113E

The Ministry of Construction of the People’s Republic of China

                The Ministry of Foreign Trade and
                Economic Cooperation of the People’s Republic of China  
              　Decree No. 113  
              Regulations on Administration of Foreign-Invested Construction
                Enterprises approved respectively at the 63rd Executive Meeting
                of the Ministry of Construction on 9 September 2002 and at the
                10th Ministerial Meeting of the Ministry of Foreign Trade and
                Economic Cooperation on 17 September 2002 are now issued and shall
                go into effect on 1 December 2002.　  
              Minister of the Ministry of Construction:&;#9;Wang Guangtao

                Minister of the Ministry of Foreign Trade and Economic Cooperation:&;#9;Shi
                Guangsheng　  
              27 September 2002  
              Regulations on Administration of Foreign–Invested
                Construction Enterprises  
              Chapter 1 General provisions  
              Article 1 &;#9;These Regulations hereof are formulated to further
                the opening up to the outside and standardise the administration
                of foreign-invested construction enterprises in accordance with
                such laws and regulations as the Construction Law of the People’s
                Republic of China, the Tendering and Bidding Law of the People’s
                Republic of China, the Law of the People’s Republic of China on
                Sino-foreign Equity Joint Ventures, the Law of the People’s Republic
                of China on Sino-Foreign Cooperative Joint Ventures, the Law of
                the People’s Republic of China on Wholly Foreign-Owned Enterprises
                and the Regulations on Administration of Construction and Engineering
                Quality.  
               Article 2&;#9;These regulations shall apply to the establishment
                of foreign–invested construction enterprises within the territory
                of the People’s Republic of China, the application for construction
                enterprise qualifications and the administration and supervision
                of foreign–invested construction enterprises.  
               The term ‘foreign-invested construction enterprise’ mentioned
                in these regulations refers to a wholly foreign-owned construction
                enterprise, or a Sino-foreign equity construction joint venture
                or a Sino-foreign cooperative construction enterprise established
                within the territory of the People’s Republic of China in accordance
                with Chinese laws and regulations.  
               Article 3 &;#9;A foreign investor, which intends to establish
                a foreign-invested construction enterprise within the territory
                of the People’s Republic of China and conduct construction business,
                shall, in accordance with laws, obtain the approval certificate
                from the relevant foreign trade and economic cooperation administration
                department and register with the State Administration of Industry
                and Commerce or its authorised administration of industry and
                commerce at local levels, and the qualification certificate from
                the relevant construction administration department.   
               Article 4 &;#9;Foreign-invested construction enterprises which
                engage in construction business within the territory of the People’s
                Republic of China shall abide by the laws, regulations and rules
                of the People’s Republic of China.  
                 
              The lawful operation of foreign-invested construction enterprises
                and their legal rights and interests within the territory of the
                People’s Republic of China shall be protected by Chinese laws,
                regulations and rules.  
               Article 5 &;#9;The foreign trade and economic cooperation administration
                department of the State Council shall be responsible for the administration
                of the establishment of foreign-invested construction enterprises.
                The construction administration department of the State Council
                shall be responsible for the administration of the qualifications
                of foreign–invested construction enterprises.  
               The foreign trade and economic cooperation administration departments
                of the people’s government of provinces, autonomous regions or
                directly administered municipalities shall be responsible for
                the administration of the establishment of foreign-invested construction
                enterprises within their authorised jurisdiction; the construction
                administration departments of the people’s government of the provinces,
                or autonomous regions or directly administered municipalities
                shall, in accordance with these Regulations, be responsible for
                the administration of qualifications of foreign–invested construction
                enterprises within their administrative regions.  
               Chapter 2 &;#9;Application for and Examination and Approval of
                Establishment of Foreign–invested Construction Enterprises and
                their Qualifications  
              Article 6 &;#9;The application for and the examination and approval
                of the establishment of foreign-invested construction enterprises
                and their qualifications shall be managed by a grading and categorization
                system.  
              Where an applicant is to apply to establish a contractor with
                Super Grade or Grade A qualifications or to establish a specialised
                contractor with Grade A qualifications, the establishment of the
                foreign-invested construction enterprise shall be examined and
                approved by the foreign trade and economic cooperation administration
                department of the State Council and its qualifications shall be
                examined and approved by the construction administration department
                of the State Council; where an applicant is to apply to establish
                a contractor or a specialised contractor with Grade B or lower
                qualifications or any of the subcontractor qualifications, the
                establishment of the foreign–invested construction enterprise
                shall be examined and approved by the foreign trade and economic
                cooperation administration department of the people’s government
                of the province, the autonomous region or the directly administered
                municipality and its qualifications shall be examined and approved
                by the construction administration department of the people’s
                government of the province, the autonomous region or the directly
                administered municipality.  
              Where the Chinese investor to a proposed Sino-foreign equity
                construction joint venture or a Sino-foreign cooperative construction
                enterprise is an enterprise administered by the central government,
                the establishment of the joint venture shall be examined and approved
                by the foreign trade and economic cooperation administration department
                of the State Council and its qualifications shall be examined
                and approved by the construction administration department of
                the State Council.  
