Interim Provisions on Financial Asset Management Companies' Absorption of Foreign Capital
in Asset Restructure and Disposal

Jointly Promulgated by the Ministry of Foreign Trade and Economic Cooperation, the Ministry of Finance and the People's Bank of China on 26th October, 2001; Implemented as of the Date of Promulgation)

Article 1 .	These Provisions have been formulated in accordance with the laws of China on foreign investment, the Regulations on Financial Asset Management Companies and related laws and regulations, with a view to standardising the absorption of foreign capital in the asset restructure and disposal by the financial asset management companies (hereinafter referred to as "asset management companies").
Article 2 .	Asset management companies are permitted to restructure and dispose of the assets they own through absorbing foreign capital.
Article 3 .	Absorption of foreign capital in asset restructure and disposal shall start at the height of strategic readjustment of the national economy, and aims to invigorate non-performing assets, introduce advanced management experience, capital and technology, technologically transform enterprises, and promote reform of state-owned enterprises and the establishment of a modern enterprise system. It shall prevent short-term transactions taking asset speculation as the sole goal and evasion of debts by enterprises.
Article 4 .	Asset management companies' absorption of foreign capital in asset restructure and disposal shall comply with the industrial policy of the state for guiding foreign investment. Culture, finance, insurance, and other fields where foreign investment is banned as listed in the Guiding Catalogue of Industries for Foreign Investment are not included in the scope for absorption of foreign capital in asset restructure and disposal. For any project that must be controlled by the Chinese side as provided by the Guiding Catalogue of Industries for Foreign Investment, the control by the Chinese side shall in principle be retained after the foreign capital participation in the restructure.
Article 5 .	Scope of assets for restructure and disposal

1.	Enterprise equities owned by asset management companies, including the equities obtained by the asset management companies after implementing debt-for-equity transfers of the enterprises, the equities owned by the asset management companies after reshuffling the indebted enterprises, and equities owned by the asset management companies in any other form.
2.	hysical assets of enterprises on which asset management companies have the power of disposal; and
3.	Enterprise credits owned by asset management companies.

Article 6 .

Methods for restructure and disposal

1.	Asset management companies may sell or transfer to foreign investors the equities or credits of non-listed companies they own after restructure;
2.	Asset management companies may directly sell or transfer to foreign investors the equities or credits of non-listed companies they own;
3.	Asset management companies may transfer to foreign investors the physical assets they own through such methods as contractual transfer, bidding or auction.
4.	Asset management companies may set up foreign-funded joint ventures jointly with foreign investors on the basis of the original enterprises by investing the enterprise equities and physical assets they own.

Article 7 .	At the time of restructure and asset disposal, asset management companies shall consult with other investors of the enterprise. Under the same conditions, the other investors have the right of preference to purchase.
Article 8 .	Evaluation and transaction price in asset restructure and disposal
The assets restructured and disposed of by asset management companies shall be evaluated by qualified asset evaluation agencies before they are sold or transferred. When the assets are evaluated, full consideration shall be given to various factors of the assets disposed of and restructured. The asset evaluation shall comply with international practice and adopt the methods widely accepted internationally. Asset management companies shall take into consideration the net value of the assets evaluated, the appreciation potential value of the assets, the current conditions of the assets and other factors. They shall independently determine the transaction price of the assets restructured and disposed of in accordance with the related provisions of the Methods for Disposal of Assets by Financial Asset Management Companies promulgated by the Ministry of Finance.
Article 9 .	Procedures for restructure and disposal of assets

1.	Asset management companies shall have a specialised examination organisation for asset disposal to examine and approve their asset restructure and disposal programmes in accordance with the related provisions of the Methods for Disposal of Assets by Financial Asset Management Companies promulgated by the Ministry of Finance. If the assets to be restructured and disposed of belong to the category where foreign investment is restricted by the Guiding Catalogue of Industries for Foreign Investment, the asset management companies shall obtain the consent of the departments in charge before approving an asset restructure and disposal programme.
2.	Asset management companies shall sign related legal documents with foreign investors in accordance with the asset restructure and disposal programme that has been approved or agreed after examination.
3.	Asset management companies shall apply to the Ministry of Foreign Trade and Economic Co-operation for handling related procedures for the establishment of foreign-funded enterprises, and apply for the certificate of approval thereof.

Article 10 .

These Provisions also apply to investors from Hong Kong, Macau and Taiwan who take part in restructure and disposal of assets of asset management companies.