|
|
|
|
Law of the
People's Republic of China on
Chinese-Foreign
Contractual
Joint Ventures
(Adopted at
the First Session of the Seventh National People's
Congress and promulgated by Order No.4 of the
President of the People's Republic of China on
April 13, 1988, and effective as of the date of
promulgation)
Article 1
This Law is formulated to expand economic
cooperation and technological exchange with
foreign countries and to promote the joint
establishment, on the principle 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 must abide by Chinese
laws and regulations and must not injure the
public interests of China.
The relevant
State authorities 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 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 parrties shall,
within 30 days of receiving the certificate of
approval, apply to the administrative authorities
for industry and commerce for registration and
obtain a business license. The date of issuance of
the business license of a contractual joint
venture shall be the date of its establishment.
A contratual 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 authorities
for industry and commerce and with the tax
anthorities.
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 authorities for industry and
commerce shall set another time limit for the
fulfilment 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 authorities for industry and
commerce according to relevant state provisions.
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 must obtain the 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
interfered with.
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 must obtain
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
authorities for industry and commerce.
Article 13 The
employment, dismissal, remuneration, welfare,
labour protection and 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 must establish its account books
within the territory of China, file its accounting
statements according to relevant provisions 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 authorities for
industry and commerce may order it to suspend its
business operations 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 provisions of the State 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 approved
scope of operation, import materials it needs and
export products it produces. A contractual joint
venture may purchase, on both the domestic market
and the world market, the raw and processed
materials, fuels, etc. within its approved scope
of operation.
Article 20
A contractual joint venture shall achieve on its
own the balance of its foreign exchange receipts
and expenditures. If a contractual joint venture
is unable to achieve the balance of its foreign
exchange receipts and expenditures on its own, it
may, in accordance with State provisions, apply to
the relevant authorities for assistance.
Article 21 A contractual
joint venture shall, in accordance with State
provisions on tax, pay taxes and may enjoy the
preferential treatment of tax reduction or
exemption.
Article 22 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 must apply to the financial and tax
authorities, which shall examine and approve the
application in accordance with State provisions
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 23
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 24 Upon the
expiration or ternination 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
authorities for industry and commerce and the tax
authorities.
Article 25
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 of receiving the application.
Article 26 Any dispute
between the Chinese and foreign parties arising
from the execution of the contract or the articles
of the association for a contractual joint venture
shall be settled through consultation or
mediation. In case of a dispute which the Chinese
or the foreign party 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 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
27 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
28 This Law shall come into force as of
the date of its promulgation. |
|
|
|
|
|
|
|
 |
|
|
|
|
|
All material on this
website is copyright and may not be republished in any form without written
permission.
© Copyright 1999 - 2005 Asia Times
Online Ltd.
|
|
Head
Office: Rm 202, Hau Fook Mansion, No. 8 Hau Fook St., Kowloon, Hong
Kong
Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
|
|
|
|
