53. What kind of land must be obtained through the granting of land- using right?

54. How are the time limits and means for the granting of land-use right regulated?

55. What are the main contents of the granting contract of land-using right?

56. What are the basic requirements for development, utilisation and management of the land?

57. What if the violation of the land administration regulations occurs?

58. Can the land-using right be re-transferred?

59. What if the granting period of the land-using right expires?

60. Are there any basic regulations for the foreign investors to develop domestically sold real estate?

61. What's the difference between the name and object of charge collection for the requited granting of land-using right?

The land must be obtained by means of granting of land use right if any of the following situations occurs:

1. Land for projects of commerce, tourism, entertainment, finance, service, commercial buildings, etc.

2. The land user is overseas natural person, legal person or other organisations, except for those otherwise stipulated in the law.

3. Other circumstances stipulated by laws, regulations and rules of municipal government.

5. The collective-owned land must be converted to State-owned land before its land-using right can be transferred.

54. How are the time limits and means for the granting of land-use right regulated?

(I) The maximum time limits for granting of land-using right is determined according to its purpose as shown below:

a. Land for residence purpose: 70 years;

b. Land for industrial purpose: 50 years;

c. Land for the purposes of education, scientific research, culture, public health and sports: 50 years;

d. Land for commercial, tourist and recreational purposes: 40 years;

e. Land for comprehensive or other purposes: 50 years;

(2) The following methods can be adopted for the granting of land-using right:

a. by agreement;

b. by tender;

c. by auction;

d. other means approved by the Municipal Government.

The granting of land-using right for commercial, tourist, recreational and luxury residence purposes should be done by tender or auction. Details are stipulated by the Municipal Government separately.

55. What are the main contents of the granting contract of land-using right?

(1) The foreign investor shall sign the contract concerning the granting of using right of state-owned land directly with Shanghai Real Estate Administration Bureau, otherwise the contract will be invalid.

The contract of the wholly foreign owned projects should be signed between foreign investors and Shanghai Real Estate Administration Bureau, while for the joint-venture and cooperative enterprise, it should be signed among foreign investor, Chinese partners and Shanghai Real Estate Administration Bureau.

(2) The following items should be included in the contract:

a) Both parties of Grantor and Grantee;

b) The location of the land, its surroundings and area;

c) The planned use of the land and technical parameter for the planning;

d) The term of the granting of the land;

e) The amount, payment and term of land granting fee;

f) The responsibility, expense undertaking and completion deadline for the demolition of original buildings, other constructions and accessories on the land;

g) The responsibility for the requirement and expenses undertaking of the public utilities related to the land;

h) Delivery time of the land granted;

i) Start and completion date of the construction of the project;

j) Both parties' rights and liabilities after the termination of the granting of land-using right;

k) Responsibility concerning violating of the contract;

I) Settlement of disputes;

m) Other items reached by two parties.

The planned requirements and figures of the land provided by the City's Planning and Administration Bureau according to the approved detailed plan should he attached to the contract. The contract should refer to the standard form, which is regulated by Shanghai Municipal Real Estate & Land Administration Bureau.

56. What are the basic requirements for development, utilisation and management of the land?

The grantee shall develop, utilise and manage the land according to the planned use and planning requirements, duration and conditions of the development stipulated in the contract. If the grantee develops real estate on the land, it shall follow the relevant applying and examining procedures respectively according to the regulations by Departments of Planning and Administration, Construction, Real Estate Administration, Transportation, Hygiene, Environment Protection, Environmental Sanitation, Fire Prevention and other administrations.

57. What if the violation of the land administration regulations occurs?

The land administration departments can penalise the grantee who violates the terms stipulated in the contract such as the developing period or conditions according to the relevant laws and regulations and can even withdraw the land-using right freely following relevant legal procedures under a worse situation.

58. Can the land-using right be re-transferred?

I) The grantee can re-transfer, collateralize and lease the land-using right or engage in other economic activities legally permitted within the granting period according to the contract and relevant laws and regulations. The new grantee shall continue to follow the contract, fulfil the liabilities and enjoy the rights after the re-transfer.

2) The on-land buildings, constructions and accessories should be transferred together with the land-using right.

