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Article 1 This Law is formulated to expand economic cooperation
and technological exchanges with other countries, help foreign
enterprises and other economic organizations or individuals
(hereinafter referred to as foreign cooperators) to establish
Sino-foreign cooperative enterprises (hereinafter referred to as
cooperative enterprises) in the People’s Republic of China with
enterprises or other economic organizations of the People’s
Republic of China (hereinafter referred to as the Chinese
cooperators) in accordance with the principle of equality and
mutual benefit.
Article 2 When establishing cooperative enterprises, the Chinese
and foreign cooperators shall, in accordance with the
regulations of this Law, set the investment or cooperation
conditions, the distribution of the profits or products, the
share of risks and losses, the method of management, the
ownership of the properties of the enterprises when the
cooperation ceases and other issues covered in the cooperative
enterprise contracts.
Cooperative enterprises that conform to the regulations of
Chinese laws on the qualification of legal persons may acquire
the status of Chinese legal persons.
Article 3 The state protects, in accordance with law, the lawful
rights and interests of cooperative enterprises and Sino-foreign
cooperators.
The cooperative enterprises shall obey the provisions of laws
and regulations of China, and shall not harm the social or
public interests of China.
The relevant organs of the state will implement supervision over
the cooperative enterprises in accordance with law.
Article 4 The state encourages the establishment of product
export and high-tech production cooperative enterprises.
Article 5 When establishing a cooperative enterprise, the
cooperators shall submit the agreement, contract, articles of
association and other documents signed by the two parties to the
department in charge of foreign economic relations and trade of
the State Council or other organs or local governments
authorized by the State Council (hereinafter referred to as the
examination and approval organs). The examination and approval
organs shall, within 45 days after receiving the application,
decide whether to approve or reject it.
Article 6 After an application for establishing a cooperative
enterprise is approved, the enterprises shall apply for
registration at the relevant industrial and commercial
administrative organ, and receive a business license within 30
days after receiving the approval certificate. The date when the
business license of a cooperative enterprise is issued is the
date the enterprise is established.
The cooperative enterprises shall conduct tax registration with
the taxation organs within 30 days after their establishment.
Article 7 Any important changes in the cooperative contracts,
discussed and agreed by all the Chinese and foreign parties
involved, shall be reported to the examination and approval
organs for approval; if the changes concern legal industrial and
commercial registration items or tax items, the enterprises
shall register such changes with the industrial and commercial
administrative and taxation organs.
Article 8 The investment or cooperative conditions supplied by
the Sino-foreign cooperators can be cash, material objects,
land-use rights, industrial property rights, non-patent
technology or other property rights.
Article 9 The Chinese and foreign cooperators shall carry out
their obligations, providing investment in full and cooperation
conditions in time, in accordance with the provisions of laws
and regulations, and the agreements in the cooperative
enterprise contracts. If the obligations are not carried out in
time, the industrial and commercial administrative organs shall
set a time limit for them to carry out the obligations. If the
cooperators still do not carry out the obligations within the
time limit, the examination and approval organs and the
industrial and commercial administrative organs shall deal with
the case in accordance with relevant state regulations.
The investment or cooperation conditions provided by the
Sino-foreign cooperators shall be testified by Chinese certified
public accountants or other relevant organs, which shall issue
testimonials to this effect.
Article 10 If one side of the Sino-foreign cooperators wishes to
transfer whole or part of its rights and obligations in the
cooperative enterprise contract, it shall obtain the agreement
of the other side and the approval of the examination and
approval organs.
Article 11 The cooperative enterprises shall manage the business
in accordance with the approved cooperative enterprise contracts
and articles of association. The right of the cooperative
enterprises to manage the business by themselves shall not be
interfered with.
Article 12 A cooperative enterprise shall have a board of
directors or a joint management organ, which will make decisions
on important issues of the cooperative enterprise in accordance
with the regulations of the contracts and articles of
association of the cooperative enterprise. One side of the
Sino-foreign cooperators shall hold the post of chairman of the
board of directors or director of the joint management organ.
The other side shall be the vice-chairman of the board of
directors or deputy director of the joint management organ. The
board of directors or the joint management organ shall make
decisions to appoint or employ the chief manager, who shall be
responsible for the daily operations and management. The chief
manager shall be responsible to the board of directors or the
joint management organ.
If the Sino-foreign cooperators wish to entrust another party
besides themselves to manage their cooperative enterprise, a
unanimous agreement must be made by the board of directors or
the joint management organ. And then the cooperative enterprise
shall report this decision to the examination and approval
organs for approval, and register the change with the industrial
and commercial administrative organ.
Article 13 A labor contract, made in accordance with law, shall
set the employment, dismissal, remuneration, welfare, labor
protection, labor insurance and other items for the staff of the
cooperative enterprise.
