(Promulgated on January 10, 2002 by Shanghai Municipal People’s Government)

Article 1 (Purpose)

These Procedures are formulated to promote the development of trade associations in this Municipality, give full play to the active role performed by trade associations in the socialist market economy and safeguard the legitimate rights and interests of trade associations.

Article 2 (Definition)

“Trade associations”in these Procedures refer to non-profit-making, mainly economic juridical associations formed voluntarily by the economic organizations in the same trade and related units in this Municipality.

Article 3 (Department of Organization and Administration)

The Municipal Office for Trade Associations Development is the competent department authorized by the Municipal People’s Government to be responsible for development planning, overall arrangement and readjustment, policy making and coordinated administration of trade associations in this Municipality.

The relevant commissions, offices and bureaus under the Municipal People’s Government are the competent departments responsible for the professional work of their related trade associations and provide professional guidance for and supervision over trade development, trade standards and other matters relevant to trade associations.

The Municipal Administration of Mass Organizations is the administrative organ which handles registration and administration of trade organizations, and is responsible for the registration and reporting for the record of the establishment, alteration and nullification of trade associations in this Municipality and for the exercising of annual checks and supervision over trade associations.

Other government departments shall coordinate in promoting and developing trade associations, and provide guidance and supervision over the relevant activities of trade associations in accordance with the law.

Article 4 (Government Support and Promotion)

The government departments at all levels shall support and promote the development of trade associations by incorporating into the plan of developing social organizations in this Municipality the plan of developing trade associations, transferring the functions originally performed by trade administration to trade associations, and ensuring that trade associations function independently.

Article 5 (Principles of Establishment)

Trade associations shall be established in accordance with the current state classificatory standards of trades or of products, or in accordance with the forms of operations or links in the operation chain or with service functions.

As to major trade associations and trade associations authorized by laws and regulations, or entrusted by the government with certain administrative functions, the principle of“One trade, one association”shall be implemented.

Only one association shall be established within the confines of this Municipality relevant to each trade or each product.

If enterprises of the same trade are relatively concentrated and their certain trades or products constitute the special features of regional economy in districts or counties, the enterprises within the districts or counties may initiate in the formation of municipal trade associations and may, after approval by the Municipal Administration of Mass Organizations, assume the role of municipality-wide trade associations.

Article 6 (Conditions for Preparing to Establish a Trade Association)

The following conditions shall be met in preparing to establish a trade association:

(1) A proposed trade association should have ten or more initiators, and they are enterprises, self-employed workers engaged in industrial and commercial business and other economic organizations in this Municipality which hold business licenses and have been consecutively operating for two years or more;

(2) A proposed trade association should have trade representativeness, and the initiators and the other members of the association should account for, or promise to account for within two years, 20 % or more of all the organizations within the trade, or 50 % or more of the total sales in the trade; and

(3) A proposed trade association should have the designatory legal representative with the required qualifications and three or more full-time staff members appropriate for the business.

Article 7 (Required Qualifications for the Designatory Legal Representative of a Trade Association)

The designatory legal representative of a trade association should meet the following qualifications:

(1) Having been engaged in the business of this trade for two years or more, and being familiar with the trade and professionally trained;

(2) Having a good record of social credit;

(3) Having been elected by the initiators;

(4) Holding no public post in any government organ; and

(5) Having no record of criminal offence, except for offence through negligence.

Article 8 (The Name)

The name of a trade association shall show the trade to which the association belongs. The name of a trade association may include the words of“Trade Association”or“Trade Council”, which may be fronted with“Shanghai”.

Other types of mass organizations shall not use such names as“trade association”and“trade council”.

Article 9 (Application for Preparations to Establish a Trade Association)

In order to make preparations to establish a trade association, the initiators shall apply to the Municipal Office for Trade Associations Development. If the application is approved after examination, the initiators shall apply to the Municipal Administration of Mass Organizations for permission to make preparations to establish the trade association by holding the approval document signed by the Municipal Office for Trade Associations Development and other relevant materials in accordance with the“Regulations on the Administration of the Registration of Mass Organizations”.

Article 10 (Examination Procedures for Making Preparations to Establish a Trade Association)

In order to make preparations to establish a trade association, the initiators shall submit to the Municipal Office for Trade Associations Development the following materials:

(1) An application;

(2) A Draft Constitution of the Trade Association;

(3) The basic information and identity certificates of the initiators and the basic information, identity certificate and personal credit report of the designatory legal representative;

(4) Basic information about the member units of the trade association;

(5) Channels for funding the activities of the association and the certificate of right to use the offices; and

(6) The sources and basic information of full-time staff members

The Municipal Office for Trade Associations Development shall, within 30 days of the receipt of relevant materials, examine the conditions for preparations to establish the trade association and the qualifications of the designatory legal representative.

The Municipal Office of Trade Associations Development shall give an opinion of assent if the proposed trade association meets the requirements, and a written statement of reasons for not approving the application if the proposed trade association does not meet the requirements.

When examining the application, the Municipal Office for Trade Associations Development shall solicit the opinions of the competent departments in charge of the professional work of the trade. The competent department responsible for the professional work of the trade shall reply within 15 days.

Article 11 (Application for Registration)

Upon approval of the preparations to establish a trade association, the initiators shall complete the preparatory work as stipulated in the“Regulations on the Administration of the Registration of Mass Organizations”and apply for registration to the Municipal Administration of Mass Organizations.

