中外合资企业法英语版（四）

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

 

(Adopted by the Second Session of the Fifth National People's Congress on July 

 

1, 1979, first amended according to the Resolution on Revising the Law of the 

 

People's Republic of China on Chinese-Foreign Joint Ventures adopted by the 

 

Third Session of the Seventh National People's Congress on April 4, 1990 and 

 

amended for the second time according to the Resolution on Revising the Law 

 

of the People's Republic of China on Chinese-Foreign Joint Ventures adopted by 

 

the Fourth Session of the Ninth National People's Congress on March 15, 2001) 

 

 

Article 1 With a view to expanding international economic cooperation and 

 

technical exchange, the People's Republic of China permits foreign companies, 

 

enterprises, other economic organizations or individuals (hereinafter referred to 

 

as ``foreign partner in a joint ventures'') to join with Chinese companies, 

 

enterprises or other economic organizations (hereafter referred to as ``Chinese 

 

partner in a joint ventures'') to establish joint ventures in the People's Republic 

 

of China in accordance with the principle of equality and mutual benefit and 

 

subject to approval by the Chinese government. 

 

 

 

Article 2 The Chinese government protects, in accordance with the law, the 

 

investment of foreign partner in a joint ventures, the profits due them and their 

 

other lawful rights and interests in a joint venture, pursuant to the agreement, 

 

contract and articles of association approved by the Chinese government. All 

 

the activities of a joint venture shall comply with the stipulations of the laws and 

 

legal regulations of the People's Republic of China. The state shall not 

 

nationalize or take over joint ventures; under special circumstances and 

 

according to the needs of social public interests, the state may requisite joint 

 

ventures according to legal procedures with due compensation. 

 

 

 

Article 3 The joint venture agreement, contract and articles of association 

 

signed by the parties to the venture should be submitted to the competent 

 

foreign economic and trade department of the state (hereafter referred to as 

 

the ``examining and approving organ'') for examination and approval; and the 

 

examining and approving organ shall, within three months, decide whether to 

 

approve or disapprove them. After approval, the joint venture should register 

 

with the competent administration department for industry and commerce, 

 

obtain a license to do business and start operation. 

 

 

 

Article 4 A joint venture shall take the form of a limited liability company. The 

 

proportion of the investment contributed by the foreign joint venture(s) should 

 

generally not be less than 25 percent of the registered capital of a joint 

 

venture. 

 

 

 

The parties to the venture shall share the profits, risks and losses in proportion 

 

to their respective contribution to the registered capital. No assignment of the 

 

registered capital of a joint venture participant shall be made without the 

 

consent of the other parties to the venture. 

 

 

Article 5 Each party to a joint venture may make its investment in cash, in kind 

 

or in industrial property rights, etc. The technology and the equipment that 

 

serve as the investment of the foreign partner in a joint venture must be 

 

advanced technology and equipment that actually suit our country's needs. If 

 

the foreign partner in a joint venture causes losses by deception through the 

 

intentional use of backward technology and equipment, it shall pay 

 

compensation for these losses. 

 

 

The investment of a Chinese partner in a joint venture may include the right to 

 

the use of a site provided for the joint venture during the period of its operation. 

 

If the right to the use of the site does not constitute a part of a Chinese partner's 

 

investment, the joint venture shall pay the Chinese government a fee for its use. 

 

The various investments referred to above shall be specified in the joint venture 

 

contract and articles of association, and the value of each (excluding that of the 

 

site) shall be jointly assessed by the parties to the venture. 

 

 

 

Article 6 A joint venture shall have a board of directors, which shall have its size 

 

and composition stipulated in the contract and the articles of association after 

 

consultation between the parties to the venture, and the directors shall be 

 

appointed and replaced by the parties to the venture. The chairman and vice-

 

chairmen of the board shall be decided by the parties to the venture through 

 

consultation or elected by the directors of the board. The office of chairman of 

 

the board shall be assumed by one side of the venture, and that of the vice-

 

chairman, by the other party. The board of directors shall decide major 

 

problems of the joint venture in accordance with the principle of equality and 

 

mutual benefit. 

 

 

 

The board of directors is empowered, pursuant to the provisions of the articles 

 

of association of the joint venture, to discuss and decide all major problems of 

 

the joint venture: expansion programs, proposals for production and operating 

 

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

 

concerning manpower and pay scales, the termination of business and the 

 

appointment or employment of the president, the vice-president(s), the chief 

 

engineer, the treasurer and the auditors, as well as their powers and periods of 

 

employment, etc. The offices of president and vice-president(s) (or factory 

 

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

 

the venture. Matters such as the employment, dismissal, payment, welfare, 

 

labor protection and labor insurance of the staff and workers of joint ventures 

 

shall be provided for in contracts reached in accordance with the law. 

