Joint Ventures
BIZCHINA / Company laws
Law of the People's Republic of China on Chinese-Foreign Contractual
Joint Ventures
Updated: 2006-04-18 09:49
(Adopted at the First Session of the Seventh National People's Congress,
and revised according to the Decision on Modifying the Law of the
People's Republic of China on Chinese-Foreign Contractual Joint Ventures
adopted at the 18th Session of the Standing Committee of the Ninth
National People's Congress on October 31, 2000, and promulgated by Order
No.40 of the President of the People's Republic of China 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 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.
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