REGULATIONS ON FOREIGN INVESTMENTS IN MOVIE THEA-TRES

01/01/2004

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On 25 November 2003, the PRC's State Ad-ministration of Radio, Film and Television, Ministry of Commerce, and Ministry of Culture jointly issued the Provisional Regulations on Establishing Cinemas with Foreign Investment, which took effect on 1 January 2004. The regulations provide that after obtaining permis-sion from the PRC government, a foreign entity or individual may set up a Sino-foreign joint venture or cooperative venture enterprise with an enterprise within the PRC for the purpose of constructing, converting or operating movie theaters.

In addition to complying with the relevant PRC requirements, foreign-invested movie theaters must also meet the following conditions:

Compliance with local planning and location requirements for cultural facilities;

Registered capital of not less than RMB6 mil-lion;

Having a fixed place of business;

In the case of a joint venture, at least 51% of the registered capital is invested by a Chinese partner;

The term of the joint venture or cooperative venture does not exceed 30 years.

In line with the arrangements approved by the PRC State Council for establishing closer trading relationships with Hong Kong and Macao, the regulations provide that from 1 January 2004, service providers from Hong Kong and Macao may construct, convert, or operate movie theaters as joint ventures or cooperative ventures, and may hold majority shareholdings of up to 75% in such ventures.