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                                       (Valid From:1996.01.04)

These Rules are hereby formulated in line with the stipulations in Article 44 of the Law of the
People's Republic of China on Certified Accountants.

1. The establishment of resident offices in China by overseas public accountants firms shall be
approved by the Chinese Ministry of Finance.

2. The Ministry of Finance authorizes the Chinese Association of Certified Accountants
(hereinafter referred to as the Association) to handle the examination of applications and exercise
professional supervision of resident offices once the establishment of these resident offices is
approved. As for the supervision and management of resident offices outside Beijing, provincial
associations of certified accountants may be entrusted by the Association.

3. Applicants applying for the establishment of resident offices in China shall submit the following
documents to the Association:

1) Application letter signed by the top leader of the applying firm (with Chinese translation). The
contents of the letter shall include the Chinese name registered by the firm in China (with its
original English name attached), the site of the resident office, and the names of the chief
representative and the resident representative.

2) Copy of registration certificate provided by the relevant authorize in the place where this firm is

3) Credit certificates of the banks and financial institutions with which the firm corresponds.

4) Certificates of appointment of the chief representative or the resident representative signed by
the top leader of the firm; education, work experience, and profession summary of the chief
representative, the resident representative, and the resident staff; and copies of the passports or
identifications cards of the people mentioned above and other certificates of professional

5) Copies of the articles of association of the firm and contracts between the partners.

6) Copy of the contract on the lease of office for the resident office, and mailing address, post
code, and telephone and fax numbers of the office.

7) Brief introduction of the firm. The contents shall include the distribution of its resident offices,
description of the partners and staff, organizational setup, trades and distribution of its clients,
sum total of annual incomes, method of income distribution, method for the signing of business
reports, way for the introduction of businesses between member firms and the headquarters,
method of charging, and sharing of administrative expenses of the headquarters.

4. After receiving applications, the Association shall make a decision on approval or disapproval
within two months. Those found to be qualified after examination shall be issued certificates of
approval by the Ministry of Finance.

5. The business scopes of the resident offices of overseas public accountants firms include:
providing of accounting, tax and other services to foreign clients who come to invest or do
businesses in China, and providing of information, international tax, and other consulting services
to relevant Chinese units.

6. The certificate of approval of resident offices shall remain valid for three years. A resident office
shall be disbanded automatically if no application is submitted for prolonging it upon expiration.
Procedures for obtaining the certificate of approval to application for prolonging the time limit shall
be gone through in three months' advance. Apart from submitting documents listed in Article 2 of
these Rules, business reports for the recent three years and copies of the original certificate of
approval shall be presented.

7. The public accountants firm that applies for the establishment of a resident office in China shall
not apply in the name of a member firm of an international public accountants firm.

8. In case of removal of offices and replacement of staff, alteration procedures shall gone through
in one month's advance to obtain approval.

9. The resident staff of a resident office shall stay in China for at least more than one year and
shall possess a copy of the contract on the lease of the residence for more than one year.

10. The certificates of appointment of resident staff may be signed either by the top leader of a
firm or by the chief representative authorized by the top leader.

11. No resident office shall employ Chinese certified accountants.

12. The overseas public accountant firm that has set up Sino-foreign joint venture public
accountant firm, branches, or member firms in China shall not set up resident offices in the same
city. If such stablishment had taken place before the promulgation of these Rules, the resident
offices shall be disbanded within three months after the promulgation of these Rules.

13. Resident offices shall not take up businesses other than stipulated in Article 5 of these Rules.
Those that engage in auditing businesses illegally shall be ordered by financial departments at
and above the provincial level to stop such businesses in line with stipulations of the Accounting
Law of the People's Republic of China, and their illegal incomes shall be confiscated with a fine
one to five times these incomes. If the case is serious, the registration of the resident office shall
be cancelled and the firm shall not be allowed to set up any resident offices in China for five years.

14. Fees shall be paid in line with regulations for various procedures such as the application for
the establishment of resident offices, extension of the terms of operation, alteration of contents,
invitations and other correspondence needed for the entry and exit visas, and residing.

15. Resident offices shall submit to the Association reports on their business activities in the
previous year in January of each year.

16. Public accountants firms in Hong Kong, Macao and Taiwan that hope to set up resident
offices on the Chinese mainland shall abide by these Rules.

17. These Rules shall take effect on the date of promulgation.

Source: Official Website of Ministry of Commerce of the PRC

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