中外合资经营企业法实施条例英文版.doc

Implementing Regulations of the Law of the Peoples Republic of China on Sino-Foreign Equity Joint Ventures (Revised in 2014) (Edited by L) Promulgation date02-19-2014 Effective regionNATIONAL PromulgatorState Council Document noOrder of the State Council No. 648 EffectivenessEffective Effective date2014-03-01 CategoryForeign Investment Enterprise ( Company Law-Foreign Investment Enterprise ) Implementing Regulations of the Law of the Peoples Republic of China on Sino-Foreign Equity Joint Ventures (Revised in 2014) (Edited by L)Order of the State Council No. 648February 19, 2014(Promulgated by the State Council on September 20, 1983, firsly amended by the State Council according to the Revision of Article 100 of the Implementing Regulations of the Law of the Peoples Republic of China on Sino-Foreign Equity Joint Ventures on January 15, 1986, and secondly amended according to the Revision of Paragraph 3, Article 80 of the Implementing Regulations of the Law of the Peoples Republic of China on Sino-Foreign Equity Joint Ventures on December 21, 1987, and further amended in accordance with the Decision of the State Council on the Revision of the Implementing Regulations of the Law of the Peoples Republic of China on Sino-Foreign Equity Joint Ventures on July 22, 2001, and finally amended in accordance with Decision of the State Council on Abolishing and Revising Some Administrative Laws and Regulations on January 8, 2011; amended for the fifth time according to Decision of the State Council on Repealing and Revising Certain Administrative Regulations on February 19, 2014)Chapter I General ProvisionsArticle 1 These Regulations are formulated for the purpose of facilitating the smooth implementation of the Law of the Peoples Republic of China on Sino-Foreign Equity Joint Ventures (hereinafter referred to as the Law on Sino-Foreign Equity Joint Ventures).Article 2 Sino-foreign equity joint ventures (hereinafter referred to as joint ventures) established within the territory of China in accordance with the Law on Sino-foreign Equity Joint Ventures are legal persons in China and are governed and protected by Chinese laws.Article 3 Joint ventures established within the territory of China shall be able to promote the economic development of China and the enhancement of science and technology, and facilitate the socialist modernization and construction.Industries in which the establishment of joint ventures is encouraged, permitted, restricted or prohibited by the State shall be determined in accordance with the provisions of the State in the Regulations on Foreign Investment Guidelines and the Guidance Catalogue of Foreign Investment Industries.Article 4 An application for establishing a joint venture shall not be approved under any of the following circumstances:1. damages Chinas sovereignty;2. violates Chinese laws;3. is not in conformity with the requirements of the development of Chinas national economy;4. causes environmental pollution; or5. there is obvious inequity in the agreements, contracts and Articles of association signed, impairing the rights and interests of one party to the joint venture.Article 5 A joint venture shall have the right to independently conduct business and management within the scope as prescribed by Chinese laws and regulations, and by the agreement, contract and Articles of association of the joint venture. The departments concerned shall provide support and assistance.Chapter II Establishment and RegistrationArticle 6 The establishment of joint ventures within the territory of China shall be subject to the examination and approval of the Ministry of Foreign Trade and Economic Cooperation of the Peoples Republic of China (hereinafter referred to as MOFTEC). Upon approval, MOFTEC shall issue a certificate of approval.The State Council shall authorize the peoples government in provinces, autonomous regions and municipalities directly under the Central Government and the relevant departments under the State Council the power to examine and approve the establishment of joint ventures which satisfy the following conditions:1. Where the total amount of capital contribution is within the examination and approval authority as prescribed by the State Council and the source of capital of the Chinese party to the joint venture has been ascertained; 2. Where there is no need for the State to allocate additional raw materials, and the national balance of fuel, power, transportation and foreign trade export quota, etc. is not affected.Joint ventures established upon approval as prescribed in the preceding paragraph shall be filed with MOFTEC for the record.MOFTEC and the State Council authorized peoples government in provinces, autonomous regions and municipalities directly under the Central Government and the relevant departments under the State Council shall hereinafter collectively referred to as the examination and approval authorities.Article 7 When applying for the establishment of a joint venture, the Chinese party and the foreign party to the joint venture shall jointly submit the following documents to the examination and approval authorities:1. an application for the establishment of a joint venture;2. the feasibility study report jointly prepared by the parties to the joint venture; 3. joint venture agreements, contracts and Articles of association executed by the representatives authorized by the parties to the joint venture;4. lists of candidates for chairperson, vice chairperson and directors nominated by the parties to the joint venture; 5. other documents required by the examination and approval authorities.Documents listed in the preceding paragraph shall be written in Chinese, and documents (2), (3) and (4) can be written simultaneously in a foreign language agreed upon by the parties to the joint venture. Documents written in both