· Document Number： No. 69 [2017] of the General Office of the State Council

· Area of Law： Companies

· Level of Authority： Regulatory Documents of the State Council

· Date issued：07-18-2017

· Effective Date：07-18-2017

· Issuing Authority： General Office of the State Council

· Status： Effective

Notice of the General Office of the State Council on Printing and Distributing the Implementing Plan for Corporate-style Restructuring of Central Enterprises
(No. 69 [2017])
The people's governments of all provinces, autonomous regions and municipalities directly under the Central Government, and all ministries and commissions of, and institutions directly under, the State Council:
The Implementing Plan for Corporate-style Restructuring of Central Enterprises, approved by the State Council, is hereby printed and distributed to you for earnest compliance.
General Office of the State Council
July 18, 2017
Implementing Plan of the Corporate-style Restructuring of Central Enterprises
The corporate system is an effective organizational form of the modern enterprise system, and is also a necessary condition for establishing a modern State-owned enterprise ("SOE") system with Chinese characteristics. After years of reform, 90% and more of the SOEs across the country have completed corporate-style reform, which has effectively advanced the separation of government and business functions in SOEs, gradually improved the corporate governance structures of SOEs, and progressively raised the level of their operations and management. Nevertheless, certain SOEs, in particular, certain central enterprises at the group level, have not yet completed corporate-style restructuring. Pursuant to the Guiding Opinions of the CPC Central Committee and the State Council on Deepening the Reform of State-owned Enterprises, decisive achievements shall be made by 2020 in the important areas and critical aspects of SOE reforms. Furthermore, according to the requirements laid down at the Central Economic Work Conference and in the Government Work Report, the corporate-style restructuring of SOEs shall be largely competed by the end of 2017. Pursuant to relevant deployments and requirements of the CPC Central Committee and the State Council, this Implementing Plan is formulated with a view to pushing central enterprises to accelerate the completion of their corporate-style restructuring.
1. Target tasks
The following tasks shall be accomplished by the end of 2017: central enterprises (excluding central financial or cultural enterprises) that are registered in accordance with the Law of the People's Republic of China on Industrial Enterprises Owned by the People and are regulated by the State-owned Assets Supervision and Administration Commission of the State Council shall all be restructured into limited liability companies or companies limited by shares that are registered in accordance with the Company Law of the People's Republic of China; and, efforts shall be made to speed up the formation of a corporate governance structure with effective checks and balances and flexible and efficient market-oriented operating mechanisms.
2. Standardized procedures
(1) Restructuring plans shall be developed. To push forward corporate-style restructuring, a central enterprise shall, pursuant to the requirements of the modern enterprise system and in light of its actual circumstances, develop a practical restructuring plan to specify matters such as the method of restructuring, the set-up of the property rights structure, the disposal of claims and liabilities, corporate governance arrangements, labor, personnel and distribution system reforms, etc., and draft or amend its articles of association pursuant to relevant provisions.
(2) Examination and approval procedures shall be tightened. Where a central enterprise is to be restructured into a solely State-owned company at the group level, the proposed restructuring shall be approved by the institution authorized by the State Council to perform the duties of an investor; and, where it is to be restructured into an enterprise with diversified equity, the proposed restructuring shall be approved by the institution that fulfills the duties of an investor after reporting to the State Council for approval under relevant procedures. The restructuring of the subsidiaries of a central enterprise shall, unless otherwise prescribed, be subject to examination and approval procedures in accordance with relevant internal provisions of the central enterprise.
(3) Registered capital shall be determined. Where a central enterprise is to be restructured into a solely State-owned company or a wholly-owned subsidiary of a State-owned or State-controlled enterprise, its audited net asset value of the preceding year may be taken as the basis for determining the registered capital of the restructured company upon change of industrial and commercial registration, and asset assessment shall be conducted before the expiry of the capital contribution subscription period stipulated in its articles of association. Where a central enterprise is to be restructured into an enterprise with diversified equity, the procedures for asset liquidation and capital verification, financial audit, asset assessment, market place transactions, etc. shall be gone through in accordance with relevant provisions, and the assessed value of assets shall be taken as the basis for subscribing to capital contribution.
3. Policy support
(1) Disposal of allocated land. As regards an enterprise that has been approved by the relevant people's government at or above the provincial level to engage in authorized business operations or that holds the qualifications of State-authorized investment institutions, its original allocated land may be disposed of by State-funded capital contribution (share investment) or authorized business operations. Where an enterprise owned by the people is restructured into a solely State-owned company or a wholly-owned subsidiary of a State-owned or State-controlled enterprise, its original allocated land may retain the nature as such in accordance with relevant provisions.