              Article 7 &;#9;The procedures for the establishment of a foreign–invested
                construction enterprise as a contractor with Super Grade or Grade
                A qualifications or a specialised contractor with Grade A qualifications
                are:  
               (1) &;#9;The applicant shall submit an application to the foreign
                trade and economic cooperation administration department of the
                people’s government of the province, the autonomous region or
                the directly administered municipality where the proposed foreign-invested
                construction enterprise is to be established.  
               (2)&;#9;The foreign trade and economic cooperation administration
                department of the people’s government of the province, the autonomous
                region or the directly administered municipality shall complete
                the preliminary examination within 30 days of receiving the application,
                and shall, if it grants the preliminary approval, submit the application
                to the foreign trade and economic cooperation administration department
                of the State Council for further approval.  
              (3) &;#9;Within 10 days of receiving the application for further
                approval, the foreign trade and economic administration department
                of the State Council shall forward the application to the construction
                administration department of the State Council for review and
                comments. The construction administration department of the State
                Council shall provide its opinion in writing within 30 days of
                receiving the request. Within 30 days of receiving the response,
                the foreign trade and economic cooperation administration department
                of the State Council shall decide whether or not to approve the
                application and express such a decision in written form. If the
                application is approved, a foreign-invested enterprise certificate
                shall be granted; if the application is not approved, reasons
                for the disapproval shall be given in written form.  
              (4) &;#9;Within 30 days of receiving the approval certificate,
                the applicant shall register with the relevant registration department.  
              (5) &;#9;After obtaining the business license for the legal entity,
                the application by the foreign-invested construction enterprise
                for qualification approval shall be conducted in accordance with
                Regulations on Administration of Construction Enterprise Qualifications.  
              Article 8 &;#9;The procedures for the establishment of a foreign-invested
                construction enterprise as a contractor or a specialised contractor
                with Grade B or lower qualifications or any of the subcontractor
                qualifications shall be administered by the construction administration
                department and the foreign trade and economic cooperation administration
                department of the people’s government of the province, the autonomous
                region or the directly administered municipality based on local
                conditions with reference to Article 7 of these Regulations and
                Regulations on Administration of Construction Enterprise Qualifications.  
               Examination and approval of qualifications of the foreign-invested
                construction enterprise by the construction administration department
                of the people’s government of the province, the autonomous region
                or the directly administered municipality shall be filed with
                the construction administration department of the State Council
                within 30 days after the approval is given.  
              Article 9 &;#9;The application by a foreign-invested construction
                enterprise for upgrading its qualifications or adding additional
                qualifications in addition to major items shall be made to the
                relevant construction administration department in accordance
                with relevant regulations.  
              Article 10 &;#9;An applicant which intends to establish a foreign-invested
                construction enterprise shall submit the following documents to
                the relevant foreign trade and economic cooperation administration
                department:  
              (1) &;#9;Application forms to establish a foreign-invested construction
                enterprise signed by the investor’s legal representative;  
              (2) &;#9;The feasibility study report prepared or accepted by
                the investors;  
              (3) &;#9;The contract for the establishment of a foreign-invested
                construction enterprise and the articles of association signed
                by the investor’s legal representative (only the articles of association
                is required for the establishment of a wholly foreign-owned construction
                enterprise);  
              (4) &;#9;The notification on pre-verification of the name of the
                enterprise;  
              (5) &;#9;Documentary evidence of legal entity registration and
                bank credential letter of the investor;  
              (6) &;#9;Appointment letters and documentary evidence of the investor’s
                designated chairman and members of the board of directors, managers
                and technical managers etc.; and  
              (7) &;#9;Balance sheets and profit and loss accounts of the investor
                over the past three years audited by a certified accountant or
                an accounting firm.  
              Article 11 &;#9;The applicant applying for foreign-invested construction
                enterprise qualifications shall submit the following documents
                to the relevant construction administration department:  
              (1) &;#9;Application forms for the foreign-invested construction
                enterprise qualifications;  
              (2) &;#9;The approval certificate for the establishment of the
                foreign-invested construction enterprise;   
              (3) &;#9;The business licence for the legal entity;   
              (4) &;#9;The bank credential letter of the investor;  
              (5) &;#9;Appointment letters and documentary evidence of the investor’s
                designated chairman and members of the board of directors, the
                enterprise’s financial manager, operations managers and technical
                managers etc.; and  
              (6)&;#9;Balance sheets and profit and loss accounts of the investor
                over the past three years audited by a certified accountant or
                an accounting firm.  
              (7)&;#9;Other documents required  
              Article 12 &;#9;The total capital contribution of the Chinese
                party to a Sino-foreign equity construction joint venture or a
                Sino-foreign cooperative construction enterprise shall not be
                less than 25% of the registered capital.   
              Article 13 &;#9;Qualifications of Sino-foreign equity construction
                joint ventures and Sino-foreign cooperative construction enterprises
                established prior to the issuance of these Regulations are required
                to be re-examined and ratified in accordance with these Regulations
                and Regulations on Administration of Construction Enterprise Qualifications.  