Article 12 (Examination and Approval of the Constitution of the Trade Association)

The proposed trade association, which has completed the preparatory work, shall submit its constitution and the basic information about the designatory legal representative of the trade association to the Municipal Office for Trade Associations Development for examination.

Any trade association that wants to revise its constitution shall report to the Municipal Administration of Mass Organizations for approval within 30 days of having the revised constitution examined and approved by the Municipal Office of Trade Associations Development.

Article 13 (Establishment of Branches and Representative Offices of a Trade Association)

Any trade association in this Municipality, which is in need of establishing branches or representative offices, shall go through relevant procedures of registration as stipulated in the relevant regulations after approval by the Municipal Office for Trade Associations Development.

Article 14 (Alterations and Nullifications)

Any trade association, that is in the need of making alterations in the registration or nullifying the registration, shall, after reporting to the Municipal Office for Trade Associations Development for examination and approval in accordance with the procedures and having its approval, apply for going through the relevant procedures with the Municipal Administration of Mass Organizations in accordance with the“Regulations on the Administration of Registration of Mass Organizations”.

Article 15 (Functions of a Trade Association)

The basic functions of a trade association are trade service, trade self-discipline, trade representation and trade co-ordination.

A trade association shall abide by the laws and regulations, implement the Party’s and the State’s guiding principles and policies, help the government to exercise the administration of the trade, safeguard the legitimate rights and interests of the association members, enhance the overall quality of the trade association and uphold the social ethics.

A trade association may, in combination with the specific situations, assume the following duties:

(1) Organizing the trade training, technical counseling, information exchanging, exhibitions and inviting commercial investment, and product promotion;

(2) Participating in the expounding and proving of government’s policy making concerning the development, reform and interests of the trade, making proposals about economic policies and legislation, and participating in relevant hearings sponsored by the government;

(3) Conducting anti-dumping, anti-monopoly or anti-subsidizing enquiries on behalf of the enterprises in the trade, or applying to the government for making such enquiries;

(4) Formulating the quality standards and service norms in accordance with the constitution of the association or the trade conventions and practices;

(5) Participating in the formulation of the regional or State’s product standards of the trade;

(6) Conducting trade statistics collection, trade surveys, publishing trade information and records of public trust, price co-ordination and examinations of trade-entry qualifications and quality through authorization by laws and regulations or through entrusting by the government;

(7) Supervising the member units in operating business in accordance with the law. Any trade association may adopt such disciplinary measures as warning, within-trade criticism, public-notice criticism and expulsion from the association against any member who violates the association constitution or the trade conventions and practices and damages the collective image of the trade through failing to meet the quality standards or service norms, jeopardizing the legitimate rights and interests of consumers, or taking part in unjust competition, or propose to the administrative departments that non-member units be punished for their illegal activities.

(8) Coordinating the relations between members of the association, between members and non-members in the trade, or between members and operators in other trades, consumers or other mass organizations;

(9) Conducting economic and technological exchanges and cooperation; and

(10) Assuming other functions authorized by the laws and regulations, entrusted by the government or stipulated by the association’s constitution.

Article 16 (Principles of Managing a Trade Association)

A trade association shall follow the principle of independence by voluntary membership, conducting association affairs on one’s own and self-funding. A trade association shall, in accordance with the association’s constitution and relevant provisions, strengthen the internal organizational structure, working system and supervision mechanism and ensure that work proceed in an orderly manner.

Article 17 (Joining a Trade Association)

Any enterprise, self-employed worker engaged in industrial and commercial business and other economic organization with business license in this Municipality may apply to join a relevant trade association. Any university or research institution in this Municipality related to the trade may also apply to join the trade association.

An enterprise which operates two or more types of trade may apply to join two or more trade associations.

Any enterprise, self-employed worker engaged in industrial and commercial business or other economic organizations which registered in other provinces and municipalities and which has branches and has operated continuously for six months or more in this Municipality may also apply to join a trade association in this Municipality.

Article 18 (The Organizational Structure of a Trade Association)

A trade association adopts the membership system. The conference of members or representative members is the highest organ of power.

The constitution of a trade association shall be examined and approved by the conference of members or representative members, and shall conform to the laws and regulations.

The chairman, vice-chairmen, executive directors and directors shall be produced by election. The election regulations, terms and powers of office, and duties of council of directors and council of executive directors are stipulated in the association’s constitution.

The elected or re-elected legal representative of a trade association shall meet the required qualifications as stipulated in Article 7 of these Procedures.

Article 19 (Funds)

A trade association may raise funds for activities through collecting membership fees, accepting donations, providing paid service or receiving financial assistance by conducting projects entrusted by the government departments.

The funds of a trade association shall be used in accordance with the relevant provisions in the constitution of the trade association.

Article 20 (Exceptions in Applicability)

The disciplinary measure about expulsion from a trade association in Item (7) in Clause 3 of Article 15 and the voluntary membership in Article 16 in these Procedures are not applicable to the trade associations that implement the natural membership system such as intermediary agencies of economic appraisal.

Article 21 (Article of Transition)

The reform and readjustment of the existing trade associations in this Municipality shall be conducted in accordance with the specific organization and implementation scheme of the Municipal People’s Government and take the relevant provisions of these Procedures as reference.

Article 22 (Date of Implementation)

These Procedures shall become effective on February 1, 2002.