the information industry under the State Council for discreet and special industries. The term "major Chinese investor in a foreign-funded telecom enterprise" as mentioned in the preceding paragraph shall be the investor that makes the largest contribution among all the Chinese investors and has a share of over 30% of the total investment made by all the Chinese investors.

Article 9
The major foreign investor of a foreign-funded telecom enterprise that is engaged in the basic telecom businesses shall meet the conditions as mentioned below: 1. It has the status of a legal person enterprise; 2. It has obtained a license for engaging in the basic telecom businesses in the country or region where it is registered; 3. It has the capitals and a staff that suit its business operations; 4. It has good performances and operation experiences in the basic telecom businesses. The term "major foreign investor of a foreign-funded telecom enterprise" as mentioned in the preceding paragraph shall refer to one that makes the largest contribution among all the foreign investors and has a share of more than 30% of the total investment made by all the foreign investors.

Article 10
The major foreign investor of a foreign-funded telecom enterprise that is engaged in the value-added telecom businesses shall have good performances and operation experiences in managing the value-added telecom businesses.

Article 11
To establish a foreign-funded telecom enterprise for engaging in the basic telecom businesses or in value-added telecom businesses within the area of more than 1 province, autonomous region or municipality directly under the Central Government, the major Chinese investor shall file an application to the administrative department of the information industry under the State Council and submit the documents as mentioned below: 1. A project proposal; 2. A feasibility study report; 3. Credentials of qualifications of the investors of the joint venture or other relevant certification documents as mentioned in Article 8, 9 and 10 of the present Provisions: 4. Certificates of meeting other conditions for engaging in the business of the basic telecom businesses or value-added telecom businesses and other certification documents as mentioned in the Telecommunications Regulation. The department of the information industry under the State Council shall examine the relevant documents as mentioned in the preceding paragraph as of the day when the application is received. If the application is for engaging in the basic telecom businesses, the examination shall be completed within 180 days and a decision shall be made concerning whether to approve or disapprove the application; if the application is for engaging the value-added telecom businesses, the examination shall be completed within 90 days and a decision shall be made whether to approve or disapprove the application. If the application is to be approved, an Examination Decision of Foreign Investment in the Telecommunications; if the application is to be disapproved, the applicant shall be inform in writing together with a statement of the reasons.

Article 12
To establish a foreign-funded telecom enterprise for engaging in the basic telecom businesses or the value-added telecom businesses within an area of more than 1 province, autonomous region or municipality directly under the Central Government, the major Chinese investor may, when filing an application according to Article 11 of the present Provisions, submit documents other than the feasibility report according to the practical situations and, after being approved and informed in writing by the administrative department of the information industry under the State Council after examination beforehand, then submit a feasibility study report. However, the time period between the day when the applicant is informed in writing of approval and the day when the applicant files a feasibility study report shall not be longer than 1 year, and this time period shall not be included in the time period for examination. 2/5

Article 13
To establish a foreign-funded telecom enterprise for engaging in the value-added telecom businesses within a province, autonomous region or municipality directly under the Central Government, the major Chinese investor shall file an application to the telecom administrative organ of the provinces, autonomous region or municipality directly under the Central Government concerned together with the documents as mentioned below: 1. A feasibility study report; 2. Credentials of qualifications or certification documents as provided in Article 10 of the present Provisions; 3. Certificates or other certification documents of meeting the other conditions for engaging in the value-added telecom businesses as mentioned in the Telecommunications Regulation. The administrative organ of the provinces, autonomous regions and municipalities directly under the Central Government shall make a decision within 60 days after receiving the application. If application is to be approved, it shall be transferred to the administrative department of the information industry under the State Council; if the application is to be disapproved, the applicant shall be informed in writing together with a statement of the reasons. The administrative department of the information industry under the State Council shall, within 30 days after receiving the decision of approving the application made by the telecom administrative organ of the provinces, autonomous regions and municipalities directly under the Central Government, complete the examination and decide whether to approve or disapprove. If approval is to be granted, an Examination Decision of Foreign Investment in the Telecommunications; if the application is to be disapproved, the applicant shall be inform in writing together with a statement of the reasons.

Article 14
The main contents of the project proposal for establishing a foreign-funded telecom enterprise shall include: the titles and basic information of the parties to the joint venture, the total amount of investment and registered capital of the joint venture to be established, the proportion of contributions to be made by the parties concerned, the type of business to be engaged in and the term of the joint venture, etc. The main contents of the feasibility study report for establishing a foreign-funded telecom enterprise shall include: the basic information to the enterprise to be established, the items of services, prediction of business and development planning, analysis of investment results, predicted time for starting business, etc.