languages shall be equally authentic and effective.Anything inappropriate in the submitted documents found by the examination and approval authorities shall be required to be amended within a specified time limit.Article 8 Upon receipt of all the documents stipulated in Article 7 hereof, the examination and approval authorities shall, within 3 months, decide whether to approve or disapprove.Article 9 The applicant shall, within one month upon receipt of the certificate of approval, go through the registration formalities with the administrative authority for industry and commerce (hereinafter referred to as the registration authority) in accordance with the relevant provisions of the State. The date on which the business license of the joint venture is issued shall be the date of the establishment of the joint venture.Article 10 For the purposes of these Regulations, joint venture agreement refers to the document agreed upon by the parties to the joint venture on some major points and principles regarding the establishment of the joint venture. Joint venture contract refers to the document in which a consensus is reached by the parties to the joint venture on their mutual rights and obligations. Articles of association refers to the document agreed upon by the parties to the joint venture specifying the purposes, organizational principles and methods of management of the joint venture in compliance with the principles of the joint venture contract. Where the joint venture agreement is in conflict with the joint venture contract, the latter shall prevail. The parties to the joint venture may agree to sign the joint venture contract and Articles of association only, without concluding a joint venture agreement.Article 11 A joint venture contract shall include the following main particulars:1. the names, the countries of registration, the legal addresses of parties to the joint venture, and the names, positions and nationalities of the legal representatives thereof;2. the name of the joint venture, its legal address, purposes and the scope and scale of business;3. the total amount of capital contribution and registered capital of the joint venture, the amount, proportion and forms of capital contribution of each party to the joint venture, the time limit for making capital contribution, stipulations concerning contribution in default and equity transfer;4. the proportion of profit to be distributed and losses to be borne by each party;5. the composition of the board of directors, the number of directors to be appointed by each party, and the responsibilities, powers and means of employment of the general manager, deputy general manager and other high-ranking managerial personnel;6. the main production equipment and technology to be adopted and their source of supply;7. the ways and means of purchasing raw materials and selling finished products;8. the principles governing the handling of finance, accounting and auditing;9. the stipulations concerning labor management, wages, welfare, and labor insurance;10. the duration of the joint venture, its dissolution and the procedures for liquidation;11. the liabilities for breach of contract;12. the ways and procedures for settling disputes between the parties to the joint venture; and13. the language(s) used in the contract and the conditions on which the contract comes into force.The annex to a joint venture contract shall carry the same effect as the contract itself.Article 12 Chinese laws shall apply to the conclusion, validity, interpretation and performance of a joint venture contract, as well as to the settlement of disputes.Article 13 The Articles of association of a joint venture shall include the following main particulars:1. the name of the joint venture and its legal address;2. the purpose, business scope and duration of the joint venture;3. the names, countries of registration and legal addresses of parties to the joint venture, and the names, positions and nationalities of the legal representatives thereof;4.the total amount of capital contribution, registered capital of the joint venture, the amount and proportion of capital contribution of each party to the joint venture, the form of contribution, the contribution payment period, stipulations concerning equity transfer, the proportions of profit distribution and losses to be borne by parties to the joint venture;5. the composition of the board of directors, its responsibilities, powers and rules of procedure, the term of office of the directors, and the responsibilities of its chairman and vice-chairman;6. the setting up of management organizations, rules for handling routine affairs, the responsibilities of the general manager, deputy general manager and other high-ranking managerial personnel, and the method of their appointment and dismissal;7. the principles governing financial, accounting and auditing systems;8. dissolution and liquidation; and9. procedures for amendment of the Articles of association.Article 14 The agreement, contract and Articles of association of a joint venture shall come into force upon approval by the examination and approval authorities. The same applies to amendments thereto.Article 15 The examination and approval authorities and the registration authority are responsible for supervising and checking the execution of the joint venture contract and Articles of association.Chapter III Form of Organization and Registered CapitalArticle 16 A joint venture shall be a limited liability company. The liability of each party to the joint venture is limited to the amount of capital contribution subscribed by it.Article 17 The total amount of capital contribution (including loans) of a joint venture refers to the sum of basic construction funds and the liquidity funds for production required to be invested in conformity with the joint ventures production scale