(2) Support in the form of preferential tax treatment. An enterprise engaging in corporate-style restructuring shall, in accordance with relevant provisions, enjoy preferential taxation policies in terms of the appreciation of assessed asset value, the change of land registration, the gratuitous transfer of State-owned assets, etc. that are involved during restructuring.
(3) Change of industrial and commercial registration. Where an enterprise owned by the people is to be restructured into a solely State-owned company or a wholly-owned subsidiary of a State-owned or State-controlled enterprise, the parent company may first go through restructuring and change its industrial and commercial registration, and its subsidiaries or public institutions shall complete restructuring or be converted into enterprises within the prescribed time limit. Where an enterprise owned by the people is to be restructured into an enterprise with diversified equity, its subsidiaries or public institutions shall be restructured or converted into enterprises first before the parent company completes restructuring and changes its industrial and commercial registration.
(4) Succession to eligibility and qualifications. Where an enterprise owned by the people is restructured into a solely State-owned company, a wholly-owned subsidiary of a State-owned or State-controlled enterprise or a State-owned holding company, the various professional or special qualification certificates and permits obtained by the said enterprise in the course of business shall be succeeded to by the company after the restructuring. The restructured enterprise shall, within one month after the change of industrial and commercial registration, go through the procedures for changing enterprise name and other matters recorded on qualification certificates and permits with relevant departments.
4. Overall coordination and progress
(1) Party leadership shall be strengthened. The Party committee (group) of a central enterprise shall earnestly strengthen the organization and leadership of the restructuring work, and enforce the requirements on simultaneous planning for Party building, simultaneous establishment of the Party organization and work departments, simultaneous staffing of the Party organization head and staff responsible for Party affairs, and simultaneous development of Party work and those on alignment with institutions, mechanisms, systems and work pursuant to relevant provisions. It is imperative to give full play to the core leadership and political role of the Party organization of a central enterprise to ensure that Party leadership and Party building are fully embodied and effectively strengthened during enterprise restructuring; safeguard the legitimate rights and interests of workers pursuant to the law, and properly handle the relationship between and among enterprise reform, development and stability; and, promptly report the major issues encountered during restructuring to the CPC Central Committee and the State Council.
(2) Efforts shall be made to develop the modern enterprise system. A restructured enterprise shall, by focusing on promoting the development of its board of directors, standardize the exercise of power, make sure rights match responsibilities, and enforce and safeguard the rights of the board of directors to make major decisions, select and appoint personnel, determine remuneration distribution, etc. pursuant to the law. A restructured enterprise shall also adhere to two unwavering principles that the Party shall always have leadership over SOEs and that the direction of SOE reforms is to establish the modern enterprise system, unify the efforts to strengthen Party leadership with those to improve corporate governance, properly handle the relationship between the Party organization and its other governance bodies, make clear the boundaries of authority, and achieve seamless alignment, so as to form a corporate governance mechanism featuring coordinated operation and effective checks and balances under which all parties concerned perform their respective duties and responsibilities.
(3) Market-oriented operating mechanisms shall be improved. A restructured enterprise shall continuously deepen the reforms of the labor, personnel and distribution systems, establish and improve the mechanism for deciding the amount and normal increment of salaries that is largely adaptable to the labor market and is pegged to its economic performance and labor productivity, improve the market-oriented employment system, and rationally increase the gap of income distribution, in a bid to form a truly market-oriented personnel selection and appointment mechanism whereby management personnel are promoted and demoted, staff members are recruited and let go, and salaries are increased or cut, based on merits.
(4) Efforts shall be made to prevent the loss of State-owned assets. It is required to standardize operations and strictly go through decision-making procedures pursuant to laws, regulations and the provisions on the restructuring of SOEs, the management of State-owned property rights, etc. during the process of corporate-style restructuring; fine-tune financial supporting policies, safeguard the legitimate rights and interests of stakeholders, and ensure financial claims can be effectively realized; strengthen the regulation of the entire restructuring process, adhere to the principle of openness and transparency, and strictly prohibit under-the-table practices and the transfer of benefits; and, properly disclose information, strengthen interim and ex post regulation, and consciously accept public oversight.
The clean-up, rectification and corporate-style restructuring of the enterprises run by Central Party and government organs as well as public institutions shall be subject to separate provisions prescribed in accordance with the requirements of national centralized and unified regulation. All provincial people's governments shall, by reference to this Implementing Plan, provide local SOEs with guidance in their corporate-style restructuring.