Article 1
These Detailed Rules are formulated in accordance with the Law of the People's Republic of China on Chinese-Foreign Cooperative Joint Ventures .
Article 2
The establishment of Chinese-Foreign cooperative joint ventures(hereinafter referred to as "cooperative joint ventures")in the territory of China shall comply with the development policy and industrial policy of the State, and the provisions of the State for the guidance of foreign investment direction.
Article 3
A cooperative joint venture may, within the perimeters of the approved cooperative joint venture agreement, contract and articles of association, conduct business and management activities independently according to law and free from the intervention of any organization or individual.
Article 4
A cooperative joint venture may be either a joint venture with the status of a Chinese legal person obtained according to law or one without the legal person status. For a cooperative joint venture without the legal person status, where Chapter IX of the Detailed Rules has special provisions, these provisions shall apply.
Article 5
The competent authority for a cooperative joint venture shall be the competent authority for the Chinese party of the joint venture. Where there are more than one Chinese party to the cooperative joint venture, the examination and approval authority shall decide on a competent authority for the cooperative joint venture in consultation with relevant departments, unless otherwise stipulated in laws and administrative rules. The competent authority for a cooperative joint venture shall conduct coordination and afford assistance in relation to matters of the cooperative joint venture.
Article 6
The establishment of a cooperative joint venture shall be examined and approved by the Ministry of Foreign Trade and Economic Cooperation or the department and local people's government authorized by the State Council. The department or local people's government authorized by the State Council may examine and approve cooperative joint ventures in the following circumstances:
(1) The total amount of investment is within the authorization for approval as set by the State Council, by the departments or local people's governments authorized by the State Council;
(2) The capital has been raised by the applicants themselves, construction and production conditions do not need to be ballanced by the State ;
(3) Exportation of the products of the cooperative joint venture does not require export quota and license to be issued by relevant competent departments of the State; or if exportation requires quota and license, the consent of relevant competent departments has been obtained prior to submitting the application for establishing the cooperative joint venture.
(4) Other circumstances in which the departments or local governments authorized by the State Council may examine and approve cooperative joint ventures as stipulated in laws and administrative rules.
Article 7
To establish a cooperative joint venture, the Chinese party/parties (hereinafter referred to as the Chinese party) shall submit to the examination and approval authority the following documents:
(1) Application for establishing a cooperative joint venture accompanied by the examination and approval documents of the competent authority;
(2) Feasibility study report jointly prepared by all parties to the cooperative joint venture accompanied by the examination and approval documents of the competent authority;
(3) Joint venture agreement, contract and articles of association signed by the legal representatives or representatives authorized by them of all parties to the joint venture;
(4) Business licenses or registration certificates, financial credit documents and valid certification documents of the legal representatives of all parties to the joint venture; where the foreign party/parties ( hereinafter referred to as the foreign party) is a natural person, valid certification documents on his/her identity, resume and financial credit shall be presented;
(5) List of chairman, deputy chairmen and members of the board of directors or list of director, deputy directors and members of the joint management committee of the cooperative joint venture as determined by all parties through consulatation;
(6) Other documents as required by the examination and approval authority. The documents listed in the preceding paragraph shall be written in Chinese with the exception of the documents in the subparagraph (4) to be presented by the foreign party, each of the documents required under subparagraph (2), (3) and (5) may be accompanied by a version of a foreign language agreed upon by all parties. The examination and approval authority shall decide whether to approve or disapprove the application for the establishment of a cooperative joint venture within 45 days from the date of receiving all the documents as stipulated; should anything incomplete or inappropriate be found in the documents presented, the examination and approval authority may demand a supplement or amendment to them within a limited period of time.
Article 8
For a cooperative joint venture approved by the Ministry of Foreign Trade and Economic Cooperation or by departments authorized by the State Council, the certificate of approval shall be granted by the Ministry of Foreign Trade and Economic Cooperation. For a cooperative joint venture approved by local people's government authorized by the State Council, the relevant local people's government shall grant the certificate of approval and submit the relevant approval documents to the Ministry of Foreign Trade and Economic Cooperation for recordation within 30 days from the date of approval. The cooperative joint venture approved for establishment shall apply, according to law, to the administrative authorities for industry and commerce for registration and business license.
