(Adopted at the Sixth Meeting of the Standing Committee of the Third Shenzhen Municipal People’s Congress on March 22, 2001.)

Article 1 In order to maintain the normal economic order of Shenzhen Special Economic Zone (hereinafter referred to as Special Zone), investigate and punish the operation without license, these rules are formulated in accordance with the provisions of laws and regulations as well as the actual circumstances of Special Zone.

Article 2 “Operation without license” referred to in these rules means the activities of arbitrarily undertaking operation at the fixed site without having been approved and registered by the administrative department of industry and commerce and having received the Business License.

Operation without license includes the following activities:

(1) arbitrarily undertaking operation without having been approved and registered by the administrative department of industry and commerce in accordance with the law and having received the Business License;

(2) continuing the operation after the operator’s Business License having been revoked by the competent department for registration;

(3) continuing the operation after the registration having been cancelled;

(4) undertaking operation beyond the operating time limit checked and approved by the competent department for registration in accordance with the law;

(5) undertaking operation with the Business License acquired by renting, lending, transferring and other illegal means;

(6) other circumstances stipulated by laws and regulations.

Article 3 The administrative department of industry and commerce is the competent department for investigating and punishing the operation without license.

The comprehensive law enforcement departments of the municipal and district people’s government exercise the functions and powers of investigating and punishing the operation without license within the scope stipulated by laws and regulations.

Relevant administrative departments for tax, public security, city administration, land administration and so on shall, together with the administrative department of industry and commerce, investigate and punish the operation without license within the scope of their respective functions and powers.

Article 4 The investigation and prosecution of the operation without license shall abide by the principle of combing the clampdown with persuasion and combing the punishment with education.

Article 5 The administrative department of industry and commerce may exercise the following functions and powers in investigating and prosecuting the operation without license:

(1) to investigate and inquire the units and individuals relevant to the operation without license;

(2) to look up and duplicate the materials of contracts, bills, account books and so on relevant to the operation without license;

(3) to seal up and detain the materials, equipments, raw or supplementary materials, products (commodities) and so on relevant to the operation without license;

(4) to sequester the business place for the operation without license;

(5) other functions and powers stipulated by laws and regulations.

Article 6 Sequestering the business place for the operation without license according to the fourth paragraph of the proceeding article shall be under one of the following circumstances:

(1) the business place for the operation without license is illegal building;

(2) undertaking the production or operation that endangers the personal health and public security;

(3) undertaking operation without license and causing certain consequences;

(4) other circumstances stipulated by laws and regulations.

Article 7 If the administrative law enforcement personnel need to take or release the compulsory measures of sealing up, detainment and sequestration, etc, they shall report to the persons in charge of the municipal or district administrative department of industry and commerce in written for approval according to their duties and powers.

Article 8 The period of taking the measures of sealing up, detainment and sequestration shall not exceed 10 days at the longest; Under special circumstances, with an approval of the persons in charge of the municipal administrative department of industry and commerce, the period may be extended for 15 days.

After the parties having accepted the punishments, the measures of sealing up, detainment and sequestration shall be released without delay.

Article 9 When taking the measures of sealing up or detainment, the law enforcement personnel shall issue the notice of sealing up or detainment and draw up detailed list of properties on the spot, which shall be signed or sealed by the parties. The enforcement personnel shall deliver a copy to the parties. If the parties refuse to sign or seal, the notice and detailed list shall be signed and witnessed by more than 2 witnesses having no interests; If there are no witnesses or the witnesses refuse to sign, more than 2 law enforcement personnel may note the conditions in the notice and detailed list.

Article 10 The properties sealed up or detained shall be the properties that have direct relations with the operation without license. If the properties are found irrelevant to the operation without license, the competent department shall release the sealing up or detainment without delay and serve the notice of releasing the sealing up or detainment to the parties.

Article 11 When the administrative department of industry and commerce takes the compulsory measures of sealing up, detainment and sequestration, it shall seal the properties with the paper strip.

The properties sealed up or detained shall be under safekeeping and are prohibited to be used, exchanged or destroyed.