59. What if the granting period of the land-using right expires?

1) If it's necessary for the grantee to continue using the land after termination, the grantee shall apply for extension no later than one year before termination, The grantee's application should be approved unless the land- using right must be withdrawn for the need of social public benefit. After getting the approval of the extension, the grantor and grantee shall sign a new contract and the grantee shall pay the granting fee according to the regulations.

2) lf the grantee doesn't apply for extension or the application is not approved, the land-using right will be withdrawn freely. The buildings, constructions and accessories should be handled according to the contract.

60. Are there any basic regulations for the foreign investors to develop domestically sold real estate?

1) The developing of domestically-sold real estate by foreign investors in the area included in the old district remould plan by the Municipal Government with concentrated jeopardised houses, slums, shabby houses and second level lanes (with over 70% construction area in which the construction area of jeopardised houses, slums and shabby houses count for over 50%) can enjoy relevant favourable policies.

2) The government will provide the land for the investment in areas concentrated with jeopardised houses, slums and shabby houses. The investor can get the land-using right by the same way as the state owned land-using right is granted and can enjoy a favourable granting price which is decided by the District Government according to the specific location. The gaining from land-using right shall be delivered to the Municipal Government according to the following calculation standard:

a) Annual land-using fee of foreign invested enterprises multiplies by five years if the volume rate is under 1.8 (including 1.8);

b) Annual land-using fee of foreign invested enterprises multiplies by five years and by 50% for the surpassing part if the volume rate is over 1.8. (see the granting fee standard in the table in question 61)

3) Other than the favourable price, such projects can also enjoy different reduction of granting fee according to different location grade from the third grade location on:

10% reduction for the third grade location; 20% reduction for the fourth grade location;

30% reduction for the fifth grade location.

4) The maximum time limit for the granting of land-using right for the developing of domestically-sold real estate by foreign investment is 70 years. The ownership of the property of the domestic buyer can refer to the regulation for administration of domestic-sold real estate.

5) The investor is responsible for the removal and resettlement expense involved. The public utilities can be constructed by the relevant departments with the expense covered by the investor or by the investor himself with the approval from the relevant government authorities.

6) The granting contract of land-using right should be signed and relevant examining and approval procedures should be followed for the developing of domestically-sold real estate by foreign investment. The contract should include the following items other than the things stipulated by the regulations:

a) The customer of the real estate shall be domestic individual or enterprises, institutional organisations, government departments, other organisations and etc.

b) The grantee of the land-using right shall not only enjoy the rights but also fulfil obligations stipulated in the contract;

7) A project company for a specific piece of land or a comprehensive real estate company shall be established for the developing of the land;

8) The removal and resettlement base essential for the developing of domestically-sold real estate by foreign investment should be included in the old district remould plan by the District Government which is also responsible for the co-ordination and settlement.

9) The removal of houses and accessories can refer to the relevant regulations of house removal administration.

Those who require to be resettled in the original area can be resettled with requital, which means that they can buy the houses according to the following regulations:

a) at the cost price for the part under the resettlement area;

b) at the market price for the part over the resettlement area;

c) the buyers have the property rights.

10) The removal of the house should be organised and executed by the Government. The unit which is responsible for the actual removal will charge 3% of the total expense of removal as the management cost.

11) A new granting contract of land-using right shall be signed according to the regulations for the granting of land-using right if the real estate is sold to foreigners. And an extra fee should be paid to meet the granting price of the land-using right of foreign-sold real estate.

61. What's the difference between the name and object of charge collection for the requited granting of land-using right?

1) Land granting fee can be defined as the fee paid for the land-using fight for several years at one time for the land for commercial, tourist, recreational, service and real estate purposes except the developing of domestically-sold real estate by foreign investment.

The granting fee of the first grade location land in the downtown shall be decided by the means of bidding or auction. The fee of the land in the other areas can be negotiated and decided among the unit using the land originally, the developer and the land administration department according to different nature and location of the land.

2) Land using fee can be defined as the fee paid to the state-owned land administration department at 1 RMB per square meter per year in the duration of land using besides the land granting fee.

