CHAPTER TEN LEGAL RESPONSIBILITIES

　　Article 206 If a company is found to have reported false capital amount, provided false certificates, or concealed important facts by means of deception during registration in violation of the provisions of this law, it shall be ordered to correct and imposed a fine 5 to 10 percent of the capital amount over-reported in case of a false report of registered capital amount and a fine of more than RMB10,000 and less than RMB100, 000 in case provision of false certificates or concealed important facts by means of deception. If a case is very serious, its registration shall be revoked. If a case is serious enough to constitute a crime, criminal responsibilities shall be affixed according to law.

　　Article 207 If a company is found to have issued shares or corporate bonds by falsifying prospectus or application forms using improper procedures in issuing shares, it shall be ordered to stop the issue, return the payment of shares with interest, and imposed with a fine one to five percent of the amount of share capital raised illegally. If a case is serious enough to constitute a crime, criminal responsibilities shall be affixed according to law.

　　Article 208 If a promoter or shareholder is found to have deceived creditors or the public by denying to pay in cash or kind or failing to transfer property rights or making false constribution for his (her) shares subscribed, he (she) shall be ordered to correct and imposed a fine 5 to 10 percent of the falsified amount of payment. If the case becomes so serious as constituting a crime, criminal responsibility shall be affixed according to law.

　　Article 209 If a promoter or shareholder is found to have drawn his (her) share of capital away after the establishment of a company, he (she) shall be ordered to correct and imposed a fine 5 to 10 percent of the capital drawn away. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 210 If a company is found to have issued stocks or bonds without the approval of the department in charge as provided for by this law, it shall be ordered to stop the issue and return the share capital raised together with interests and shall be imposed a fine one to five percent of the share capital raised. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 211 If a company is found to have set up separate accounting books apart from those set up according to law, it shall be ordered to correct and imposed a fine ranging from RMB10, 000 to RMB100,000. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　If a personal bank account is deposited with the assets of a company, the illegal proceeds shall be confiscated, together with a fine more than one time and less than five times the amount of the illegal proceeds. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 212 If a company is found to have provided false financial and accounting statements or concealed important facts in the reports to shareholders or the public, the responsible person(s) directly in charge and other persons directly responsible shall be imposed of a fine of RMB10,000 to RMB100,000. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 213 If a company is found to have converted State owned property into shares or sold the property at low prices or distributed the property to individuals in violation of this law, the responsible persons in charge and persons directly responsible shall be given administrative punishments. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 214 If a director, supervisor or manager is found to have abused he (her) powers to accept bribes or other illegal proceeds or peculate property of his(her) company, the illegal proceeds shall be confiscated and the property be ordered to return and the person in question shall be punished by the company concerned. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　If a director or a manager of a company is found to have used the company's funds for personal purpose or as loan to others, he(she) shall be ordered to return the funds and punished by the company, with the illegal proceeds returning to the company. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　If a director or a manager is found to have violated this law by using the property of the company to provide collateral for the debts of shareholders or other individuals, he (she) shall be ordered to cancel the collacteral and be liable to compensation and the proceeds arising from illegal provision of the collateral shall belong to the company. If the case is very serious, punishments shall be meted out by the company.

　　Article 215 If a director or a manager is found to have violated this law by conducting, in person or in cooperation with others, businesses similar to the company's, he (she) shall be punished by the company concerned and the proceeds arising from the businesses concerned shall belong to the company.

　　Article 216 If a company is found to have failed to draw from its profits statutory common reserve or public welfare funds as provided for by this law, it shall be ordered to make good the due amount and imposed a fine ranging from RMB10,000 to RMB100,000.

　　Article 217 If a company fails to notify creditors or make a public announcement about its merger or division or reduction of registered capital or liquidation as provided for by this law, it shall be ordered to correct and imposed a fine ranging from RMB10, 000 to RMB100,000.

