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中华人民共和国中外合资经营企业法(英文版)
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中华人民共和国中外合资经营企业法(修正本)(英文版)

        LAW OF THE PEOPLE'S REPUBLIC OF CHINA  ON  CHINESE-FOREIGN  EQUITYJOINT VENTURES

          he Third Session of the Seventh National People's Congress  onApril 4, 1990)

            Important Notice:

This  English  document  is  coming  from  "LAWS  AND  REGULATIONS  OF THE

PEOPLE'S REPUBLIC OF  CHINA  GOVERNING  FOREIGN-RELATED  MATTERS" (1991.7)

which  is  compiled  by  the  Brueau  of  Legislative Affairs of the State

Council of  the  People's Republic of China, and is published by the China

Legal System Publishing House.

In case of discrepancy, the original version in Chinese shall prevail.

 

          Whole Document 

 

LAW OF THE PEOPLE'S REPUBLIC OF CHINA  ON  CHINESE-FOREIGN  EQUITY

JOINT VENTURES

(Adopted at the Second Session  of  the  Fifth  National  People's

Congress on July 1, 1979, and revised in accordance with the  Decision  of

the National People's Congress Regarding the Revision of the  Law  of  the

People's Republic  of  China  on  Chinese-Foreign  Equity  Joint  Ventures

adopted at the Third Session of the Seventh National People's Congress  on

April 4, 1990)

Article 1

With  a  view  to  expanding  international   economic   cooperation   and

technological exchange,  the  People's  Republic  of  China  shall  permit

foreign  companies,   enterprises,   other   economic   organizations   or

individuals (hereinafter referred to  as  "foreign  joint  venturers")  to

establish  equity  joint  ventures  together   with   Chinese   companies,

enterprises or other economic organizations (hereinafter  referred  to  as

"Chinese joint venturers") within the territory of the  People's  Republic

of China, on the principle of equality and mutual benefit, and subject  to

approval by the Chinese Government.

Article 2

The Chinese Government shall protect, according to the law, the investment

of foreign joint ventures, the profits due them  and  their  other  lawful

rights  and  interests  in  an  equity  joint  venture,  pursuant  to  the

agreement, contract and articles of association approved  by  the  Chinese

Government.

All activities of an equity joint venture shall comply with the provisions

of the laws, decrees and pertinent regulations of the People's Republic of

China.

The state shall not nationalize or requisition any equity joint venture.

Under special circumstances, when public interest requires,  equity  joint

ventures  may  be  requisitioned  by  following   legal   procedures   and

appropriate compensation shall be made.

Article 3

The equity joint venture agreement, contract and articles  of  association

signed by the parties to the venture shall be  submitted  to  the  state's

competent department in charge of foreign  economic  relations  and  trade

(hereinafter referred to as the examination and approval authorities)  for

examination and approval. The examination and approval  authorities  shall

decide to approve or disapprove the  venture  within  three  months.  When

approved, the  equity  joint  venture  shall  register  with  the  state's

competent department in charge of industry  and  commerce  administration,

acquire a business license and start operations.

 

Article 4

An equity joint venture  shall  take  the  form  of  a  limited  liability

company.  The proportion of the foreign joint venturer's investment in  an

equity joint venture shall be, in general, not less than 25 percent of its

registered capital.  The parties to the venture shall share  the  profits,

risks and losses in proportion to their contributions  to  the  registered

capital.

If any of the joint venturers wishes to assign its registered capital,  it

must obtain the consent of the other parties to the venture.

Article 5

The parties to an equity joint venture may make their investment in  cash,

in kind or in industrial property rights, etc.

The technology and equipment contributed by a foreign  joint  venturer  as

its investment must be really advanced technology and equipment that  suit

China's needs. In case of losses caused by a foreign joint venturer in its

practising  deception  through  the  intentional  provision  of   outdated

technology and equipment, it shall compensate for the  losses.  A  Chinese

joint venturer's investment may include the right to the  use  of  a  site

provided for the equity joint venture during the period of its operation.

If the right to the use of the site is not taken as a part of the  Chinese

joint venturer's investment,  the  equity  joint  venture  shall  pay  the

Chinese Government for its use.  The above-mentioned investments shall  be

specified in the contract and articles of association of the equity  joint

venture, and their value (excluding that of the site) shall be assessed by

all parties to the venture.

 

Article 6

An equity joint venture shall have a board of directors; the number of the

directors thereof from each party and the composition of the  board  shall

be  stipulated  in  the  contract  and  articles  of   association   after

consultation among the parties to the venture;  such  directors  shall  be

appointed and replaced by the relevant parties. The chairman and the vice-

chairman (vice-chairmen) shall be determined through consultation  by  the

parties to the venture or elected  by  the  board  of  directors.  If  the

Chinese side or the foreign side assumes the office of the  chairman,  the

other  side  shall  assume  the  office(s)  of  the  vice-chairman  (vice-

chairmen). The  board  of  directors  shall  decide  on  important  issues

concerning the joint venture on  the  principle  of  equality  and  mutual

benefit.

