ORGANISATION MONDIALE
DU COMMERCES/C/N/209
17 décembre 2002
(02-6957)
Conseil du commerce des services Original:  anglais
NOTIFICATION AU TITRE DE L'ARTICLE III:3 DE L'ACCORD GÉNÉRAL
SUR LE COMMERCE DES SERVICES
La délégation de la République populaire de Chine a fait parvenir au Secrétariat la
notification ci-après.
_______________
1. Membre adressant la notification:
République populaire de Chine
2. Notification au titre de:
Article III, paragraphe 3 de l'Accord général sur le commerce des services
3. Date d'entrée en vigueur/durée:
22 juillet 2001
4. Organisme responsable de la mise en œuvre et de l'application de la mesure:
Ministère du commerce extérieur et de la coopération économique
5. Description complète de la mesure* indiquant les modes de fourniture visés, l'effet sur le
commerce des services (par exemple, restrictions/mesures de libéralisation) et
l'incidence de la mesure sur les engagements  énoncés dans la liste du Membre et dans sa
liste d'exemptions de l'article II (NPF), le cas échéant:
Règlement d'application de la Loi de la République populaire de Chine sur les coentreprises à
capitaux chinois et étrangers.
On trouvera ci-joint le texte intégral en anglais de cette loi.1  Seule la version en chinois fait
foi, la traduction en anglais n'étant fournie qu'à titre de référence.
6. Membres spécifiquement affectés, le cas échéant:
Tous les Membres
                                                     
* Y compris les accords internationaux, les me sures de reconnaissance ou d'autres types.
1 En anglais seulement.S/C/N/209
Page 2
7. Les textes peuvent être obtenus auprès de:
- Point d'information /g254
- Secrétariat de l'OMC /g254
- Autres sources (adresse, télécopie
et téléphone d'un autre organisme) /g168
_______________S/C/N/209
Page 3
Regulations for the Implementation of the Law of the People's Republic of China on
Sino-Foreign Equity Joint Venture
(Promulgated by the State Council on Sept ember 20, 1983, amended by the State Council on
January 15, 1986 and on December 21, 1987, amended in accordance with the Decision of the StateCouncil on Amending the Regulations for the Implem entation of the Law of the People's Republic of
China on Chinese-Foreign Equity Joint Ventures on July 22, 2001)
Chapter I General Provisions
Article 1 These Regulations are formulated with a vi ew to facilitating the smooth implementation
of the Law of the People's Republic of China on Ch inese-Foreign Equity Joint Ventures (hereinafter
referred to as the Law on Chinese-Foreign Equity Joint Ventures).
Article 2 Chinese-Foreign equity joint ventures (hereinafter referred to as joint ventures)
established within the territory of China in accord ance with the Law on Chinese-Foreign Equity Joint
Ventures are legal persons of China and are subject to the jurisdiction of Chinese laws and enjoyprotection thereof.
Article 3 Joint ventures established within the territo ry of China shall be able to promote the
development of China's economy and raise scientific and technological levels for the benefit of socialist
modernization.
The industries in which the State encourages, permits, restricts or prohibits the establishment of joint
ventures, shall be governed by the provisions of th e State on guiding the direction of foreign investment
and the catalogue for the guidance of foreign investment industries.
Article 4 Applications for establishing joint ventures shall not be approved if they involve any of
the following circumstances:
(1) a detriment to China's sovereignty;
(2) violation of Chinese Laws;
(3) nonconformity with the requirements of the development of China's national economy;
(4) creation of environmental pollution;
(5) obvious inequity in the agreements, cont racts and articles of association signed,
impairing the rights and interests of one of the parties.
Article 5 A joint venture has the right to independently conduct business operations and
management within the scope as prescribed by Chinese laws and regulations, and by the agreement,
contract and articles of association of the joint ve nture. The departments concerned shall provide support
and assistance.
Chapter II Establishment and Registration
Article 6 The establishment of a joint venture in Ch ina shall be subject to examination and
approval by the Ministry of Foreign Trade and Ec onomic Cooperation of the People's Republic of China
(hereinafter referred to as the Ministry of Fore ign Trade and Economic Cooperation). Upon approval, an
approval certificate shall be issued by the Mi nistry of Foreign Trade and Economic Cooperation.