              Article 14 &;#9;All documents required to be submitted by an applicant
                under these Regulations shall be in Chinese. If the original documentary
                evidence is in a foreign language, a Chinese translation shall
                be provided.  
              Chapter 3 Scope of Contracting  
              Article 15 &;#9;Wholly foreign-owned construction enterprises
                may only undertake the following types of construction projects
                within the scope of their qualifications:  
              (1) &;#9;Construction projects funded totally by foreign investments,
                foreign grants or foreign investments and grants;  
              (2) &;#9;Construction projects financed by international financial
                organisations and awarded through international tendering process
                in accordance with the provisions of the loan agreement;  
              (3) Sino-foreign jointly constructed projects where the foreign
                investment is equal to or greater than 50%; Sino-foreign jointly
                constructed projects where the foreign investment is less than
                50% but which Chinese construction enterprises cannot undertake
                independently due to technical difficulties subject to the approval
                of the construction administration departments of the people’s
                government of provinces, or autonomous regions or directly administered
                municipalities;   
               (4) &;#9;China-invested construction projects which Chinese construction
                enterprises cannot undertake independently due to technical difficulties.
                Such projects may be jointly undertaken by Chinese and foreign
                construction enterprises subject to the approval of the construction
                administration departments of the people’s government of provinces,
                or autonomous regions or directly administered municipalities.  
              Article 16 &;#9;Sino-foreign equity construction joint ventures
                and Sino-foreign cooperative construction enterprises shall undertake
                construction projects within the permitted scope of their grades
                of qualifications.  
              Chapter 4 Supervision and Administration  
              Article 17 &;#9;The criteria of grading of qualifications of foreign-invested
                construction enterprises shall be in accordance with the criteria
                of grading of construction enterprise qualifications formulated
                and issued by the construction administration department of the
                State Council.  
              Article 18 &;#9;Where a foreign-invested construction enterprise
                undertakes a construction project as the contractor, it shall
                itself complete the main structure of the project.  
              Article 19 &;#9;Where a foreign-invested construction enterprise
                contracts for construction projects in the form of a consortium
                with other construction enterprises, the consortium shall contract
                for projects within the permitted scope of the lower qualification
                grade.  
              Article 20 &;#9;Where a foreign-invested construction enterprise
                contracts for construction projects beyond the permitted scope
                of its qualifications in violation of Article 15 of these Regulations,
                a fine at an amount between 2% to 4% of the construction contract
                price shall be collected. An order to suspend its business operation
                and to correct the wrongdoings may also be issued and its qualification
                certificate may be demoted. In serious situations, the qualification
                certificate shall be revoked and any proceeds illegally obtained
                shall be confiscated.  
              Article 21 &;#9;Where a foreign-invested construction enterprise
                carrying out construction business violates the Construction Law
                of the People’s Republic of China, the Tendering and Bidding Law
                of the People’s Republic of China, Regulations on Administration
                of Engineering Construction Quality and Regulations on Administration
                of Construction Enterprise Qualifications and other relevant laws,
                regulations and rules, it shall be penalised in accordance with
                relevant provisions.  
              Chapter 5 Supplemental Provisions  
              Article 22 &;#9;For a foreign enterprise which has already obtained
                a Foreign Enterprise Qualification Certificate for Contracting
                for Construction Projects prior to these Regulations come into
                force, it may apply for a construction enterprise qualification
                of an appropriate grade based on its track record of project contracting
                within the territory of the People’s Republic of China when establishing
                a foreign-invested construction enterprise.  
               Where a foreign enterprise which has already established a foreign
                invested construction enterprise within the territory of the People’s
                Republic of China as stated in Paragraph 1 of this Article is
                to establish a new foreign-invested construction enterprise, the
                qualification grade of the new foreign-invested construction enterprise
                shall be determined in accordance with Regulations on Administration
                of Construction Enterprise Qualifications.  
              Article 23 &;#9;Investors from Hong Kong Special Administrative
                Region, Macao Special Administrative Region or Taiwan shall establish
                construction enterprises and carry out construction businesses
                in other provinces, autonomous regions or directly administered
                municipalities in accordance with these Regulations, unless it
                is otherwise provided by laws, regulations or the State Council.  
              Article 24 &;#9;The construction administration department of
                the State Council and the foreign trade and economic cooperation
                administration department of the State Council shall be responsible
                for interpretation of these Regulations in accordance with their
                respective functions.   
              Article 25 &;#9;These Regulations shall come into force on 1 December
                2002.  
              Article 26 &;#9;The Tentative Measures on Administration of Foreign
                Enterprise Qualifications for Contracting for Construction Projects
                Within the Territory of China issued by the Ministry of Construction
                (Decree No. 32 of the Ministry of Construction) shall be repealed
                as of 1 October 2003.  
              Article 27 &;#9rovisions on Establishment of Foreign-invested
                Construction Enterprises (File No. 533, 1995) jointly issued by
                the Ministry of Construction and the Ministry of Foreign Trade
                and Economic Cooperation shall be repealed as of 1 December 2002.