1. Foreign Investment:

(1) Circular on Printing and Distributing the Opinions on the Enforcement of Issues Related to the Application of Laws and Regulations Governing the Administration of the Approval and Registration of Foreign Invested Companies (Decree No. 81)
Extract:
On April 24, 2006, the State Administration for Industry and Commerce (SAIC), the Ministry of Commerce, General Administration of Customs, and the State Administration of Foreign Exchange jointly issued such circular.
The promulgation of Decree No. 81 provides concrete legal grounds for enhancing the accuracy of applying related laws and regulations and their coordination, improving the efficiency of approval and registration of foreign invested companies (FICs) as well as increasing the attractiveness of China's investment facilities.
Such Decree further clarifies major changes in the said two pieces of legislation, including the incorporation of limited liability companies owned by a single legal person, means of capital contribution by shareholders, the incorporation and alteration registration, etc.

(2) Circular of the Ministry of Commerce on Certain Issues Concerning the Issuance of the Confirmation of Domestic or Foreign-Invested Projects Encouraged by the State to Foreign-Invested Enterprises (No. 201 [2006] of the Ministry of Commerce April 29, 2006)
Extract:
In order to further regulate the operational tax exemption procedures for the import of equipment by the foreign-invested　enterprises and clarify the specific requirements for the Confirmation of Domestic or Foreign-Invested Projects Encouraged by the State, the notice circulate a circular on the relevant issues as follows:
I. General Principles
As a general rule, the Confirmation Letters for the foreign-invested projects in the encouraged category shall be separately issued by the competent departments for development and planning, economy and trade, and foreign trade and economic cooperation, in particular, the Confirmation Letters for the foreign-invested projects in the encouraged category above the limits shall be separately issued by the National Development and Reform Commission and the Ministry of Commerce, and those under the limits shall be issued by the relevant departments under the provincial people's government in light of the current division of duties and functions and the limits of authorities.
II. Scope for the Ministry of Commerce to Issue Confirmation Letters and Import Certificates
The Conformation shall be issued to nine categories of Foreign-Invested Company.

(3) The Supplementary Provisions on the Establishment of Investment Companies by Foreign Investors (May 26, 2006)
Extract:
The Supplementary Provisions became effective on July 1, 2006. The Supplementary Provisions supplements the Provisions on the Establishment of Investment Companies by Foreign Investors (the second revised version by the MOC in 2004, the “Original Provisions”).
In the event of any discrepancy between articles of the Original Provisions and the Supplementary Provisions, the latter shall prevail. The Supplementary Provisions adjust the capital contribution requirements applicable to foreign investors establishing investment companies. The Original Provisions required that each such capital contribution be fully paid in within two years from the day when the business license was issued.
Under the Supplementary Provisions, at least USD 30 million of the registered capital must be contributed within two years from the day when the business license is issued.

(4) Circular of the State Administration of Foreign Exchange on the Adjustment of Certain Foreign Exchange Administrative Policies of Overseas Investment (June 6, 2006)
Extract:
The Circular is intended to complete the set of policies that encourage overseas investment and to enable domestic investors to carry out multinational transactions. According to the Circular, when a domestic investor needs to use foreign currency for overseas investment, it may use its own foreign currency, use RMB to purchase foreign currency, or request for a domestic loan of foreign currency. Beginning July 1, 2006, SAFE will no longer impose quotas on its sub-bureaus with respect to the amount of foreign currency that may be purchased for the purpose of overseas investment. The Circular further provides that after submitting the application or letter of intent of an overseas investment project to SAFE or its sub-bureaus and before obtaining the official approval, a domestic investor may, subject to the approval of SAFE’s sub-bureaus, use foreign currency to make external payment of upfront fees related to an overseas investment project. When doing so, it may use the foreign currency it already owns, or foreign currency purchased from or loaned by a bank.
Generally speaking, the upfront fees shall not exceed 15% of the amount of overseas investment. If a domestic investor needs to pay upfront fees in an amount that exceeds 15% of the amount of overseas investment, it must seek pre-approval from the local SAFE sub-bureau.