The State Council may authorize the people's govern ments of the provinces, autonomous regions, and
municipalities directly under the Central Government or relevant departments of the State Council to
examine and approve the establishment of joint ventures that meet the following requirements:
(1) the total amount of investment is within  the limit set by the State Council and the
source of capital of the Chinese venturers has been ascertained;S/C/N/209
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(2) no additional allocation of raw materials by the State is required and the national
balance as to fuel, power, transportation and foreign trade export quotas is not affected.
The joint ventures approved and established accordin g to the preceding paragraph shall report to the
Ministry of Foreign Trade and Economic Cooperation for the record.
The Ministry of Foreign Trade and Economic Cooperation and the people's governments of the
provinces, autonomous regions, and municipalities di rectly under the Central Government or relevant
departments of the State Council authored by the St ate Council will hereinafter be generally referred to
as the examination and approval authorities.
Article 7 When applying for the establishment of a joint venture, the Chinese and foreign
venturers shall jointly submit following documents  to the examination and approval authorities:
(1) an application for the establishment of the joint venture;
(2) the feasibility study report jointly prepared by the parties to the venture;
(3) the joint venture agreement, contract  and articles of association signed by
representatives authorized by the parties to the venture;
(4) a list of candidates for chairman and vice chairman of the board of directors and
directors nominated by the parties to the venture;
(5) other documents specified by the examination and approval authorities.
The documents listed in the preceding paragraph shall be  written in Chinese. Documents (2), (3) and ( 4)
may be written simultaneously in a foreign language agreed upon by the parties to the joint venture.
Both versions are equally authentic.
Where the examination and approval authorities fi nd something unsuitable in the documents submitted,
they shall demand a modification that shall be made within a specified time limit.
Article 8 Upon receipt of the documents provided in  Article 7, the examination and approval
authorities shall, within 3 months, decide whether to approve or disapprove the establishment of the
joint venture.
Article 9 The applicant shall, within one month as of  the receipt of the Approval Certificate,
register with the administrative department for industry and commerce (hereinafter referred to as
registration administration agency) according to the rele vant provisions of the State. The date of the
issuance of its business license is the date of the formal establishment of the joint venture.
Article 10 The "joint venture agreement" mentioned in  these Regulations refers to the document
agreed upon and concluded by the parties to the joint venture on some major points and principles
governing the establishment of the joint venture. " Jo int venture contract " refers to the document agreed
upon and concluded by the parties to the joint venture on their mutual rights and obligations. "Articles of
association of the joint venture" refers to the doc ument agreed upon by the parties to the joint venture
specifying the purpose, organizational principles a nd method of management of the joint venture in
compliance with the principles of the joint venture contract.
Where the joint venture agreement comes into confli ct with the contract, the latter shall prevail.
The parties to the joint venture may agree to sign th e contract and articles of  association only, without
signing an agreement.
Article 11 A joint venture contract shall include the following main items:
(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;S/C/N/209
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(2) the name of the joint venture, its legal address, purpose and the scope and scale of
business;
(3) the total amount of investment and register ed capital of the joint venture, the amount,
proportion and forms of investment to be cont ributed by each party to the joint venture,
the time limit for contributing the investme nt, stipulations concerning incomplete
contributions, and assignment of equity;
(4) the proportion of profits to be shared  and losses to be borne by each party;
(5) the composition of the board of directors,  the distribution of the number of directors,
and the responsibilities, powers and means of employment of the general manager,
deputy general manager and high ranking managerial personnel;
(6) the main production equipment and technol ogy to be adopted and their source of
supply;
(7) the ways and means of purchasing raw materials and selling products;
(8) principles governing the handling of finance, accounting and auditing;
(9) stipulations concerning labor manageme nt, 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) ways and procedures for settling disputes  between the parties to the joint venture;
(13) the language(s) used for the contract and the conditions for putting the contract into
force.
The annex to the contract of a joint venture sh all be equally authentic as the contract itself.
Article 12 Chinese laws shall apply to the conclusion, validity, interpretation and execution 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 items:
(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 investment, registered capital of the joint venture, each party's
investment proportion, stipulati ons concerning the assignment of equity, 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 direct ors, 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 rankingmanagerial personnel, and the method of their appointment and dismissal;
(7) principles governing financial, accounting and auditing systems;
(8) dissolution and liquidation;
(9) procedures for amendment of the articles of association.
