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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 parties 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 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
authorities 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 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. |
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