|
|
|
(Adopted at the First Session of the Seventh National People's Congress on April 13, 1988 and promulgated by Order
No.4 of the President of the People's Republic of China on April 13, 1988; amended according to the Decision on Revision of the Law
of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures adopted at the 18th Meeting of the Standing Committee
of the Ninth National People's Congress on October 31, 2000)
Article 1 This Law is formulated to expand economic cooperation and technological exchange with foreign countries and to promote
the joint establishment, on the principles of equality and mutual benefit, by foreign enterprises and other economic organizations
or individuals (hereinafter referred to as the foreign party) and Chinese enterprises or other economic organizations (hereinafter
referred to as the Chinese party) of Chinese-foreign contractual joint ventures ( hereinafter referred to as contractual joint ventures
) within the territory of the People's Republic of China.
Article 2 In establishing a contractual joint venture, the Chinese and foreign parties shall, in accordance with the provisions
of this Law, prescribe in their contractual joint venture contract such matters as the investment or conditions for cooperation,
the distribution of earnings or products, the sharing of risks and losses, the manners of operation and management and the ownership
of the property at the time of the termination of the contractual joint venture.
A contractual joint venture which meets the conditions for being considered a legal person under Chinese law shall acquire the status
of a Chinese legal person in accordance with law.
Article 3 The State shall, according to law, protect the lawful rights and interests of the contractual joint ventures and
of the Chinese and foreign parties.
A contractual joint venture shall abide by Chinese laws and regulations and may not injure the public interests of China.
The relevant State authority shall exercise supervision over the contractual joint ventures according to law.
Article 4 The State shall encourage the establishment of productive contractual joint ventures that are export-oriented or
technologically advanced.
Article 5 For the purpose of applying for the establishment of a contractual joint venture, such documents as the agreement,
the contract and the articles of association signed by the Chinese and foreign parties shall be submitted for examination and approval
to the department in charge of foreign economic relations and trade under the State Council or to the department or local government
authorized by the State Council (hereinafter referred to as the examination and approval authority). The examination and approval
authority shall, within 45 days from the date of receiving the application, decide whether or not to grant approval.
Article 6 When the application for the establishment of a contractual joint venture is approved, the parties shall, within 30 days
from the date of receiving the certificate of approval, apply to the administrative department for industry and commerce for registration
in order to obtain a business license. The date of issue of the business license of contractual joint venture shall be the date of
its establishment.
A contractual joint venture shall, within 30 days of its establishment, carry out tax registration with the tax authorities.
Article 7 If the Chinese and foreign parties, during the period of operation of their contractual joint venture, agree through
consultation to make major modifications to the contractual joint venture contract, they shall report to the examination and approval
authority for approval; if the modifications include items involving statutory industry and commerce registration or tax registration,
they shall register the modifications with the administrative department for industry and commerce and with the tax authorities.
Article 8 The investment or conditions for cooperation contributed by the Chinese and foreign parties may be provided in cash
or in kind, or may include the right to the use of land, industrial property rights, non-patent technology or other property rights.
Article 9 The Chinese and foreign parties shall, in accordance with the provisions of the laws and regulations and the agreements
in the contractual joint venture contract, duly fulfil their obligations of contributing full investment and providing the conditions
for cooperation. In case of failure to do so within the prescribed time, the administrative department for industry and commerce
shall set another time limit for the fulfillment of such obligations; if such obligations are still not fulfilled by the new time
limit, the matter shall be handled by the examination and approval authority and the administrative department for industry and commerce
according to relevant State regulations.
The investments or conditions for cooperation provided by the Chinese and foreign parties shall be verified by an accountant registered
in China or the relevant authorities, who shall provide a certificate after verification.
Article 10 If a Chinese or foreign party wishes to make an assignment of all or part of its rights and obligations prescribed
in the contractual joint venture contract, it shall be subject to consent of the other party or parties and report to the examination
and approval authority for approval.
Article 11 A contractual joint venture shall conduct its operational and managerial activities in accordance with the approved
contract and articles of association for the contractual joint venture. The right of a contractual joint venture to make its
own operational and managerial decisions shall not be free from any interference.
Article 12 A contractual joint venture shall establish a board of directors or a joint managerial institution which shall,
according to the contract or the articles of association for the contractual joint venture, decide on the major issues concerning
the venture. If the Chinese or foreign party assumes the chairmanship of the board of directors or the directorship of the joint
managerial institution, the other party shall assume the vice-chairmanship of the board or the deputy directorship of the joint managerial
institution. The board of directors or the joint managerial institution may decide on the appointment or employment of a general
manager, who shall take charge of the daily operation and management of the contractual joint venture. The general manager shall
be accountable to the board of directors or the joint managerial institution.
If a contractual joint venture, after its establishment, chooses to entrust a third party with its operation and management, it shall
be subject to the unanimous consent of the board of directors or the joint managerial institution, report to the examination and
approval authority for approval, and register the change with the administrative department for industry and commerce.