 

 

 

Article 7 Staff and workers of joint ventures shall establish their trade unio 

 

organizations, conduct trade unio activities and safeguard their lawful rights 

 

and interests according to the law. Joint ventures shall provide necessary 

 

conditions for the activities of the trade unios within the enterprises. 

 

 

 

Article 8 After payment, pursuant to the provisions of the tax laws of the 

 

People's Republic of China, of the joint venture income tax on the gross profit 

 

earned by the joint venture and after deduction from the gross profit of a 

 

reserve fund, a bonus and welfare fund for staff and workers, and a venture 

 

expansion fund, as provided in the articles of association of the joint venture, the 

 

net profit should be distributed to the parties to the joint venture in proportion to 

 

their respective contributions to the registered capital. 

 

 

 

A joint venture may enjoy preferential treatment of tax reduction or exemption 

 

in accordance with state tax laws and administrative regulations. A foreign 

 

partner in a joint venture that reinvests in China its share of the net profit may 

 

apply for refund of a part of the income taxes already paid. 

 

 

 

Article 9 A joint venture shall open a foreign exchange account with a bank 

 

approved by the state foreign exchange administration or other financial organs 

 

for handling foreign exchange businesses, with its business license. The 

 

pertinent foreign exchange transactions of a joint venture shall be conducted in 

 

accordance with the regulations on foreign exchange control of the People's 

 

Republic of China. In its operating activities a joint venture may directly raise 

 

funds from foreign banks. 

 

 

 

The various kinds of insurance coverage of a joint venture shall be furnished by 

 

insurance companies within Chinese territory. 

 

 

Article 10 In its purchase of required raw and processed materials, fuels, etc. 

 

within the approved business scope, a joint venture may make the purchases 

 

from Chinese market or the international market according to the principle of 

 

being fair and rational. 

 

 

 

A joint venture is encouraged to market its products outside China. Export 

 

products may be distributed to foreign markets through the joint venture 

 

directly or through associated agencies, and they may also be distributed 

 

through China's foreign trade agencies. Products of the joint venture may also 

 

be distributed in the Chinese market. 

 

 

Whenever necessary, a joint venture may establish branches outside China. 

 

 

 

Article 11 The net profit that the foreign side in a joint venture receives after 

 

fulfilling its obligations under the laws and various agreements and contracts, 

 

the funds it receives at the time of the joint venture's scheduled expiration or 

 

early termination, and any other funds, may be remitted abroad in accordance 

 

with the foreign exchange regulations and in the currency specified in the joint 

 

venture contract. 

 

 

 

The foreign side in a joint venture shall be encouraged to deposit in the Bank of 

 

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

 

 

Article 12 The wages, salaries and other legitimate income earned by the 

 

foreign staff and workers of a joint venture, after payment of individual income 

 

tax under the tax laws of the People's Republic of China, may be remitted 

 

abroad in accordance with the foreign exchange regulations. 

 

 

 

Article 13 The contract period of a joint venture may be decided through 

 

consultation by the parties to the venture according to its particular line of 

 

business and circumstances. The joint ventures of some trades should decide 

 

their contract periods; and the joint ventures of other trades may or may not 

 

decide their contract periods. If the parties to a joint venture with a prescribed 

 

contract period agree to extend the period, an application for extension of the 

 

contract should be made six months before its original expiration date. The 

 

examining and approving organ should make a decision within one month from 

 

the day of receiving the application. 

 

 

 

Article 14 In case of heavy losses, failure of a party to fulfill the obligations 

 

prescribed by the contract and the articles of association, force majeure, etc., 

 

the contract may be terminated through consultation and agreement by the 

 

parties to the venture, subject to approval of the examining and approving 

 

organ and to registration with the industry and commerce administrations of the 

 

state. In cases of any losses caused by a breach of contract, the party violating 

 

the contract shall assume financial responsibility. 

 

 

 

Article 15 Disputes arising between the parties to a joint venture that the board 

 

of directors cannot settle through consultation may be settled through mediation 

 

or arbitration by a Chinese arbitration agency or through arbitration by another 

 

arbitration agency agreed upon by the parties to the venture. In cases where 

 

the parties of a joint venture have not made any stipulations on arbitration in 

 

their contract or have not reached an agreement on arbitration in writing 

 

afterward may take proceedings to the people's court. 

 

 

 

Article 16 This law shall come into force on the day of promulgation.