The functions and powers of the board of directors are, as  stipulated  in

the articles of association of the equity joint venture,  to  discuss  and

decide all major issues concerning  the  venture,  namely,  the  venture's

development plans, proposals for production and business  operations,  the

budget for revenues and expenditures, the  distribution  of  profits,  the

plans concerning manpower and wages, the termination of business, and  the

appointment  or  employment  of  the  general  manager,  the  vice-general

manager(s), the chief engineer, the treasurer and the auditors, as well as

the determination of their functions, powers and terms of employment, etc.

The offices of general manager and  vice-general  manager(s)  (or  factory

manager and deputy manager(s) shall be assumed by the  respective  parties

to the venture.  The employment and discharge of  the  workers  and  staff

members of an equity joint venture shall be stipulated in accordance  with

the law in the agreement and contract concluded  by  the  parties  to  the

venture.

 

Article 7

The new profit of an equity joint venture shall be distributed  among  the

parties to the venture in proportion to their respective contributions  to

the registered capital, after payment out  of  its  gross  profit  of  the

equity joint venture income tax, pursuant to the  provisions  of  the  tax

laws of the People's Republic of China, and after deduction from the gross

profit of a reserve fund, a bonus and welfare fund for workers  and  staff

members and a venture expansion  fund,  as  stipulated  in  the  venture's

articles of association. An equity joint venture may, in  accordance  with

provisions of the relevant laws and administrative rules  and  regulations

of the state on taxation, enjoy preferential treatment for reduction of or

exemption from taxes.

A foreign joint venturer that reinvests its share of the net profit within

the territory of China may apply for partial  refund  of  the  income  tax

already paid.

Article 8

An equity joint venture shall, on the strength of  its  business  license,

open a foreign exchange  account  with  a  bank  or  any  other  financial

institution which is permitted by the state agency  for  foreign  exchange

control to handle foreign exchange transactions.  An equity joint ventures

shall handle its foreign exchange  transactions  in  accordance  with  the

regulations on foreign exchange control of the People's Republic of China.

An equity joint venture may, in its business  operations,  directly  raise

funds from foreign banks.

The various kinds of insurance coverage of an equity joint  venture  shall

be furnished by Chinese insurance companies.

Article 9

The production and business operating plans of  an  equity  joint  venture

shall be submitted to the competent authorities for record  and  shall  be

implemented through economic contracts.

In its purchase of  required  raw  and  semi-processed  materials,  fuels,

auxiliary equipment, etc., an  equity  joint  venture  should  give  first

priority to purchases in China. It may also make such  purchases  directly

on the world market with foreign exchange raised by itself.

An equity joint venture shall be encouraged to market its products outside

China. It may sell its export products  on  foreign  markets  directly  or

through  associated  agencies  or  China's  foreign  trade  agencies.  Its

products may also be sold on  the  Chinese  market.   When  necessary,  an

equity joint venture may set up branches and subbranches outside China.

 

Article 10

The net profit which a foreign joint venturer receives as its share  after

performing its obligations under the  laws,  and  the  agreements  or  the

contract, the funds it receives upon the expiration of the venture's  term

of operation or its early termination, and its other funds may be remitted

abroad in accordance with foreign exchange control regulations and in  the

currency or currencies specified in the  contract  concerning  the  equity

joint venture.

A foreign joint venturer shall be encouraged to deposit  in  the  Bank  of

China the foreign exchange which it is entitled to remit abroad.

Article 11

The wages, salaries or other legitimate income earned by a foreign  worker

or staff  member  of  an  equity  joint  venture,  after  payment  of  the

individual income tax under the tax  laws  of  the  People's  Republic  of

China, may be remitted abroad in accordance with foreign exchange  control

regulations.

Article 12

Based  on  different  lines  of   trade   and   different   circumstances,

arrangements for the  duration  of  equity  joint  ventures  may  be  made

differently through agreement by the parties to the venture. Equity  joint

ventures engaged in certain lines of trade shall specify their duration in

the contracts, while equity joint ventures engaged in certain other  lines

of trade may choose to or not to specify their duration in the contracts.

Where an equity joint venture has  had  its  duration  specified  and  the

parties to the venture agree to extend the  duration,  the  venture  shall

file an application for the purpose  with  the  examination  and  approval

authorities  six  months  before  its  expiration.   The  examination  and

approval  authorities  shall,  within  one  month  after  receipt  of  the

application, decide on its approval or disapproval.

 

Article 13

In case of heavy losses, failure of a party  to  perform  its  obligations

under the contract and the articles of association, or force majeure etc.,

the parties to the joint venture may terminate the contract through  their

consultation and agreement, subject to approval  by  the  examination  and

approval authorities  and  to  registration  with  the  state's  competent

department in charge of industry and commerce administration. In cases  of

losses caused by a breach of contract, the financial responsibility  shall

be borne by the party that has breached the contract.

Article 14

Disputes arising between the parties to an equity joint venture which  the

board of directors has  failed  to  settle  through  consultation  may  be

settled through mediation or arbitration by an arbitration agency of China

or through arbitration by another arbitration agency agreed  upon  by  the

parties.

Article 15

This Law shall enter into force as of the date of promulgation. The  power

to amend this Law is vested in the National People's Congress.

 

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