深圳经济特区创业投资条例 Regulations of Shenzhen Special Economic Zone on Venture Capital

ation of corresponding modifications.

　　Article 21 The investors of venture capital management institution shall contribute their whole declared capital before registration of the establishment.

　　Chapter IV Business Scope and Rules for Management

　　Section I Rules for Venture Capital Institutions

　　Article 22 A venture capital institution may carry out the following business：

　　（1） Investing in technological or other venture capital enterprises and projects；

　　（2） Providing management services for venture capital enterprises invested in by it； and

　　（3） Other business as allowed by laws and regulations.

　　Article 23 A venture capital institution shall not practice the following activities：

　　（1） Engaging in those financial business such as absorbing deposits， providing loans， settling accounts， discounting bills， splitting and lending funds， trust investing， finance leasing and trading of foreign exchange or futures， etc.；

　　（2） Engaging in the business which may lead unlimited liability to its assets；

　　（3） Purchasing listed stock， but it shall be otherwise in the case that the held stock of an enterprise to be listed and in the case of stock swap， stock allotment and sales， stock presentation， etc.； and

　　（4） Other business as prohibited by laws and regulations.

　　Article 24 The total amount of investment invested in an enterprise by a venture capital institution shall not exceed 20% of the registered capital of the institution without being adopted by investors representing at least two third of the voting rights.

　　Article 25 A venture capital institution may withdraw its investment through merging， stock rights repurchasing and stock listing， etc……

　　Article 26 A venture capital institution may retain professional personnel who equipped with specialty qualification for venture capital or trust venture capital management institutions to manage its investment business.

　　Article 27 A venture capital institution may trust commercial banks to be trustees of its venture capital.

　　The venture capital instituti

on may trust the institution which approved by the Municipal Government to be trustee of its stock rights or stock of a venture capital enterprise.

　　Section II Rules for Venture Capital Management Institutions

　　Article 28 In the case that a venture capital institution trusts a venture capital management institution to manage its investment business， the two parties shall conclude a written contract of management by entrustment.

　　A contract of management by entrustment in generally includes the following clauses：

　　（1） The amount of venture capital for management by entrustment；

　　（2） The scope and restriction of investment and standard for selecting investment projects；

　　（3） Procedure for making investment decisions；

　　（4） The list of middle and higher management who will undertake the obligation of management of investment；

　　（5） The content of management services to be provided to the invested enterprises；

　　（6） Calculation and payment of costs for administration and reward for achievement；

　　（7） Term and termination of management by entrustment；

　　（8） Liabilities for breach of contract； and

　　（9） Manners for solution of disputes.

　　Article 29 The venture capital management institution carries out activities of risk investment in the name of the entrusting institution as agreed in the contract of management by entrustment.

　　Article 30 In the case that a trustee venture capital management institution carries out investment activities with capital of the entrusting institution， the trustee shall use its own capital， which shall not be less than 1% of the amount of actual investment， for synchronization investment， except otherwise agreed upon by the parties.

　　Synchronization investment shall abide by the principles of “buying and selling at the same time” and “same payment for same stock”。

　　Any venture capital management institution shall not carry out investment activities stipulated by Article 23 of these regulations and use its own capital to carry out investment activities other than synchronization investment.

　　Article 31 Before bringing forward advices for investment， a trustee venture capital management institution shall investigate the investment object prudently and completely disclose the investigation result to the entrusting institution.

　　In case that the venture capital management institution fails to disclose serious defect exists in the assets， debts or intellectual property right of the enterprise to be invested in due to willfulness or gross negligence， which results in investment loss to the entrusting institution， the trustee institution shall be liable for civil compensation according to law.

　　Article 32 In case that a trustee venture capital management institution and its employees have interest relationship with the object to be invested in， the institution shall completely disclose such interest relationship and accept inquiry at the time providing investment advices for the entrusting institution.

　　Article 33 A trustee venture capital management institution shall completely disclose information on the implementation of investment business to the entrusting institution in time and be liable for the authenticity， veracity and integrality of the information disclosed by it.

　　Article 34 A venture capital management institution may be trusted to manage investment business of several venture capital institutions. The trustee institution shall equally provide investment advices and disclose information for all the entrusting institutions， except otherwise agreed upon by relevant parties.

　　Article 35 A trustee venture capital management institution shall not embezzle entrusting venture capital or use the capital to provide a guaranty for itself or any third party， or deposit the capital into its own bank account.

　　Ch

apter V Encouragement and Preferential Policies

　　Article 36 The government shall encourage and support venture capital institutions to invest in those projects listed in the Guidelines for Investing Venture Capital in Hi-tech Industries and Projects， and provide policy direction and fund support according to need.

　　Article 37 The governmental subsidies for trial-produce of new technological products， midway experiments and important scientific research projects shall be used in priority to support such projects of venture capital enterprises.

　　Article 38 A venture capital institution may use all of its capital to carry out investment.

　　Article 39 In case the amount of investment in a project listed in the Guidelines for Investing Venture Capital in Hi-tech Industries and Projects invested by a venture capital institution has exceeded its registered capital or 70% of the total amount of its capital subscription， and thereinto the investment in the original enterprise is not less than 30% of the total amount of investment， such institution can enjoy preferential policy for hi-tech enterprises.

　　The accumulative total investment as described in the aforesaid paragraph shall include the investment which had been withdrew from the invested enterprise and encashed in the past five years before the date of calculation； the calculation of amount of investment of a venture capital institution shall base on the actual amount at the time of investing.

　　Article 40 A venture capital institution may set aside 5% of its gross income of the current year for risk subsidy fund to make up for the company's　losses　of　the　previous　year and current　year； The balance of the risk subsidy fund， which shall not exceed 10% of net assets value of the end of the current year， may be carried forward to next year.

　　Article 41 The proportion of capital subscription by a venture capital institution in an enterprise in hi-tech achievements shall not be limited， and the income distribution system that distributing on the basis of intellectual elements such as technology， share option and yearly pay scheme， etc. may be put into practice.

　　Chapter VI Supervision and Administration

　　Article 42 When implementing annual inspection over venture capital institutions or venture capital management institutions， the Municipal Industrial and Commercial Authority shall bring the information that whether the venture capital institutions or venture capital management institutions abide by relevant provisions of these regulations into the content for annual inspection， and report the result of the check or disposal result to the Municipal Technological Authority.

　　Article 43 In the case that the Municipal Industrial and Commercial Authority find the venture capital institutions or venture capital management institutions failing to conform with provisions of these regulations， the authority shall make the decision of disapproval of pass of annual inspection for those institutions.

　　Those venture capital institutions fail to pass the annual inspection shall be suspended of preferential policies arranged for them originally for one year， while in the same case those venture capital management institutions shall be suspended of being entrusted of new investment business for one year.

　　In the case that the Municipal Industrial and Commercial Authority find the venture capital institutions or venture capital management institutions failing to conform with provisions of these regulations for two continuous years， those institutions shall

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