The Establishment， Modification and Termination of the Enterprise

Article 16 The establishment of the enterprise must conform to the law and the relevant provisions of the State Council， and the application for the establishment must be submitted to the government or the competent department of the government for examination and approval. The enterprise shall obtain the status of a legal person after it is approved by， registers itself with and receives a business license from the administrative authorities for industry and commerce.

The enterprise shall carry out its productive and operational activities within the approved and registered scope of operation.

Article 17 An enterprise must meet the following qualifications for its establishment：

1） Its products are needed by society；

2） It has access to the required energy sources， raw and processed materials， and communication and transportation facilities；

3） It possesses a name of its own and premises for production and operation；

4） It possesses funds in conformity with state provisions；

5） It possesses its own organizational structure；

6） It has a definite scope of operation； and

7） Other qualifications as provided by the laws and regulations.

Article 18 The merger of enterprises or the division of an enterprise shall be subject to approval by the government or the competent department of the government in accordance with the provisions of the laws and administrative rules and regulations.

Article 19 An enterprise shall be terminated for any of the following reasons：

1） being abolished due to its violation of the laws and regulations；

2） being dissolved by decision of the competent department of the government made in accordance with the provisions of the laws and regulations；

3） being declared bankrupt in accordance with law； or

4） other reasons.

Article 20 When an enterprise is merged with another enterprise or other enterprise or when it is divided or terminated， its property must be protected and its claims and debts shall be liquidated according to law.

Article 21 The modification of registered items such as the merger of enterprises and the division or termination of the enterprise， and the scope of operation shall be subject to approval by and registration with the administrative authorities for industry and commerce.