Article 14 The agreement, contract and articles of as sociation shall come into force upon approval
by the examination and approval authorities. The same applies to amendments thereof.
Article 15 The examination and approval authorities a nd the registration administration agency are
responsible for supervising and checking on the execu tion of the joint venture contracts and articles of
association.S/C/N/209
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Chapter III Form of Organizat ion and Registered Capital
Article 16 A joint venture is a limited liability company.
Each party to the joint venture is liable to the join t venture within the limit of the capital subscribed by
it.
Article 17 The total amount of investment (including ente rprise loans) of a joint venture refers to
the sum of capital construction funds and the circula ting funds needed for the joint venture's production
scale as stipulated 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 investment
registered at the registration administration agency fo r the establishment of the joint venture. It shall be
the total amount of investment subscribed by parties to the joint venture.
The registered capital shall generally be represented in Renminbi, or may be in a foreign currency
agreed upon by the parties to the joint venture.
Article 19 A joint venture shall not reduce its registered capital during its term. However, where
the changes occurring in the total investment and th e scale of production or operation indicate that there
is a real need to reduce the registered capital, the reduction shall be approved by the examination and
approval authorities.
Article 20 If one party to the joint venture intends to assign all or part of its investment subscribed
to a third party, consent shall be obtained from the other party to the joint venture, and the assignment
shall be registered with the registration administra tion agency after being approved by the examination
and approval authorities.
When one party assigns all or part of its investment  to a third party, the other party has a preemptive
right.
When one party assigns its investment subscribed to a third party, the terms of assignment shall not be
more favorable than those to the other party to the joint venture.
No assignment shall be effective should ther e be any violation of the above provisions.
Article 21 Any increase, assignment or other disposal of the registered capital of a joint venture
shall be approved at a meeting of the board of di rectors and submitted to the original examination and
approval authorities for approval.
Registration procedures for changes shall be ha ndled at the registration administration agency.
Chapter IV Ways of Contributing Investment
Article 22 Each joint venturer may invest in cash or  may contribute buildings, factory premises,
equipment or other materials, industr ial property, proprietary technology, or right to the use of a site,
appraised at appropriate prices, as an investment. If the investment is in the form of buildings, premises,
equipment or other materials, industrial property or proprietary technology, the prices shall be
determined through consultation by the parties to  the joint venture on the basis of fairness and
reasonableness, or they shall be evaluated by a thir d party accepted and invited by the parties to the joint
venture.S/C/N/209
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Article 23 The foreign currency contributed by the foreign joint venturer shall be converted into
Renminbi according to the base exchange rate quoted  by the People's Bank of China on the date of its
submission or be cross exchanged into the foreign currency as agreed upon.
Should the cash Renminbi cont ributed by the Chinese joint venturer be converted into foreign currency,
it shall be converted according to the base exchange  rate quoted by the People's Bank of China on the
date of its submission.
Article 24 The machinery, equipment or other material s contributed as an investment by the
foreign joint venturer shall be indispensa ble to the production of the joint venture.
The fixed price of the machinery, equipment or othe r materials referred to in the preceding paragraph
shall not be higher than the current international ma rket price for similar equipment or other materials.
Article 25 The industrial property or proprietary tec hnology contributed by the foreign joint
venturer as an investment shall m eet one of the following conditions:
(1) capable of markedly improving the pe rformance and quality of existing products and
raising productivity;
(2) capable of notably saving raw materials, fuel or power.
Article 26 Foreign joint venturers who contribute indust rial property or proprietary technology as
an investment shall present relevant documentation on the industrial property or proprietary technology,
including copies of the patent certificates or trad emark registration certificates, statements of validity,
their technical characteristics, practical value, the basis for calculating the price and the price agreement
signed with the Chinese joint venturers. All th ese shall serve as an annex to the contract.
Article 27 The machinery, equipment or other materi als, industrial property or proprietary
technology contributed by the foreign joint ventur er as an investment shall be submitted to the
examination and approval authorities for approval.
