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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 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 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 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 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 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. |
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