　　If a company is found in the process of liquidation to have concealed its property, made false reports about its balance sheet or list of assets or distributed its property before clearing debts, it shall be ordered to correct and imposed a fine from one to five percent of the amount of property concealed or distributed before clearing debts. The person(s) in charge and other people directly responsible shall be fined for a sum RMB10,000 to RMB100,000. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 218 If a liquidation group fails to submit its liquidation report to the company registration department as provided for by this law or concealed important facts or missed important items, it shall be ordered to correct.

　　If a member of a liquidation group is found to have abused his (her) power to seek personal gains by resorting to deception, or peculated the company's property, he (her) shall be ordered to return the property to the company, have the illegal proceeds confiscated and be imposed a fine one time to five times the amount of the illegal proceeds. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 219 If an organization undertaking assets or investment appraisal or inspection is found to have provided false certificates, the illegal proceeds shall be confiscated and a fine one time to five times the illegal proceeds shall be imposed and the organization shall be ordered by department in charge to stop operation. Qualification certificate(s) to the person(s) directly in charge shall be revoked. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　If an organization undertaking assets or investment appraisal or inspection is found to have provided reports with major omissions due to negligence, it shall be ordered to correct and if the case is fairly serious, a fine one time to three times the income shall be imposed and the organization shall be ordered to stop operation by department in charge according to law. The qualification certificate(s) of the person(s) directly in charge shall be revoked.

　　Article 220 If the department in charge authorized by the State Council is found to have granted the approval to applications for establishing a company which fails to meet the requirements as provided for by this law or granted approval to applications for issuing stocks falling short of the requirements, administrative punishments shall be meted out to people in charge and other persons directly responsible if the case is serious. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 221 If the securities administration department of the State Council is found to have granted approval to application for public offers of shares, a stock listing or issue of bonds which does not conform to the prescribed conditions, people in charge and other persons directly responsible shall be subject to administrative punishments if the case is serious. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 222 If a company registration department is found to approve registration that does not meet the prescribed requirements, people in charge and other persons directly responsible shall be subject to administrative punishments if the case is serious. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 223 If a higher-level department is found to have forced the company registration department to approve a registration that does not conform to the requirements or cover up the illegal registration, people in charge and other persons directly responsible shall be subject to administrative punishments if the case is serious. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 224 If a company without a legal registration is found to have used the name of a limited liability company or a joint stock company limited, it shall be ordered to correct and may also be fined from RMB10,000 to RMB100,000. If the case is serious enough to constitute a crime, criminal responsibility shall be affixed according to law.

　　Article 225 If a company fails to open business after six months or more of its establishment without justifiable reasons or has suspended its operations for more than six months in succession after starting operation, its business license shall be revoked.

　　If a company fails to go through alteration registration procedures as provided for by this law when changes have taken place, it shall be ordered to register within a prescribed time limit. If it fails to register within the time limit, a fine ranging from RMB10,000 to RMB100,000 shall be imposed.

　　Article 226 If a foreign company has violated the provisions of this law and set up branches inside China without approval, it shall be ordered to correct or close down the branch and be imposed a fine ranging from RMB10,000 to RMB100,000.

　　Article 227 If a department in charge for examination and approval according to this law refuses to grant an approval to the establishment or a company registration department refuses to grant the approval to the registration of a company which has meet prescribed requirement for establishment or registration, a review may be applied or an administration suit may be filed for the case.

　　Article 228 If a company has violated the provisions of this law, it shall bear the civil responsibility of compensation and pay fines and pecuniary penalty and if the amount of property is not enough to pay for the three, it should firstly make compensation for civil responsibility.

　　CHAPTER ELEVEN SUPPLEMENT PROVISIONS

　　Article 229 If a company is registered before the implementation of this law in accordance with a provious law, administrative decrees or local regulations and the provisions of "Convention on Limited Liability Company" and "Convention on Joint Stock Company" formulated by the department of the State Council in charge, it may continue its operation and those company which cannot meet the requirements as provided for by this law should create the conditions so as to meet the necessary requirements. Specific procedures for the implementation of this law shall be separated formulated by the State Council.

　　Article 230 This law shall come into effect as of July 1, 1994.