(5) Provisions on the Takeover of Domestic Enterprises by Foreign Investors
Extract:
On August 8, 2006, the Ministry of Commerce ("MOFCOM"), joined by the State-owned Assets Supervision and Administration Commission of the State Council, State Administration of Taxation, State Administration for Industry and Commerce, China Securities Regulatory Commission ("CSRC") and State Administration of Foreign Exchange, amended and released the Provisions for Foreign Investors to Merge and Acquire Domestic Enterprises (the "M&A Rules"). The M&A Rules, which take effect September 8, 2006, supersede the existing M&A rules in China that were in place since April 12, 2003 — the Interim Provisions for Foreign Investor.
The M&A Rules represent an important step in the further development of China’s regulation of the foreign acquisition of China-based companies. In addition to the four agencies that promulgated the earlier rules, both SASAC and the CSRC joined in issuing the M&A Rules. MOFCOM will continue to be at the center of regulatory activity in this area but will now be cooperating with an even broader range of government agencies than before. It is clear from the M&A Rules that China’s key government agencies are increasing their attention to M&A activities and can be expected to be even more active in monitoring.

（6）Regulation of the People’s Republic of China on the Administration of Foreign-funded Banks (Order of the State Council No. 478)
Extract:
The Regulation of the People’s Republic of China on the Administration of Foreign-funded Banks, which was adopted at the 155th executive meeting of the State Council on November 8, 2006, is hereby promulgated and shall come into force as of December 11, 2006.
This Regulation is formulated to meet the demands for opening to the outside world and for economic development, to strengthen and improve the administration of foreign-funded banks, and to promote the steady and sound operation of the banking sector.

(7) Detailed Rules for the Implementation of the Regulations on the Administration of Foreign-funded Banks of the People’s Republic of China
Extract:
The Detailed Rules is promulgated by order No.6.of the china Banking Regulatory Commission on November 24，2006 and shall come into force as of December 11，2006．The Detailed Rules for the Implementation of the Regulations on the Administration of Foreign—funded Financial Institutions of the Peoples Republic of china is promulgated by the china Banking Regulatory Commission on July 26，2004 shall be abolished simultaneously.
The Rules hereof expressly provide that an initially established foreign-funded bank shall submit a summary of the information about the financial system in its home country or region and of applicable financial regulatory laws and regulations．An initially founded representative office a foreign bank shall submit a certificate issued by a China-registered financial institution in the banking industry to support the availability of agent relationship between the restitution and the foreign bank．

(8) Administration of Foreign-Invested Construction Project Design Enterprises (Issuing Date: January 5, 2007; Effective Date: January 5, 2007)
Extract:
In China, most construction projects are rated according to size and difficulty as Grade A, Grade B, or Grade C. Construction design and other construction-related firms receive qualification ratings on a similar scale. Construction firms must meet a different set of thresholds (such as registered capital, number of qualified architects, and completed design works) for each grade.
The Design Enterprise Implementing Rules allow foreign construction design enterprises, as well as qualified foreign architects and engineers, to establish Design Enterprises in China. Foreign investors that are involved in other industries are excluded from China’s construction design market.

(9) Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Scope of Tax Refund Policies on Purchasing Domestically Produced Equipment for Foreign-funded Projects
Extract:
The Notice confirms the scope of such tax refund policies to other recently amended and updated rules and policies. The Notice states that the following types of enterprises may be eligible for the value-added tax (“VAT”) refund benefits: (i) foreign-invested enterprises (“FIEs”) that are recognized as ordinary VAT taxpayers and (ii) enterprises that are not ordinary VAT taxpayers but are (a) FIEs engaged in transportation or normal residential building development or (b) Chinese-foreign cooperative joint ventures engaged in oceanic petroleum exploration and development (collectively, the “Eligible Enterprises”).
The Notice provides that Eligible Enterprises may claim VAT refunds for domestically produced equipment that they purchase for foreign-invested projects that are listed in the Catalogue for the Guidance of Foreign Investment Industries or in the Catalogue of Priority Industries for Foreign Investment in the Central and Western Regions, as amended. Eligible Enterprises should manage such equipment as fixed assets.