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Article 1. In order to adapt to the needs of the reform and opening process, to absorb foreign capital, to introduce advanced technology and equipment, and to promote the prosperous development of the film industry of China, the present Regulation is formulated in accordance with the Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, the Law of the People's Republic of China on Chinese-foreign Contractual Joint Ventures, the Regulation on Film Administration, and other relevant laws and regulations. Article 2. The present Regulation shall apply to the foreign companies, enterprises, other economic organizations or individuals (hereinafter referred to foreign parties) that, according to the principle of equality and mutual benefit and upon approval of the Chinese government, establish Chinese-foreign equity or contractual joint ventures, construct or reconstruct cinemas, and engage in film showing business with the companies or enterprises registered within China (hereinafter referred to the Chinese party). Article 3. Foreign investors may not establish any solely-owned cinemas or form any film network companies. Article 4. Foreign investors shall satisfy the following conditions for investing in cinemas: (1) The arrangements and planning are in line with the local cultural facilities; (2) The registered capital is no less than 6 million yuan; (3) There are fixed business (showing) premises; (4) With respect to Chinese-foreign equity joint cinemas, the proportion of the investment made by the Chinese party in the registered capital shall account for no less than 51%; with respect to Chinese-foreign equity joint cinemas established in pilot cities such as Beijing, Shanghai, Guangzhou, Chengdu, Xi'an, Wuhan, and Nanjing, the proportion of the investment made by the foreign party in the registered capital may not exceed 75% at the most; (5) The period of the equity or contractual joint venture shall not exceed 30 years; and (6) The relevant laws, regulations and provisions of China shall be complied with. Article 5. Where the Chinese party makes the investment with state-owned assets (excluding cash), the relevant formalities shall be gone through pursuant to the relevant provisions on the management of state-owned assets. Article 6. The establishment of a foreign-funded cinema shall be reported for examination and approval pursuant to the following procedures: (1) The Chinese party must file an application with the provincial administrative department of commerce of the place where it is located, and submit the following materials: 1. The application form for the project of establishment of the foreign-funded cinema; 2. The certificate of legal person status of the Chinese party, the materials relating to the land use right of the cinema, and the creditability certificate issued by the bank; 3. The qualification certificate of the foreign party, the creditability certificate issued by the bank, and the financial status certificate issued by the accounting firm; 4. The notice for preliminary ratification of the cinema name issued by the department of industry and commerce administration; 5. The feasibility study report, contract, and articles of association; and 6. Other materials to be provided as required by the laws and regulations and the examination and approval body; (2) The provincial administrative department of commerce of the place where the applicant is located shall, after obtaining consent from the provincial administrative department of film, make the examination and approval pursuant to the relevant laws and regulations of the state on foreign investment, and report to the Ministry of Commerce, the State Administration of Radio, Film and Television, and the Ministry of Culture for record. The Certificate of Approval for Foreign-funded Enterprises shall be issued to the foreign-funded enterprise that has been approved to establish; (3) For a foreign-funded cinema that has been approved to establish, the applicant shall, within one month from the day of receiving the Certificate of Approval for Foreign-funded Enterprises, make the registration with the provincial department of industry and commerce administration by taking the Certificate of Approval for Foreign-funded Enterprises; and (4) After the construction or reconstruction of a foreign-funded cinema has been finished and upon examination for acceptance by the relevant departments, the applicant shall apply for the License for Film Showing with the provincial administrative department of film by taking the Certificate of Approval for Foreign-funded Enterprises and the Business License before starting the business of film showing. Article 7. For any alteration of the shareholding or investment of a foreign-funded cinema that has been established, the procedures prescribed in Article 6 herein shall be followed. Article 8. A foreign-funded cinema must abide by the relevant laws and regulations of the state, conduct business operations in accordance with the Regulation on Film Administration, and subject itself to the supervision and administration of the relevant departments of the Chinese government. The cinema must hold a License for Public Film Showing issued by the State Administration of Radio, Film and Television (SARFT) for each film to be shown, may not show any smuggled or pirate films, and may not show any video tapes, VCD, or DVD for commercial purpose. Article 9. Foreign investors shall comply with the relevant provisions of the state when engaging in any other entertainment business affiliated to the cinema. Article 10. The present Regulation shall be referred to where investors from Hong Kong Special Administrative Region, Macao Special Administrative Region, and Taiwan area establish any enterprises engaging in film showing in the mainland of China. Article 11. The present Regulation and the appendix hereto shall come into force on January 1, 2004. The Provisional Regulation on Investment in Cinemas by Foreign Investors promulgated by the SARFT, the Ministry of Foreign Trade and Economic Cooperation and the Ministry of Culture on October 25, 2000, shall be repealed on the same day when the present Regulation and the appendix hereto come into force. Appendix: In order to promote the establishment of closer economic and trade relationship between Hong Kong, Macao and the mainland of China, and to encourage the service providers from Hong Kong and Macao to establish enterprises engaging in film showing in the mainland of China, and in accordance with the Arrangements of the Mainland of China and Hong Kong on Establishing Closer Trade and Economic Relationship and the Arrangements of the Mainland of China and Macao on Establishing Closer Trade and Economic Relationship, the following special provisions are hereby made with respect to the investment in cinema made by service providers from Hong Kong and Macao as provided for in the Interim Regulation on Investment in Cinemas by Foreign Investors: 1. As of January 1, 2004, service providers from Hong Kong and Macao shall be allowed to construct, reconstruct and operate cinemas in the mainland of China through equity or contractual joint ventures. The service providers from Hong Kong and Macao are allowed to hold the majority shares, but the proportion may not exceed 75%. 2. Other provisions on investment in cinemas by service providers from Hong Kong and Macao in the mainland of China shall still accord with the Provisional Regulation on Investment in Cinemas by Foreign Investors. |
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