Article 28 The parties to the joint venture shall pay in  all the investment subscribed according to
the time limit stipulated in the contract. Where the time limit has been exceeded and there has not been a
payment or a full payment, compensation for losses or interest on the arrears shall be paid in accordance
with the stipulations of the contract
Article 29 After the investment is paid by the partie s to the joint venture, a Chinese certified
public accountant shall verify it and provide a certificate of verification, in accordance with which the
joint venture shall issue to them investment certifi cates, which include the following items: the name of
the joint venture; date, month and year of the esta blishment of the joint venture; names of the joint
venturers and the investment contri buted; date, month and year of th e contribution of the investment;
and date, month and year of the i ssuance of investment certificates.
Chapter V Board of Directors and Management Structure
Article 30 The highest authority of the joint venture sh all be its board of directors, which shall
decide all major issues concerning the joint venture.
Article 31 The board of directors shall consist of no less than three members. The distribution of
the number of directors shall be determined through consultation by the parties to the joint venture with
reference to the proportions of investment contributed.
The term of office for the directors is four years.  Their term of office may be renewed with the re-
appointment by the parties to the joint venture.S/C/N/209
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Article 32 The board of directors shall convene at least one meeting every year. The meeting shall
be called and presided over by the chairman of the board. Where the chairman is unable to call the
meeting, he shall authorize the vice chairman or a di rector to call and preside over the meeting. The
chairman may convene an interim meeting on the sugg estion of more than one third of the directors.
A board meeting requires a quorum of over two thirds  of the directors. Where a director is unable to
attend, he may make a proxy authorizing someone el se to represent him and vote in his stead.
A board meeting shall usually be held at the location of the joint venture's legal address.Article 33 Decisions on the following items shall be made only after being unanimously agreed
upon by the directors present at the board meeting:
(1) amendments to the articles of association of the joint venture;
(2) suspension or dissolution of the joint venture;
(3) increase in or reduction of the regi stered capital of the joint venture;
(4) merger or division of the joint venture.
Decisions on other matters may be made according to the rules of procedure stipulated in the
articles of association.
Article 34 The chairman of the board of directors is the legal representative of the joint venture.
Where the chairman is unable to perform his duties, he shall authorize the vice chairman of the board or
a director to represent the joint venture.
Article 35 A joint venture shall establish a management office which is responsible for the day-to-
day management and operations. The management office shall have a general manager and severaldeputy general managers who assist the general manager in his work.
Article 36 The general manager shall carry out the decisions of the board meeting and organize
and conduct the day-to-day management and operations of the joint venture. Within the scope of
authorization by the board, the general manager sh all; externally, represent the joint venture, and
internally, have the right to appoint and dismiss hi s subordinates and exercise other powers as authorized
by the board of directors.
Article 37 The general manager and deputy general managers shall be engaged by the board of
directors of the joint venture. These positions ma y be held either by Chinese or foreign citizens.
At the instance of the board of directors, the chairm an, vice chairman or other directors of the board may
concurrently be the general manager, deputy general managers or other high ranking managerial
personnel of the joint venture.
In handling major issues, the general manager sh all consult with the deputy general managers.
The general manager or deputy general managers shall not hold posts concurrently as general manager
or deputy general managers of other economic orga nizations. They shall not get involved in other
economic organizations' commercial competition against their own joint venture.
Article 38 In case of graft or serious dereliction of dut y on the part of the general manager, deputy
general managers or other high ranking managerial personnel, they may be dismissed at any time by a
decision of the board of directors.S/C/N/209
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Article 39 Establishment of branch offices (including sales offices) outside China or in regions of
Hong Kong or Macao is subject to approval by the Ministry of Foreign Trade and Economic
Cooperation.
Chapter VI Introduction of Technology
Article 40 The introduction of technology mentioned in this Chapter refers to the acquisition of
necessary technology by the joint venture by means of  technology transfer from a third party or a joint
venturer.
Article 41 The technology to be introduced to the join t venture shall be appropriate and advanced
and enable the venture's products to display conspi cuous social economic results domestically or to be
competitive on the international market.
Article 42 The right of the joint venture to do busines s independently shall be maintained when
concluding such technology transfer  agreements, and relevant documentation shall be provided by the
technology exporting party with reference to the provisions of Article 26 of these Regulations.