as set out in the contract and the Articles of association of the joint venture.Article 18 The registered capital of a joint venture refers to the total amount of capital contribution registered with the registration authority for the establishment of the joint venture. It shall be the total amount of capital contribution subscribed by parties to the joint venture. The registered capital shall generally be denominated in Renminbi, or may be in a foreign currency agreed upon by the parties to the joint venture.Article 19 The registered capital of the joint venture may not be reduced during the operation term of the joint venture. If there is a genuine need for reduction due to the changes in the total amount of capital contribution and the production and operation scale, it shall be subject to the approval of the examination and approval authorities.Article 20 If one party to the joint venture intends to transfer all or part of its equity to a third party, consent shall be obtained from the other party to the joint venture, and approval from the examination and approval authorities is required. The formalities for change of registration shall be handled with the registration authority.When one party transfers all or part of its equity to a third party, the other party shall have preemptive right.When one party transfers its equity to a third party, the conditions for such transfer may not be more favorable than those for the other party to the joint venture. Where the above stipulations are violated, no transfer shall be valid.Article 21 Any increase in or reduction of the registered capital of a joint venture shall be approved by the board meeting and submitted to the examination and approval authorities for approval. The formalities for change of registration shall be handled with the registration authority.Chapter IV Forms of Capital ContributionArticle 22 A party to a joint venture may make its capital contribution in money or in the form of buildings, factory premises, machinery, equipment or other materials, industrial property, proprietary technology, or site use rights, the value of which shall be used as capital contribution. If the capital contribution is in the form of buildings, premises, machinery, equipment or other materials, industrial property or proprietary technology, the value thereof shall be determined by the parties to the joint venture through consultation and on the basis of fairness and reasonableness or shall be appraised by a third party agreed upon by the parties to the joint venture.Article 23 The capital contribution in foreign currency made by the foreign party shall be converted into Renminbi or cross exchanged into a predetermined foreign currency at the standard exchange rate published by the Peoples Bank of China on the day the payment is made. If there is a need for cash contribution in Renminbi made by the Chinese party to be converted into a foreign currency, it shall be converted at the standard exchange rate published by the Peoples Bank of China on the day the payment is made.Article 24 The machinery, equipment or other materials contributed by the foreign party as capital contribution shall be those that are indispensable for the production of the joint venture.The valuation of the machinery, equipment or other materials as mentioned in the preceding paragraph may not be higher than the current international market price of machinery, equipment and other materials of the same kind.Article 25 The industrial property or proprietary technology contributed by the foreign party to a joint venture shall meet one of the following conditions:1. capable of markedly improving the performance, quality of existing products and raising productivity; or2. capable of notably saving raw materials, fuel or power.Article 26 The foreign party to a joint venture who makes its capital contributions in the form of industrial property or proprietary technology shall deliver documentation relating thereto, including photocopies of the patent or trademark registration certificates, statements of validity, technical features and practical value thereof, the basis for calculating the value as well as the agreement signed with the Chinese party to the joint venture on the value thereof, as annexes to the contract.Article 27 The machinery, equipment or other materials, industrial property or proprietary technology contributed by the foreign party to the joint venture shall be reported to the examination and approval authorities for further approval.Article 28 Each party to the joint venture shall make its capital contribution in full and within the time limit stipulated in the joint venture contract. If a party delays in making its capital contribution or fails to make its contribution in full, it shall pay interest on such default or compensate for the losses pursuant to the provisions of the contract.Article 29 The capital contribution made by each party to a joint venture shall be verified by a certified public accountant registered in China, who shall issue a capital verification report on the basis of which the joint venture shall issue a capital contribution certificate to the parties to the joint venture. The capital contribution certificate shall include the following particulars: name of the joint venture, the day, month and year of the establishment of the joint venture, the names of the parties to the joint venture and their capital contribution, the date, month and year on which their capital contribution is made, and the date, month and year of the issuance of capital contribution certificates.Chapter V Board of Directors and Business Management OrganizationArticle 30 The board of directors shall be the highest authority of a joint venture, which shall decide all major issues concerning the joint venture.Article 31 The board of directors shall consist of no