Provisional Rules for Foreign Investment in Cinemas

(Promulgated on November 25，2003 by the State Administration of Radio，Film and Television as Decree No.21 and effective as of January 1，2004)

Article 1　These rules are enacted in accordance with the Sino-Foreign Equity Joint Venture Enterprises Law，the Sino-Foreign Cooperative Joint Venture Enterprises Law，and the Regulations for the Administration of Films and other relevant laws and regulations in order to accommodate the requirements of reform and opening up，to attract foreign funds，to introduce advanced technology and equipment，and to promote the prosperity and development of the film industry in China.

Article 2　These rules are applicable to the establishment of Sino-foreign equity joint ventures organizations or individuals(hereinafter referred to as the foreign joint venture party)together with Chinese companies or enterprises(hereinafter referred to as the Chinese joint venture party)，in accordance with the principles of equality and mutual benefit and with the approval of the Chinese government，to set up and renovate cinemas and engage in the filmscreening business.

Article 3　Foreign investors are not permitted to establish wholly foreign-owned cinemas or cinema chain companies.

Article 4　A foreign-invested cinema shall satisfy the following conditions:

(1)it shall comply with the local arrangement of and planning for cultural facilities; (2)its registered capital shall not be less than RMB 6 million; (3)it shall have fixed business premises(for film screening);

(4)in the case of a Sino-foreign equity joint venture cinema，the Chinese joint venture party's equity share in the registered capital shall not be less than 51%.The foreign joint venture party's maximum equity share in the registered capital of Sino-foreign equity joint venture cinemas established in the pilot cities of Beijing，Shanghai，Guangzhou，Chengdu，Xi'an，Wuhan and Nanjing shall not exceed 75%;

(5)the terms of the joint venture shall not exceed 30 years;and

(6)it shall conform to relevant Chinese laws，regulations，and rules.

Article 5　Where the Chinese joint venture party invests state-owned assets(other than cash investments)，relevant procedures shall be undertaken in accordance with the relevant regulations for themanagement of such assets.

Article 6　The procedures to apply for approval to establish a foreign-invested cinema are as follows:

(1)The Chinese joint venture party must apply to the local provincial-level administration for industry and commerce and submit the followingmaterials

1.a project application for the establishment of a foreign-invested cinema;

2.documents certifying the legal person status of the Chinese joint venture party，relevant documents regarding the land-use rights for the cinema，and a credit reference letter issued by said party's bank;

3.documents certifying the qualification of the foreign joint venture party，a credit reference letter issued by its bank，and documents certifying its financial status issued by an accounting firm;

4.the name pre-approval notice of the foreign-invested cinema issued by the administration for industry and commerce;

5.a feasibility study report，contract，and articles of association;and

6.any other materials as required by laws，regulations，and the relevant approval authority.

(2)The local provincial-level administration for industry and commerce shall examine and approve the application in accordance with state laws and regulations regarding foreign investment after it has solicited the opinion of the provincial administration of film，and shall then，for recording purposes，file the application with the Ministry of Commerce，the State Administration of Radio，Film and Television，and the Ministry of Culture.If approved，a Foreign-Invested Enterprise Approval Certificate shall be issued to the foreign-invested enterprise.

(3)A foreign-invested cinema that has secured approval for establishment shall，within onemonth of receiving the Foreign-Invested Enterprise Approval Certificate，present the said certificate to the provincial-level administration for industry and commerce and undertake the necessary registration procedures.

(4)A foreign-invested cinema that has completed its construction or refurbishmentmay only engage in the film-screening business after it has been inspected and approved of by the relevant departments as being up to standard and having obtained a Film Screening Operating Permit from the provincial-level administration for film on the strength of its Foreign-Invested Enterprise Approval Certificate and Business License.

Article 7　Changes in the equity or investment amount of an established foreigninvested cinema shall be handled in accordance with the procedures set forth in Article 6 hereof.

Article 8　Foreign-invested cinemas must comply with relevant state laws and regulations，carry out business activities in accordance with the Regulations for the Administration of Films，and accept the supervision and administration of relevant Chinese government departments.Those films screened must have a Film Screening Operating Permit issued by the State Administration of Radio，Film and Television.Cinemas shall not screen smuggled or pirated films or engage in the commercial screening of videotapes，VCDs or DVDs.

Article 9　Foreign-invested cinemas providing other auxiliary entertainment services must do so in compliance with the relevant state regulations.

Article 10　The establishment on the Mainland of enterprises that engage in the filmscreening business by investors from the Hong Kong Special Administrative Region，the Macau Special Administrative Region，or Taiwan shall be handled with reference to these rules.

Article 11　These rules and the appendix hereto shall take effect as of January 1 2004.The Provisional Rules for Foreign Investment in Cinemas jointly promulgated on October 25，2000 by the State Administration of Radio，Film and Television，the Ministry of Foreign Trade and Economic Cooperation，and the Ministry of Culture shall be simultaneously repealed.

Appendix:

To build a closer economic and trade relationship between the Mainland and Hong Kong，and between the Mainland and Macau，and to encourage Hong Kong and Macau service providers to establish enterprises on the Mainland that engage in the film-screening business，pursuant to the Closer Economic Partnership Arrangement Between the Mainland and Hong Kong and the Closer Economic Partnership Arrangement Between the Mainland and Macau，both approved by the State Council，the following special rules have been created governing investment in cinemas by Hong Kong and Macau service providers as referred to in the Provisional Rules for Foreign Investment in Cinemas，namely:

1.As of January 1，2004，Hong Kong and Macau service providers will be permitted to build，renovate，and operate cinemas on the Mainland in the form of equity joint ventures or cooperative joint ventures and are permitted to own amajority equity share of up to 75%.

2.Other provisions regarding investment in Mainland cinemas by Hong Kong and Macau service providers shall be implemented with reference to the Provisional Rules for Foreign Investment in Cinemas.