For the articles sealed up or detained that are liable to be putrid, deteriorated and other articles that are difficult or unsuitable to preserve, after extracting the evidences, the administrative department of industry and commerce may auction, sell off or take other measures to handle carefully and skillfully in advance according to law.

Article 12 For the operators without license, the administrative department of industry and commerce shall order them to stop the operating activities and impose the following punishments according to different circumstances:

(1) to impose a fine. The party that undertakes operation without license in the name of company shall be imposed a fine more than 20,000 yuan but less than 100,000 yuan; The party that undertakes operation without license in the name of partnership enterprise shall be imposed a fine more than 500 yuan but less than 5,000 yuan; The party that undertakes operation without license in the name of enterprise owned by an individual investor or in the name of individual business shall be imposed a fine more than 500 yuan but less than 3,000 yuan; Other operators without license shall be imposed a fine more than 5,000 yuan but less than 20,000 yuan;

(2) to confiscate the illegal gains;

(3) in case the party who refuses to accept the decisions of stopping the operating activities, its materials, equipments, tools, raw or supplementary materials, products (commodities), and other properties relevant to operation without license may also be confiscated;

The preceding punishments may be imposed separately or jointly.

Article 13 For the parties that provide the Business License of Enterprise to the operators without license by the means of renting, lending or transferring, the administrative department of industry and commerce shall confiscate the illegal gains and impose a fine more than 10,000 yuan but less than 30,000 yuan.

For the parties who provide the Business License of Individual Business for the operators without license by the means of renting, lending or transferring, the administrative department of industry and commerce shall confiscate the illegal gains and impose a fine more than 500 yuan but less than 20,000 yuan.

Article 14 For the parties that provide relevant certificates, contracts, bills or bank accounts for the operators without license, the administrative department of industry and commerce shall order them to rectify their activities within a prescribed time limit; If the parties fail to rectify their activities delinquently, the administrative department of industry and commerce shall confiscate the illegal gains and may impose a fine less than 20,000 yuan.

For the parties that provide the equipments, tools, raw and supplementary materials, places of business and other operating conditions for the operators without license, the administrative department of industry and commerce shall order them to rectify their activities within a prescribed time limit; If the parties fail to rectify their activities delinquently, the administrative department of industry and commerce shall confiscate the illegal gains and may impose a fine less than 20,000 yuan.

Article 15 If the parties move, exchange or transfer the properties sealed up according to law, the administrative department of industry and commerce shall order them to hand the properties over within a prescribed time limit and impose a fine more than 10 percents but less than 20 percents of the value of the moved, exchanged or transferred properties; If the parties fail to hand the properties over within a prescribed time limit, they shall be imposed a fine more than one time but less than 2 times of the value of the employed, exchanged or transferred properties.

Article 16 For the parties who demolish the seals arbitrarily, besiege or beat up the law enforcement officials, and resist or hinder the performance of the official business, the public security organization shall impose punishments to them according to the Regulations of the People’s Republic of China on Punishments in Public Order and Security Administration. If the circumstances are serious and constitute crimes, the judicial organization shall prosecute their criminal responsibilities in accordance with law.

Article 17 If the parties are not satisfied with the decisions of administrative punishment or administrative compulsory measures, they may apply for administrative appeal or file administrative lawsuits.

Article 18 If the parties refuse to fulfill the decisions of administrative punishment that have come into effect, the administrative department of industry and commerce may auction the properties sealed up or detained to offset the fine, or apply for coercive execution to the people’s court according to law.

Article 19 The administrative department of industry and commerce and its detached offices shall strengthen the investigation and punishment of the operation without license within their administrative areas. If they find out there exists operation without license but fail to investigate or punish or are slake in their work, the superior or relevant departments shall circulate a notice of criticism to the persons in charge of the administration of industry and commerce of their administrative areas, until give administrative sanctions to the competent leaders and the persons in charge.

For the persons who take bribes and bend the law, neglect duties, play favouritism and commit irregularities, as well as abuse their powers, relevant departments shall give them administrative sanctions; If the circumstances constitute crimes, they shall be prosecuted the criminal responsibilities according to law. If losses are caused to the party, they shall compensate according to law.

Article 20 These rules shall go into effect as of July 1, 2001.