Chapter One General Principle

Article 1. To strengthen the management of Shanghai Cultural Development Foundation (hereinafter referred to as SHCDF) supporting loans for cultural projects, SHCDF has established the Management Regulations in accordance with Management Method for Foundations of the State Department, the Charter of SHCDF, the Funds Management method of SHCDF, and laws such as“General Rules of Loan (trial)”and“Law of Guarantee”.

Article 2. The mission of SHCDF supporting loans for cultural projects is: to use modern financial methods and tools, to boost cultural innovation, to support cultural projects, to use funds for cultural development efficiently, so as to promote the prosperity and development of Shanghai cultural undertakings.

Article 3. The operating mechanism of supporting loans is: reasonable, legal, open and transparent.

　　Chapter Two The Scope of Supporting Loans

Article 4. Any insufficiently funded project in accordance with Shanghai cultural development orientation, and having market potential and debt-paying ability is qualified for applying the supporting loans. Such projects include compositions, performances, productions, publications, exhibitions, and activities in fields like literature, film and TV, drama, traditional opera, music and dance, acrobatics, the fine arts, calligraphy, photography and juvenile literature and arts, etc.

Article 5. The following are eligible to apply for the loans from SHCDF::

　　(1) Citizens with registered permanent residence status in Shanghai;

　　(2) Citizens from other provinces of China with residence permit in Shanghai；

　　(3) Foreigners working in Shanghai with permanent residence permit; and

　　(4) Legal persons or other organizations registered in Shanghai

　　Chapter Three Forms of Supporting Loans

Article 6. The supporting loans for cultural projects consist of two major forms: consignment loan and pledged loan.

　　Article 7. SHCDF adopts different types of loans to support cultural projects according to the evaluation on social benefits of the projects as follows:

　　(1) Consignment loan + 100% interest subsidy by SHCDF

　　(2) Consignment loan + partial interest subsidy by SHCDF (25%, 50%, 75%)

　　(3) Consignment loan + the total interest by the party supported

　　(4) Pledged loan + 100% interest subsidy by SHCDF

　　(5) Pledged loan + partial interest subsidy by SHCDF (25%, 50%, 75%)

　　(6) Pledged loan + the total interest by the party supported

　　Article 8. The performance of SHCDF’s supporting loans on cultural projects follows the basic principles hereinafter:

　　(1) To individual applicants, SHCDF usually supports in the form of pledged loan,

　　(2) To legal persons or other organizations, whose cultural projects have certain social benefits and can adapt market operation, SHCDF usually supports in the form of pledged loan,

　　(3) To other cultural projects, SHCDF usually supports in the form of consignment loan.

　　Chapter Four Application, Examination and Evaluation

　　Article 9. Projects applying for supporting loans shall be in accordance with cultural development orientation of Shanghai and the Charter of SHCDF.

　　Article 10. The applicants shall submit“The Application Form of Supporting Loans for Cultural Projects”. SHCDF office will affirm the qualification of the projects.

　　Article 11. After the qualification affirmance, accounting firm and commercial bank will be consigned to examine, evaluate and audit the applying projects independently.

　　Article 12. The accounting firm is in charge of analyzing the feasibility of the applying projects, auditing the project budgets and the budget for revenue and expenditure, putting forward the feasibility report by evaluating the market prospect, economic benefits and social benefits.

　　Article 13. Commercial Bank will make an independent credit evaluation on the applying projects passed the qualification affirmance and by risk analysis, put forward a preliminary plan of supporting loans for cultural projects in the form of an Independent Censor Opinion Paper.

　　Chapter Five Project Verification and Loan Granting

　　Article 14. According to the independent examination report by intermediary agencies such as accounting firms and commercial banks, SHCDF will make suggestions to the Examination and Approval Committee of SHCDF for examination and Verification.

　　Article 15. Provided that the projects have passed the examination of the Examination and Approval Committee, SHCDF office will inform the applicants and commercial bank in written form.

　　Article 16. By right of the written notice the loan-takers can draw the related loan vouchers and contract text from commercial bank, process the consignment or guarantee procedure with SHCDF and make loan application to commercial bank by providing related materials.

　　Article 17. The loan-takers shall prepare the materials to the loan granting in accordance with the requirements of commercial bank and in the meanwhile sign the loan agreement with commercial bank.

　　Article 18. Commercial bank will take charge of granting loans to the qualified projects.

　　Chapter Six Repayment for the Principal and Interest of Loans

　　Article 19. The loan-takers shall pay commercial bank due-to-pay interest according to the stated date and way of charging interest appointed in the supporting loan agreement.

　　Article 20. The loan-takers should, according to the bilateral appointment between loan-takers and SHCDF, submit the interest payment application on the projects that enjoy SHCDF interest subsidy. SHCDF will remit the certain sum of money from SHCDF specialized interest account to the settlement account opened by the applicants.

　　Article 21. Commercial bank will deliver written notices to the loan-takers one month before the appointed supporting loans repayment date and the applicants shall finish the repayment procedure in terms of the regulations.

　　Chapter Seven Projects Supervision and Special Disposal Clause

　　Article 22. During the implement of the supporting loan project, commercial bank will control the account of the loan-takers to supervise the loan-takers to use the money according to the loans supporting projects implement schedule and effectively control the real direction of investment of the principal.

　　Article 23. The loan-takers shall submit“Management Report of the Projects on Supporting Loans”to SHCDF on time.

　　Article 24. For those loan-takers who breach the agreement, resort to deception, or embezzle the funds, SHCDF, depending on how serious the case is, will take such measures as postponing, stopping or calling back part or all of the funds. For those very serious cases, the loan-takers will be investigated legal liability.

　　Article 25. If the supporting loans for cultural projects cannot be repaid or become lost loans, the projects will be processed by special disposal clause procedure after the examination and approval by the Examination and Approval Committee of SHCDF.

　　Chapter Eight Case-Ending

　　Article 26. After the liquidation of the supporting loans, SHCDF office will accomplish the final report of the supporting loan project.

　　Article 27. If the supporting loans cannot be repaid or becomes the lost loans, SHCDF office will have a settlement audit of the projects and report it to the Examination and Approval Committee for examination and approval to be transferred to special disposal clause process.

　　Chapter Nine Appendix

　　Article 28. SHCDF office is entitled to the right of interpretation of the method.

　　Article 29. The method will be put into practice on a trial basis from Oct 1, 2005.