Article 9
An application for establishing a cooperative joint venture shall not be approved if the venture involves in any of the following circumstances:
(1) Detriment to China's sovereignty or public interest;
(2) Jeopardizing the State security;
(3) Polluting and damaging the environment;
(4) Other circumstance involving violation of laws, administrative rules and the State industrial policies.
Article 10
For the purpose of the Detailed Rules, the cooperative joint venture agreement refers to a written document produced after all parties reached consensus on the principles and significant matters in relation to the establishment of the cooperative joint venture. For the purpose of the Detailed Rules, the cooperative joint venture contract refers to a written document produced after all parties reached consensus on their respective rights and obligations in the cooperative joint venture. For the purpose of the Detailed Rules, the articles of association of a cooperative joint venture refers to a written document laying down the principles of organization and method of operation and management as agreed on by all parties in line with the cooperative joint venture contract. Where there are any contents in the agreement and articles of association which are inconsistent with the contract of a cooperative joint venture, the contract shall previal. The parties to a cooperative joint venture may not sign a cooperative joint venture agreement.
Article 11
The agreement, contract and articles of association of a cooperative joint venture shall enter into force upon the issuance of the certificate of approval by the examination and approval authority. For the duration of the cooperative joint venture, and substantive amendment to the agreement, contract and article of association of the cooperative joint venture shall be approved by the examination and approval authority.
Article 12
The contract of a cooperative joint venture shall bear the following items:
(1) Names, place of registration, domicile of all parties, and names, titles and nationalities of their legal representatives ( where the foreign party is a natural person, his/her name, nationality and domicile);
(2) Name, address and business scope of the cooperative joint venture;
(3) Total amount of investment, registered capital, way and duration of investment or cooperation conditions contributed by each party;
(4) Transfer of investment contribution or provision of cooperation conditions by each party; (5) Distribution of income or products to all parties, apportioning of risk or loss between the parties;
(6) Composition of the board of directors or the joint management committee, allocation of the members of the board of directors or the joint management committee, responsibilities of and the ways for employment and dismissal of the president and other senior management people;
(7) Main production equipment and production technology to be employed, and their sources;
(8) Arrangement for sales of products in and outside China;
(9) Arrangement for the income and expenditure of foreign exchanges of the cooperative joint venture;
(10) duration, dissolution and liquidation of the cooperative joint venture;
(11) Other obligations of the parties and the responsibilities arising from breach of the contract;
(12) Principles for handling finance, accounting and auditing;
(13) Settlement between and among all parties;
(14) Procedures for amending the cooperative joint venture contract.
Article 13
The articles of association of a cooperative joint venture shall include the following items:
(1) Name and address of the cooperative joint venture; (2) Business scope and duration of cooperation of the cooperative joint venture; (3) Names, places of registration, domicile of all parties to the cooperative joint venture and names, titles, and nationalities of their legal representatives (where the foreign party is a natural person, his/her name, nationality and domicile); (4) Total amount of investment, registered capital, ways and duration of investment or cooperation conditions contributed by the parties to the cooperative joint venture; (5) Distribution of income or products to all parties and apportioning of risk and loss between the parties; (6) Composition, terms of reference and proceedings of the board of directors or joint management committee of the cooperative joint venture; term of office for directors of the board of directors or members on the joint management committee; terms of reference of chairman and vice chairmen of the board of directors or director and deputy directors of the joint management committee; (7) Establishment, terms of reference and reles for handling matters of the operation and management body; terms of reference, engagement and dismissal of general manager and other senior management personnel; (8) Regulations related to labor management covering emplyment of staff and workers, training, labor contract, salaries & wages, social insurance, welfare benefits, job safety, etc.; (9) Finance, accounting and auditing system of the cooperative joint venture; (10) Dissolution and liquidation of the cooperation joint venture; (11) Procedures for amendment of the articles of association of the cooperative joint venture.
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.