Article 13 The employment, dismissal, remuneration, welfare benefits, occupational protection, labour insurance, etc. of the
staff members and workers of a contractual joint venture shall be specified in contracts concluded in accordance with law.
Article 14 The staff and workers of a contractual joint venture shall, in accordance with law, establish their trade
union organization to carry out trade union activities and protect their lawful rights and interests.
A contractual joint venture shall provide the necessary conditions for the venture's trade union to carry out its activities.
Article 15 A contractual joint venture shall establish its account books within the territory of China, file its accounting
statements according to relevant regulations and accept supervision by the financial and tax authorities.
If a contractual joint venture, in violation of the provisions prescribed in the preceding paragraph, does not establish its account
books within the territory of China, the financial and tax authorities may impose a fine on it, and the administrative department
for industry and commerce may order it to suspend its business operation or may revoke its business license.
Article 16 A contractual joint venture shall, by presenting its business license, open a foreign exchange account with a bank
or any other financial institution which is permitted by the exchange control authorities of the State to conduct transactions in
foreign exchange.
A contractual joint venture shall handle its foreign exchange transactions in accordance with the State regulations on foreign exchange
control.
Article 17 A contractual joint venture may obtain loans from financial institutions within the territory of China and
may also obtain loans outside the territory of China.
Loans to be used by the Chinese and foreign parties as investment or conditions for cooperation, and their guarantees shall be provided
by each party on its own.
Article 18 The various kinds of insurance coverage of a contractual joint venture shall be furnished by insurance institutions
within the territory of China.
Article 19 A contractual joint venture may, within its scope of operation approved, import materials it needs and export products
it produces. A contractual joint venture may, in adherence to the principles of fairness and rationality, purchase on both the Chinese
and the world market the raw and semi-processed materials, fuels and other materials it needs within the approved scope of operation.
Article 20 A contractual joint venture shall, in accordance with State regulations on tax, pay taxes and may enjoy the preferential
treatment of tax reduction or exemption.
Article 21 The Chinese and foreign parties shall share earnings or products, undertake risks and losses in accordance with
the agreements prescribed in the contractual joint venture contract.
If, upon the expiration of the period of a venture's operation, all the fixed assets of the contractual joint venture, as agreed
upon by the Chinese and foreign parties in the contractual joint venture contract, are to belong to the Chinese party, the Chinese
and foreign parties may prescribe in the contractual joint venture contract the ways for the foreign party to recover its investment
ahead of time during the period of the venture's operation. If the foreign party, as agreed upon in the contractual joint venture
contract, is to recover its investment prior to the payment of income tax, it shall apply to the financial and tax authorities, which
shall examine and approve the application in accordance with State regulations concerning taxes.
If, according to the provisions of the preceding paragraph, the foreign party is to recover its investment ahead of time during the
period of the venture's operation, the Chinese and foreign parties shall, as stipulated by the relevant laws and agreed in the contractual
joint venture contract, be liable for the debts of the venture.
Article 22 After the foreign party has fulfilled its obligations under the law and the contractual joint venture contract,
the profits it receives as its share, its other legitimate income and the funds it receives as its share upon the termination of
the venture, may be remitted abroad according to law.
The wages, salaries or other legitimate income earned by the foreign staff and workers of contractual joint ventures, after the payment
of the individual income tax according to law, may be remitted abroad.
Article 23 Upon the expiration or termination in advance of the term of a contractual joint venture, its assets, claims
and debts shall be liquidated according to legal procedures. The Chinese and foreign parties shall, in accordance with the agreement
specified in the contractual joint venture contract, determine the ownership of the venture's property.
A contractual joint venture shall, upon the expiration or termination in advance of its term, cancel its registration with the administrative
department for industry and commerce and the tax authorities.
Article 24 The period of operation of a contractual joint venture shall be determined through consultation by the Chinese
and foreign parties and shall be clearly specified in the contractual joint venture contract. If the Chinese and foreign parties
agree to extend the period of operation, they shall apply to the examination and approval authority 180 days prior to the expiration
of the venture's term. The examination and approval authority shall decide whether or not to grant approval within 30 days from the
date of receiving the application.
Article 25 Any dispute between the Chinese and foreign parties arising from the execution of the contract or the articles of
association for a contractual joint venture shall be settled through consultation or mediation. In case of a dispute which the Chinese
or foreign parties is unwilling to settle through consultation or mediation, or of a dispute which they have failed to settle through
consultation or mediation, the Chinese and foreign parties may submit it to a Chinese arbitration agency or any other arbitration
agency for arbitration in accordance with the arbitration clause in the contractual joint venture contract or a written agreement
on arbitration concluded afterwards.
The Chinese or foreign party may bring a suit in a Chinese court, if no arbitration clause is provided in the contractual joint venture
contract and if no written agreement is concluded afterwards.
Article 26 The detailed rules for the implementation of this Law shall be formulated by the department in charge of foreign
economic relations and trade under the State Council and reported to the State Council for approval before implementation.
Article 27 This Law shall go into effect as of the date of its promulgation.
|
|
|
|