On July 18th, 2014, the Ministry of Commerce and the Ministry of Finance jointly published the Administrative Measures for Risk Disposal Reserve Fund for Foreign Labor Services Corporation (for Trial Implementation) (“Measures”), which consists 5 chapters and 26 articles and will come into effect on August 17th, 2014. The Interim Measures for the Reserve Fund for Foreign Labor Services Corporation promulgated on November 27th, 2001 by the former Ministry of Foreign Trade and Economic Corporation and the Ministry of Finance as well as the supplementary provisions thereof shall be simultaneously repealed. Main contents of the Measures are as follows:

l An enterprise engaging in foreign labor services corporation shall deposit a risk disposal reserve fund for foreign labor services corporation (“Reserve Fund”) with a designated bank within five working days after the date of obtaining the business qualifications for foreign labor services corporation and registering with competent administration for industry and commerce. The Reserve Fund shall be in the amount of RMB three million, and be deposited either in cash or with a bank guarantee letter of equivalent amount thereto.

l Where enterprises engaging in foreign labor services corporation refuse to bear, or cannot afford, the labor remunerations payable to workers or the compensations for losses suffered by workers pursuant to the law, competent authorities for commerce shall use the Reserve Fund by judgments, rulings and other binding legal instruments rendered by people's courts.

KWM Comment: In the revision of provisions concerning reserve fund for foreign labor services corporation, besides that the amount payable increases from RMB one million to RMB three million, the prerequisites for using the Reserve Fund are also changed, which deserves the attention.