Regulations of Shenzhen Special Economic Zone on Business

Chapter IV Names of Merchants and Transfer of Business

Article 26 Merchants shall have their own names.

Names of merchants shall be composed of the following parts in such proper order: names of administrative areas, shop names, trade or business features and form of organization. Laws and administrative regulations shall be applicable in case they stipulate otherwise.

Article 27 Merchants may use their own names as shop names, but only limited to the merchants whose investors are natural persons.

Article 28 Shop names of merchants shall be composed of more than two Chinese characters.

Words or content of shop names that are applied to be registered shall not:

(1) damage the interests of the state, society and public;

(2) contain feudal and superstitious elements;

(3) be contrary to social ethics and aequum et bonum;

(4) contain harmful political meaning or racial or ethnic discrimination;

(5) use the same name as that of an administrative area at or above the county level;

(6) be homonymous compared with a registered shop name of any other person, which may be misunderstood as the other's shop name;

(7) be composed of Arabic numerals or letters of foreign languages; or

(8) be the ones prohibited to be used according to laws and administrative regulations.

Article 29 The preliminary examination system shall be applied to registration of names of merchants. In case the names applied for registration passed the examination and approved by the Registration Organization, the organization shall provide documents regarding use of such names for the applicants. The names approved shall be revoked by the Registration Organization in case they have not been used by the applicants within 6 months from the date such names have been checked and approved.

Article 30 Anyone shall not use a shop name that has been registered by any other person within the Special Zone as his own within the Special Zone, unless otherwise they have investment relationship or they have agreed in a franchise agreement.

Article 31 The shop name may be separately transferred in case it is different from trademark or composed no trademark of the transferor, but it can be transfer to only one transferee.

The shop name or name that has been transferred separately shall not be further used within the same jurisdictional areas of the Registration Organization by the transferor.

The transfer of shop names or name without registration cannot be invoked to any third party, the transferor and transferee shall bear jointly and severally liability for the payment of debts arised to the third party.

Anyone shall be ordered to make corrections within the specified time limit, or else shall be imposed a fine of RMB 5,000 in case he violates the first, second and third paragraphs of this article.

Article 32 The transferors and transferees of a business transfer shall fulfill registration of alteration and go through other procedures concerned according to law.

Article 33 In the case of business transfer, operating properties including names shall be transferred. The Registration Organization shall automatically revoked the names resulted in the transfer in case the transferees fails to use it.

Subsidiaries of limited liability merchants shall not be transferred other than their properties, and their names shall not be used by the transferee. Transfer of subsidiaries of unlimited liability merchants shall be prohibited.

Article 34 The transferor and transferee of a business transfer shall determine ways of assumption of debts incurred by the transferor before such business transferred under a contract.

Article 35 The transferee of a business transfer, who has not used the name resulted from the transfer but has promised in the public notice to assume the debts incurred by the transferor, shall pay the debts upon requesting by the debtee.

Article 36 In case the transferee in a business transfer assumes the debts incurred by the transferor, the debtee shall request the transferee to pay the debts within one year from the date such business transfer takes effect or the public notice is issued.

Chapter V Commercial Account Books

Article 37 All merchants shall establish financing and accounting systems according to laws, administrative regulations, rules of the financial competent authority of the State Council and these regulations.

Article 38 All merchants shall establish account books at the commencement of business. Account books and balance sheets shall be made to provide the information concerning the status of profit and loss in the course of business operation.

Article 39 All merchants may adopt electronic account books, but shall not destroy the data that has generated while changing the financial software under use.

Article 40 All merchants shall record the transactions in written forms according to their successively order, unless otherwise specifically provided by the laws and administrative regulations.

Article 41 The operating properties and their value at the commencement of business and the end of each year shall be clearly recorded in account books.

The balance sheets shall be made on the basis of the account books and shall be signed in the name of the person who makes the account books.

Article 42 The following matters that may affect any transactions and operating properties shall be recorded in account books on the basis of the original vouchers:

(1) Receipt and expenditure of funds and portfolios;

(2) Receipt and expenditure, addition and subtraction, and use of funds in finances;

(3) Generation and settlement of debts and credits;

(4) Addition and subtraction of capital and funds, receipt and expenditure of funds;

(5) Calculation of income, expenses and cost;

(6) Calculation and treatment of financial results; and

(7) Other matters required by laws that shall be handled with accounting procedures and financial accounting.

Article 43 All merchants shall assign special persons to properly preserve business account books. The period for preserving business account books shall be subject to the provisions of laws, administrative regulations and rules of the financial competent authority of the State Council.

Article 44 The agencies of justice, taxation, audit and registration may order contesting parties or merchants to submit all or part of their business account books under the application of subscribers or shareholders, partners or other interested persons.

Chapter VI Commercial Employees

Article 45  The merchants may select or appoint managers to conduct specific business according to association articles or partnership agreements.

Article 46 The merchants may appoint several managers including deputy managers to jointly exercise rights of representation.

The commercial acts conducted by any of the representatives with the authorization of the merchants shall be effective to the merchants.

Article 47 The manager shall be entitled to manage all kinds of business on behalf the merchant within the scope of authorization.

The manager shall be entitled to nominate deputy managers and chief accountants to the merchant for appointing or dismissing.

The manager may appoint or dismiss employees at or below the post of a deputy manager.

Article 48 The restriction on the right of representation for a manager shall not be invoked to resist the bona fide third party, unless otherwise the manager provides warranty for others or disposes real properties of the merchant without being authorized by the merchant.

Article 49 The manager shall fulfill the obligations of prohibition of business strife, i.e., shall not carry out any business that is the same as that of the merchant who appoints him, which are stipulated by the Company Law of the People's Republic of China.

The merchant shall be entitled to deem the transaction, which is carried out by the manager who violates the aforesaid obligations, as its own transaction and acquire his income.

The merchant shall lose such right in case it fails to exercise the right as specified in the aforesaid paragraph of this article within 3 months from the date it knows that the manager violates such obligations or within one year from the date of the transaction carried out by the manager.

Article 50 The authority of the person in charge of a subsidiary of a limited liability merchant, whose duty is similar to that of a manager, may be deemed as same as that of a manager. But such person shall not act on behalf of the merchant in respect of acts in action.