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The Law For The People

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(Approved by the State Council on March 13, 1981 and
Promulgated by the Bank of China on March 13, 1981)

Article 1. In accordance with the provisions of Article 8 of the Law of the People's Republic of China on Chinese-Foreign Joint Ventures that "A joint venture shall open an account with the Bank of China or a bank approved by the Bank of China", these Interim Procedures are formulated to support the requirements of Chinese-foreign joint ventures (hereafter referred to as "joint ventures") for funds in their operating and business activities through the handling of loans to joint ventures (hereafter refereed to as "loans").

Article 2. Prospective Borrowers. Any joint venture may apply for a loan if, in accordance with the provisions of the Law of the People's Republic of China on Chinese-Foreign Joint Ventures, it has been approved by the Foreign Investment Commission, has registered with the General Administration for Industry and Commerce and has obtained a business license.

Article 3. Types of Loans. The Bank of China shall handle the following types of loans to joint ventures:

The above-mentioned loans fall into two categories: Renminbi loans and foreign currency loans. A loan shall be repaid in the same currency in which it was made. Interest on a foreign currency loan shall be computed and charged in foreign currency.

Article 4.Conditions for Loans.

A Joint venture that applies for the use of a loan shall satisfy the following conditions:

Article 5. Term of Loans.

The term of a lone shall be decided by the borrowing venture and the bank, according to the specific contents of the items covered by the loan and distinguishing among differing cases.

Article 6. Interest Rates on Loans. The interest rates on Renminbi loans shall be those prescribed by the People's Bank of China. The interest rates on foreign currency loans shall be set by the Bank of China and shall be put into effect after being checked and approved by the People's Bank of China.

Article 7. Application for Loans, Signing of Loan Agreements and Utilization of Loans.

Article 8. Repayment of the Principal and Payment of Interest on Loans.

Article 9. Servicing and Supervision of Loans. In accordance with the policies and decrees of the State, the bank shall actively support joint ventures in developing their production and operations and provide good service to them. Borrowing ventures shall accept the inspection and supervision of the bank with respect to utilization of loans and shall provide the bank with materials and reports concerning various kinds of plans, such as those for production, supply and marketing, finances and capital construction, and how they are being put into effect. If a borrowing venture does not comply with the loan agreement, the bank may, distinguishing among differing cases, adopt economic measures to safeguard its rights and interests, such as terminating disbursement of the loan or recalling the loan ahead of the repayment schedule.

(The English translations are for reference only)

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