Circular of the Ministry of Information Industry, the Ministry of Education, the Ministry of Science and Technology, the State Administration of Taxation Concerning the Issuance of

XinBuLianChan [2000] No.968 October 16,2000

The Ministry of Information Industry, the Ministry of Education, the Ministry of Science and Technology, the State Administration of Taxation The departments in-charge of information industry, the state tax bureaus, local tax bureaus, association of Chinese software industry in all provinces, autonomous regions and municipalities directly under the State Council:

This "Certifying Standard and Managing Measures For Software Enterprises (For Trial Implementation)" (hereinafter the "Regulations") is promulgated for the purpose of implementing the "Policies on Encouraging the development of Software Industry and Integrated Circuit Industry" stipulated by the State Council. It is issued now for you to carry out.

In view of the actual conditions of the software enterprises and software industry associations throughout the country, the certifying work will be carried out at the level of province, autonomous region, municipality directly under the State Council and municipality separately listed on the State plan for the time being and will extend to the prefecture level when time matures.

Attachment:

Certifying Standard and Managing Measures for Software Enterprises (for Trial Implementation)

Article 1 This Regulations is promulgated pursuant to "Policies on Encouraging the development of Software Industry and Integrated Circuit Industry" (hereinafter "Policies") of the State Council for the purpose of accelerating the development of software industry, increasing creativity and international competitiveness of information industry.

Article 2 All the software enterprises certified by the standard and procedure of this Regulations are entitled to the encouragement policies as stipulated in the Policies.

Article 3 Software products in this Regulations shall refer to the computer software, information system provided to the consumer or the software set in the equipment, or the computer software provided together with technical services such as computer system integration and applied service.

Article 4 The Ministry of Information Industry stipulates standard and managing measures for certifying software enterprise jointly with the Education Commission, Ministry of Science and Technology, the Sate Tax Administration, etc. The Ministry of Information Industry shall manage and supervise the industry of software, coordinate and administer the certifying of software enterprises throughout the country. Its main duties are:

1. according to the proposal of the departments in-charge of information industry in all provinces, autonomous regions and municipalities directly under the State Council, it shall designate the certifying organs for software enterprises at provincial level, authorize such organs or cancel the authorization, and announce the namelist of certifying organs;

2. instructing, supervising and examining certification of software enterprises throughout the country;

3. accepting the application for reconsideration of certifying result and annual examination.

Article 5 The departments in-charge of information industry in all provinces, autonomous regions and municipalities shall be responsible for certifying software enterprises in their administrative areas. Their duties are:

1. supervising and examining the certifying work in their administrative areas and designating the certifying organs at prefecture level;

2. examining and approving the certifying result in their administrative areas jointly with the tax authorities at the same level;

3. announcing the namelist of certified software enterprises in their administrative areas and issuing certificates for such enterprises;

4. accepting application for reconsideration of certifying result and annual examination result in their administrative areas.

Article 6 With recommendation of departments in- charge of information industry in all provinces, autonomous regions and municipalities directly under the State Council, the association of software industry or related associations empowered by the Ministry of Information Industry shall be the certifying organs. The certifying organs shall meet the following requirements:

1. It is software industry association or related association above prefecture level that is registered by civil administration departments;

2. It should take the enterprises as its major members, there should be more than 30 software enterprises in it;

3. It possesses permanent office premises;

4. There are not fewer than 5 full-time staff members familiar with software industry and special staff in charge of the organization of certification and annual examination.

Article 7 In provinces, autonomous regions and municipalities directly under the State Council, where the requirements stipulated in Article 6 of this Regulations can not be satisfied, the Chinese Software Industry Association may act as agent for certifying work.

Article 8 The software enterprise certifying organs are responsible for the certifying work of the software enterprise and annual examination work in the authorized areas. They shall be responsible for:

1. accepting and authorizing the software enterprise certifying application in the area;

2. organizing the examination and annual examination of software enterprise certifying;

3. proposing the namelist of preliminarily elected organs for certifying software enterprise in the area;

4. submitting the preliminary namelist to the departments in-charge of information industry for examination;

5. other certifying work entrusted by the departments in-charge of information industry.

Article 9 For the software enterprise that meets one of the following requirements, the Chinese Software Industry Association shall be responsible for the certifying and annual examining work, and the preliminarily elected namelist shall be submitted to the Ministry of Information Industry for examination and approval:

1. the registered capital is over 10 million US dollars with foreign shares exceeding 50%;

2. the annual operating income of an enterprise branch amounts to over 300 million yuan and such branch is of the enterprise of trans-provinces, trans-autonomous regions, or trans-municipalities directly under the State Council.

Article 10 Entrusted by the Ministry of Information Industry, the Chinese Software Industry Association shall instruct, supervise and examine the certifying work in various areas.

Article 11 The software enterprise certifying organs shall earnestly carry out their work on the principle of publicity, justness, equality for the purpose of serving the software enterprises and promoting the development of software industry.

The charging standard for certifying software enterprise shall be determined by price authorities of State Council with the request of the Ministry of Information Industry.