3) Land using price can be defined as the fee paid annually for some foreign investment projects that already began their business without going through the land leasing procedure and some co-operative projects except real estate ones according to the fee schedule:

99. How does foreign or Taiwan, Hongkong and Macao enterprise apply for the establishment of Representative Office in Shanghai?

If a foreign, Hongkong, Taiwan or Macao enterprise (referred to trading company, manufacturer, forwarding agent, contractor, consulting company, advertising company, holding company, and leasing company) intends to establish a representative office (a non-direct-operational institution representing its enterprise to engage in such activities as liaison services, marketing survey, product introduction and technical exchange), it shall entrust Shanghai Foreign Investment Service Centre (SFISC) or other sponsors authorised by the government authority according to the nature of its business to apply to the Shanghai Municipal Commission of Foreign Economic Relations and Trade. Once approved, the foreign enterprise shall register to ICAB of Shanghai with the Certificate of Approval within thirty days.

1 00. What sort of documents and materials shall be presented when an application is made?

When applying for the establishment of a representative office, a foreign or Hongkong, Taiwan and Macao enterprise shall submit the following papers and materials:

(1) The application with the signature of either the Chairman of the Board or the General Manager of the enterprise including brief introduction of the enterprise, purpose to set up a representative office, the name of its representative office, names of the chief representative and representatives (if any) and business scope, its duration and its address, etc;

(2) A legal business-opening certificate issued by the competent authorities of the country or region where the applicant is located (copy);

(3) A letter issued by a financial institution which has business relations with the applicant testifying its financial and credit standing ( original);

(4) A letter of attorney issued by the Chairman of the Board or the General Manager for the chief representative and representative (if any) of its office and their curriculum vitae and identity cards (copy). If the Chairman of the Board happens to be the chief representative or representative, the letter should be co-signed by at least another two directors. For those enterprises, which have no Board of Directors, the letter should be signed by the executive director.

(5) Two application forms for establishment and personnel arrangement.

(6) Other documents the government considers necessary.

A foreign financial institution or a foreign insurance company or a foreign stock exchange shall submit, in addition to the documents and materials mentioned above, the organisation charter of its general company, the name list of the directors and its latest annual report about its capital, debt, profit and loss.

101. Is there any regulation about the location of a resident representative office?

A representative office can either entrust Shanghai Foreign Investment Service Centre (SFISC) to find a place as its office or choose by itself from among the hotels and office buildings designated by the SMERT and rent it.

102. What other formalities must be handled apart from registering with the ICAB? (Industrial and Commercial Administration Bureau)

(1) Apart from registering to the ICAB, the representative office shall go through such procedures as preparing official seals, applying for institution code certificate, opening foreign exchange expenditure account and register to the tax bureau step by step;

(2) The foreign representatives shall apply for health certificate, working permission certificate, working visa and long term residence permits;

(3) Register and declare at the Customs Office if there are self-use cars, office appliances and home appliances imported.

103. Which company can be entrusted to engage Chinese employees for a representative office?

A representative office can entrust the Shanghai Foreign Service Company, International Technology & Intelligence Co-operation Company of China or China's Sida Co-operation Company of International Economy and Technology to handle it if it needs to take on Chinese employees. Both the employer and the employee shall sign the employment contract. A representative office is not allowed to take on employees by itself.

104. What's the maximum time limit of a Representative Office for one approval? How long does the business registration certificate remain in force?

The maximum time limit for a Representative Office approved for one time is three years and if it's necessary, the foreign enterprises shall apply to the Shanghai Municipal Foreign Economic Relations and Trade Commission for extension through original sponsor at least sixty days before termination. Ale valid term of business registration certificate for a Representative Office is one year. The Representative Office shall apply for extension to the Administration Bureau of Industry and Commerce 30 days before termination and at the same time present a business summary of one year.

105. What shall be done if a representative office wants to amend the contents of registration?

If it wants to change the name, its chief representative or representatives, its business scope, it duration or its address, a representative office shall entrust the original sponsor to apply to SUERT (Shanghai Municipal Foreign Economic Relations and Trade Commission). Once approved, it can handle its amendment at the ICAB with the certificate of approval.

106. How are the cancellation procedures followed when the Representative Office terminates or winds up operation before termination?