, or an entity passes itself off as a branch company of a limited liability company or joint stock limited company while not registered as such in accordance with the law, it shall be ordered by the company registration authority to make rectification or such entity shall be closed down, and a fine of not more than RMB 100,000 may be imposed.
 
Article 212
Where a company fails to commence operation for more than 6 months without proper cause, or suspends operation on its own without proper cause for more than 6 consecutive months after commencement of operation, the company registration authority shall revoke its company business license.
 
Where the company fails to carry out amendment registration in accordance herewith when a registered item of the company has changed, it shall be ordered to register within a prescribed time limit, and where the company has not carried out registration after expiration of the time limit, a fine of not less than RMB 10,000 but not more than RMB 100,000 shall be imposed.
 
Article 213
Where, in violation hereof, a foreign company establishes a branch within China without approval, it shall be ordered to make rectification, or such branch shall be ordered to terminate, and a fine of not less than RMB 50,000 but not more than RMB 200,000 may be imposed.
 
Article 214
Where a company conducts illegal activities jeopardizing the national security and social public interests, the business license of such company shall be revoked.
 
Article 215
Where a company violates of this Law, and is therefore liable for civil damages as well as for an administrative fine or criminal fine, and its assets are not sufficient to cover both, its assets shall first be used to cover the civil liability for damages.
 
Article 216
Where any violation of this Law constitutes a crime, criminal liability shall be imposed in accordance with the law.
 
Chapter Thirteen : Supplementary Provisions
 
Article 217
For the purpose of this Law, the definitions of the following terms are:
 
(1) Senior Officer referred to herein means the manager, deputy manager, person in charge of financial affairs, secretary of the board of directors of a listed company or any other personnel so appointed in the article of association of the company.
(2) Controlling Shareholder referred to herein means the shareholder which amount of capital contribution accounts for more than fifty percent (50%) of the total amount of capital of a limited liability company or, the shareholder with more than fifty percent (50%) of the total amount of share capital of a joint stock limited company or, the shareholder of either a limited liability company or a joint stock limited company which, by virtue of its voting right represented by its capital contribution or shareholding, has a significant impact on the decision of shareholders meeting or the general meeting of shareholders regardless of a percentage lower than fifty percent as aforementioned.
(3) Actual Controller referred to herein means a person who is not a shareholder of the company but has virtual control over corporate actions through investment in, agreement or other arrangements with the company.
(4) Affiliation referred to herein means the connection between a controlling shareholder, actual controller, director, supervisor or senior officer of a company and the enterprises controlled by them, directly or indirectly, or any other kinds of relationships that are likely to cause diversion of the company’s interests. Notwithstanding the foregoing, companies which majority of shares are controlled by the state are not necessarily affiliated with one another simply because the majority of their shares are commonly controlled by the state.
 
Article 218
This Law shall be applicable to foreign-invested limited liability companies and joint stock limited companies. Where the laws on enterprises with foreign investment provide otherwise, such provisions shall apply.
 
Article 219
This Law shall become effective on January 1, 2006.

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