Article 12 The certifying standard of software enterprise shall be as follows:

1. the enterprise is established within our country according to relevant laws;

2. the business and major income are technical service such as computer software development and production, system integration, application, etc.;

3. the enterprise develops one or more software products or possesses intellectual property right of the products, or provides technical services such as computer information system integration that has passed qualification and grade certification.

4. The proportion of technical staff in the work of software development and technical service shall not be lower than 50% of the total staff in the enterprise;

5. It has technical equipment and premises essential for software development and relevant technical service;

6. It has measures and capability to safeguard the quality of software and services;

7. The development fund for software technique and products shall amount to over 8% of the enterprise's annual software income;

8. The annual sale income of software shall be over 35% of the total annual income of the enterprise, with the income of self-developed software amounting to over 50% of the software sales income;

9. The enterprise has clear property right, standardized management and complies with disciplines and laws.

Article 13 The applying enterprise shall submit the following materials to the software enterprise certifying organs:

1. application forms of software enterprise certifying, including statement of assets and liabilities, statement of profit and loss, statement of cash flow, staff disposition, education structure, software developing environment, operation conditions, etc.;

2. duplicate and copy of the business license for enterprise legal person;

3. namelist of the software products developed, produced or managed by the enterprise, including the software products developed and sold by the enterprise;

4. certificates for the software products that are developed by the enterprise or certificate that such enterprise possesses the intellectual property right of the products, including registration certificate of the software, copyright or patent certificate;

5. qualification grade certificate issued by the Ministry of Information Industry for the system integration enterprise

6. other materials required by the Ministry of Information Industry.

Article 14 The certifying organs shall examine the application materials submitted by the software enterprise according to standard stipulated in Artifice 12. The organs shall mainly examine the forms and organize experts to examine when necessary. For the qualified enterprise, the certifying organs shall make a preliminary namelist and submit to the departments in-charge of information industry at the same level for examination and approval.

Article 15 The departments in-charge of information industry at the same level of the certifying organ shall examine the enterprise namelist, and approve, announce jointly with the tax administrations. The authorities shall issue certificate of software enterprise and report to the departments in-charge of information industry at higher level for record.

Article 16 The software enterprise certification shall be examined annually. The certifying organs shall annually examine the software enterprises in the authorized areas according to the standard stipulated in Article 12 of this Regulations. The result shall be examined by departments in-charge of information industry and tax administrations at the same level of the certifying organ and reported to the higher authorities for record.

After the annual examination, the departments in-charge of information industry shall announce the names and stamp on the certificates of the qualified software enterprises; the enterprises not qualified shall not be entitled to the encouragement policies provided in the "Policies" for the current year.

Article 17 By the valid certificate of the current year, the certified software enterprise may go through relevant procedures in relevant institutions and enjoy the encouragement policies provided in the Policies.

Article 18 Where the enterprise has objection to the result of certification or annual examination, it may apply for reconsideration to the departments in-charge of information industry in the provinces, autonomous regions, municipalities directly under the State Council, or directly to the Ministry of Information Industry within one month after the announcement of the result.

The applying enterprise shall submit reconsideration application and relevant certificates; the accepting authorities shall notify the applicant whether to accept the application or not within 15 days after receiving the application.

The accepting authorities shall investigate and verify the application and make a reconsideration decision within 3 months after accepting the application.

Article 19 Where the certified software enterprise changes due to the reasons such as adjustment, separation, merger, restructure, it shall go through the formalities of alteration or apply for re-certification to the governing certifying organ within 3 months of the occurrence of the above facts.

Article 20 The enterprise of integrated circuit designing shall be considered identically with software enterprise.

The integrated circuit designing enterprise shall be certified according to the standard and procedure stipulated in this Regulations for the software enterprise, except that its producing process shall comply with the process for integrated circuit designing and the managing regulations.

Article 21 Where the software enterprises manufacture, produce, sell pirated software, or use software without license, besides those disposed of by the relevant agencies, the certifying organs shall request the authorities of information industry at the same level to cancel their certification and report to the higher information industry for record.

The certifying organs may refuse the application of the above enterprise from one to three years according to the circumstances.

Article 22 When applying for certification or annual examination, the enterprise shall submit the true materials and content as required by this Regulations. If there are any verified false materials or content, the certifying organs shall cease to accept the application or request the departments in-charge of information industry to cancel the qualification of the enterprise to enjoy encouragement policies, and report to the higher information industry authority for record.

Article 23 Where the certifying organ violates this Regulations, the authorizing information industry authority shall order it to correct within a time limit and if it fails, its certifying qualification shall be withdrawn.

Article 24 Where any member of the certifying organ abuses their power, seeks private benefit by fraudulent practices and infringes legal interests of the enterprise, he shall be imposed administrative sanction by his organ and where the circumstances are so serious as to constitute an offence, he shall be investigated into the criminal liability by the judicial organs according to law.

Article 25 The forms such as certifying application form, annual examination application form and software enterprise certificates shall be printed by the Ministry of Information Industry.

Article 26 The Regulations shall be interpreted by the Ministry of Information Industry.

Article 27 This Regulations shall come into force as the date of promulgation.

Promulgated by The Ministry of Information Industry, the Ministry of Education, the Ministry of Science and Technology, the State Administration of Taxation on 2000-10-16