Article 14 The workers of the cooperative enterprise shall set
up union organizations in accordance with law, carry out union
activities and protect the lawful rights and interests of the
workers.
The cooperative enterprise shall provide the necessary
conditions for the activities of the workers’ union of the
enterprise.
Article 15 The cooperative enterprise shall set up account books
in China, submit accounting statements in accordance with
regulations, and accept the supervision of the financial and
taxation organs.
If a cooperative enterprises is in violation of the above
regulations by not setting up accounting books in China, the
financial and taxation organs shall impose a fine, and the
industrial and commercial administrative organ can order it to
cease operation or even evoke its business license.
Article 16 The cooperative enterprises shall open foreign
exchange accounts with the banks or other financial organs
designated by the state foreign exchange control organs for
handling foreign exchange businesses.
Issues of cooperative enterprises concerning foreign exchange
shall be dealt with in accordance with state regulations on the
control of foreign exchange.
Article 17 The cooperative enterprises may seek loans from
financial organs in China as well as organs abroad.
The loans and guarantees used by the Sino-foreign cooperators as
investments or cooperation conditions shall be arranged by
themselves.
Article 18 The various kinds of insurance coverage for
cooperative enterprises shall be furnished by insurance organs
in China.
Article 19 Cooperative enterprises may import the materials they
need and export their products within the approved business
range. The cooperative enterprises may purchase the necessary
raw materials, fuels and other materials within the approved
business range in the domestic or international market, in
accordance with the principles of being fair and reasonable.
Article 20 Cooperative enterprises must pay taxes and enjoy
preferential treatment such as tax reduction or exemption in
accordance with relevant regulations of the state.
Article 21 The Chinese and foreign cooperators shall distribute
the profits or products and share the risks and losses in
accordance with the cooperative enterprise contracts.
If all the fixed properties of a cooperative enterprise are to
belong to the Chinese cooperator at the expiration of the
contract, according to the cooperation contract, the
Sino-foreign cooperators may arrange for the foreign cooperator
to take back its investments before the expiration of the
contract.
If a cooperative enterprise contract stipulates that the foreign
cooperator shall take back its investments before paying income
tax, the cooperative enterprise must send an application to the
financial and taxation organs, for examination and approval in
accordance with state taxation regulations.
As in the above provisions, if the contract stipulates that the
foreign cooperator take back the investment before the
expiration of the contracts, the Sino-foreign cooperators shall
share the responsibility for the debts of the cooperative
enterprise in accordance with the provisions of laws and the
cooperative enterprise contract.
Article 22 The lawful profits of the enterprises, other lawful
incomes of the foreign cooperators after they have performed
their legal obligations and the funds shared when the
cooperation is terminated may be remitted abroad in accordance
with law.
The salary and other lawful incomes of the foreign employees of
cooperative enterprises may be remitted abroad after paying
individual income tax in accordance with law.
Article 23 Cooperative enterprises shall clear the assets,
creditor’s rights and debts when the cooperative enterprise
contracts expire or end before the expiration time. The Chinese
and foreign cooperators shall confirm the ownership of the
assets of the cooperative enterprises in accordance with the
cooperation contracts.
When the cooperation comes to an end or ends before the
expiration time, the cooperative enterprise shall cancel its
registration with the relevant industrial and commercial
administrative and taxation organs.
Article 24 The cooperation time limit shall be decoded by the
Sino-foreign cooperators and stipulated in the cooperation
contract. If the Chinese and foreign cooperators wish to extend
the cooperation time limit, they shall send an application to
the relevant examination and approval organ 180 days before the
expiration date of the cooperation contract. The examination and
approval organs shall, within 30 days after receiving the
application, decide whether to approve or reject the
application.
Article 25 The Chinese and foreign cooperators shall solve all
disputes arising in the course of performance of the cooperative
enterprise contract and the articles of association by
negotiation or mediation. In case the Chinese and foreign
cooperators do not wish to solve the dispute by negotiation or
mediation, or negotiation or mediation has proved unsuccessful,
the two parties may take the dispute to the Chinese arbitration
organs or other arbitration organs in accordance with the
arbitration provisions in the cooperative enterprise contracts
or written arbitration agreements made after the dispute has
arisen.
If the Chinese and foreign cooperators have not stipulated
arbitration provisions in the cooperative enterprise contract
and failed to reach any agreement in writing after the emergence
of a dispute, they can file a lawsuit with a Chinese court.
Article 26 The department in charge of foreign economic
relations and trade of the State Council shall draw up rules for
the implementation of this Law, which will come into effect
after the State Council has given its approval.
Article 27 This Law shall go into effect on the day it is
promulgated. |