Article 15
To establish a foreign-funded telecom enterprise, if the investment project shall be subject to the examination and approval of the administrative department of planning under the State Council or the comprehensive administrative department of economy under the State Council as pursuant to the provisions of the State, the administrative department of the information industry under the State Council shall, prior to issuing an Examination Decision of Foreign Investment in the Telecommunications, transfer the application materials to the administrative department of planning under the State Council or the comprehensive administrative department of economy under the State Council for examination and approval. If the application materials are transferred to the administrative department of planning under the State Council or the comprehensive administrative department of economy under the State Council for examination and approval, the time limit for examination and approval as stipulated in Articles 11 and 13 of the present Provisions may be extended for 30 days.

Article 16
To establish a foreign-funded telecom enterprise that is to be engaged in the basic telecom businesses or the value-added telecom businesses within an area of more than 1 province, autonomous region or municipality directly under the Central Government, the major Chinese investor shall, on the basis of the Examination Decision of Foreign Investment in the Telecommunications, submit to the administrative department of foreign trade and economic cooperation under the State Council the contracts and articles of association of the foreign-funded telecom enterprise to be established; if the foreign-funded telecom enterprise is to be engaged in the value-added telecom businesses within the area of a province, autonomous region or municipality directly under the Central Government, the major Chinese investor shall, on the basis of the Examination Decision of Foreign Investment in the Telecommunications, submit to the administrative department of foreign trade and economic cooperation of the people's government of 3/5 the province, autonomous region or municipality directly under the Central Government the contracts and articles of association of the foreign-funded telecom enterprise to be established. The administrative department of foreign trade and economic cooperation under the State Council and the administrative department of foreign trade and economic cooperation of the people's governments of the provinces, autonomous regions and municipalities directly under the Central Government shall, within 90 days after receiving the contracts and articles of association of the foreign-funded telecom enterprise to be established, complete the examination and decide whether to approve or disapprove. If approval is to be granted, an Approval Certificate of Establishing A Foreign-funded Enterprise shall be issued; if disapproval is to be granted, the applicant shall be informed in writing together with a statement of the reason.

Article 17
The major Chinese investor of a foreign-funded telecom enterprise shall apply for a License of Telecom Business Operations at the administrative department of the information industry under the State Council on the basis of the Approval Certificate of Establishing A Foreignfunded Enterprise. The major Chinese investor of the foreign-funded telecom enterprise shall apply to the administrative department for industry and commerce for registration as a foreign-funded telecom enterprise on the basis of the Approval Certificate of Establishing A Foreign-funded Enterprise and the License of Telecom Business Operations.

Article 18
To engage in cross-border telecom business, a foreign-funded telecom enterprise shall obtain the approval of the administrative department of the information industry under the State Council and does the business through the Entry and Exit Bureau of International Telecommunications established upon the approval of the administrative department of the information industry under the State Council.

Article 19
Any one who violates Article 6 of the present Provisions shall be ordered by the administrative department of the information industry under the State Council to make corrections and be fined not less than 100,000 yuan but not more than 500,000 yuan. In case the violator fails to make the corrections within the time limit, the administrative department of the information industry under the State Council shall revoke the License of Telecom Business Operations and the department of foreign trade and economic cooperation that issued the Approval Certificate of Establishing A Foreign-funded Enterprise shall revoke the Approval Certificate of Establishing A Foreign-funded Enterprise.

Article 20
Any one who violates Article 18 of the present Provisions shall be ordered by the administrative department of the information industry under the State Council to make corrections and be fined not less than 200,000 yuan but not more than 1 million yuan. In case the violator fails to make the corrections within the time limit, the administrative department of the information industry under the State Council shall revoke the License of Telecom Business Operations and the department of foreign trade and economic cooperation that issued the Approval Certificate of Establishing A Foreign-funded Enterprise shall revoke the Approval Certificate of Establishing A Foreign-funded Enterprise.

Article 21
Any one who obtains approval by presenting false or counterfeited credentials or certification materials in its application for establishing a foreign-funded telecom enterprise, the approval shall be invalidated and the violator shall be fined not less than 200,000 yuan but not more than 1 million yuan by the administrative department of the information industry under the State Council, its License of Telecom Business Operations shall be revoked and the department of foreign trade and economic cooperation that issued the Approval Certificate of Establishing A Foreignfunded Enterprise shall revoke the Approval Certificate of Establishing A Foreign-funded Enterprise.

Article 22
Any foreign-funded telecom enterprise violates the Telecommunications Regulation and other relevant laws or administrative regulations in its telecom business operations shall be punished by relevant administrative organs.

Article 23
Any intra-territorial telecom enterprise that applies for getting listed in overseas stock exchanges shall obtain the consent of the administrative department of the information industry under the State Council after examination and shall obtain the approval of relevant administrative organs according to relevant provisions.

Article 24
The present Provisions shall be applicable, by reference, to the companies and enterprises from the Hong Kong and Macao Special Administrative Regions and Taiwan in their investment in the Mainland of China to engage in the telecom businesses.

Article 25
The present Provisions shall take effect as of January 1, 2002.
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