The Measures for Equity Pledge Registrations with Administrations for Industry and Commerce ( the Measures) took effect on October 1, 2008. The State Administration for Industry and Commerce (SAIC) promulgated the Measures in accordance with the Property Law of the PRC.

The Measures establish the registration scope and jurisdiction, registration procedures, conditions and the responsibilities of the applicant.

The Measures apply to pledging the equity interest of limited liability companies and companies limited by shares, except equities that have been registered with a securities clearing house. In essence, holders of equity interest in non-publicly traded companies may pledge their equity interest, and the pledge should be registered with an administration for industry and commerce (AICs).

The subject matter of an equity pledge registration must be equities that may be legally transferred and pledged. No equity interests that are currently frozen by courts may be registered. Moreover, to pledge the equities of a foreign-invested company, the AICs will not process the registrations until the authorities originally approving the company’s establishment have approved the pledge.

Thirdly, the registration items include (a) the names of the pledgor and pledgee; (b) the name of the pledging equity company; (c) the amount of equity that is being pledged. The category of registration includes establishment registration, amendment registration, de-registration and revocation registration, of which the first three kinds of registration shall be applied for jointly by the pledgor and pledgee, and the last one may be applied for by either party. For different registrations, different application materials are required.

Finally, the applicant shall be responsible for the authenticity of the application materials, legality and validation of the equity pledge contract and the complete ownership of the pledging equity.