Article 43 The technology transfer agreements concluded by a joint venture shall be submitted to
the examination and approval authorities for approval.
Technology transfer agreements sha ll meet the following requirements:
(1) Fees for the use of technology shall be fair and reasonable.
(2) Unless otherwise agreed upon by both par ties, the technology exporting party shall not
put any restrictions on the quantity, price or re gion of sale of the products that are to be
exported by the technology importing party.
(3) The term for a technology transfer agreem ent is generally not longer than 10 years.
(4) After the expiration of a technology transf er agreement, the technology importing party
shall have the right to continue to use the technology.
(5) Conditions for mutual exchange of inform ation on the improvement of the technology
by both parties to the technology tran sfer agreement shall be reciprocal.
(6) The technology importing party shall have the right to buy the equipment, parts and raw
materials needed from sources they deem suitable.
(7) No irrational restrictive clauses prohibited under Chinese law and regulations shall be
included.
Chapter VII Right to the Use of Site and Fees
Article 44 Joint ventures shall carry out the principle of frugal use of land for their premises. Any
joint venture requiring the use of a site shall file an  application with local departments of the municipal
(county) government in charge of land and obtain the right to use a site after securing approval and
signing a contract. The acreage, location, purpose and contract period and fee for the right to use a site
(hereinafter referred to as site use fee), rights a nd obligations of the two contracting parties and penalty
provisions for breach of contract shall be stipulated in explicit terms in the contract.
Article 45 If the Chinese joint venturer already has th e right to the use of a site for the joint
venture, it may use the right as part of its investment . The monetary equivalent of this investment shall
be the same as the site use fee otherwise paid for acquiring a site of similar conditions.
Article 46 The standards for site use fees shall be set by the people's governments of the province,
autonomous region or municipality directly under th e Central Government where the joint venture is
located in the light of the purpose for which it is used, geographic and environmental conditions,
expenses for requisition, demolition and resettleme nt and the joint venture's requirements forS/C/N/209
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infrastructure, and filed with the Ministry of Foreign Trade and Economic Cooperation and the State
department in charge of land for the record.
Article 47 Joint ventures engaged in agriculture and animal husbandry may, with the consent of
the people's governments of the province, autonomous  region or municipality directly under the Central
Government, pay a percentage of the joint venture's revenues from its business operations as site use
fees to the local department in charge of land.
Projects of a development nature in economi cally under-developed areas may receive special
preferential treatment in respect of site use fees with the consent of the local people's government.
Article 48 The rates of site use fees shall not be subject to adjustment in the first 5 years beginning
from the date the land is used. After that, the interv al in between the necessary adjustments to be made
according to the development of the economy changes in, supply and demand, and changes in
geographic and environmental conditions shall not be less than three years.
Site use fees as part of the investment by the Chin ese joint venturers shall not be subject to adjustment
during the contract period.
Article 49 he fee for the right to the use of a site obtained by a joint venture according to
Article 44 of these Regulations shall be paid annually from the date of use of the land as stipulated in
the contract.  For the first calendar year, the venture will pay a half-year fee if it has used the land forover 6 months; if less than 6 months, the site use fee shall be exempted. During the contract period, if
the rate of the site use fee is adjusted, the joint venture shall pay it according to the new rate from the
year of adjustment.
Article 50 In addition to the right to use a site ob tained according to the provisions of this
Chapter, a joint venture may, accordin g to the relevant provisions of the State, also obtain the right to
use a site.
Chapter VIII Purchasing and Selling
Article 51 In its purchase of required machinery, equipment, raw materials, fuel, parts, means of
transport and office equipment, etc. (hereinafter refe rred to as materials), a joint venture has the right
to decide whether it buys them in China or from abroad.
Article 52 The materials needed for office and daily use for joint ventures can be purchased in
China based on needs without quantity restrictions.
Article 53 The Chinese Government encourages joint ventures to sell their products on the
international market.
Article 54 A joint venture has the right to export its products itself and may entrust the sales
organization of the foreign joint venturer or a Chinese-Foreign trade corporation to sell on acommission or distributorship basis.
Article 55 Within the scope of business stipulated in the contract, a joint venture may import
machinery, equipment, parts, raw materials and fuel needed for its production. A joint venture shall
make a plan every year for items for which import licenses are required by the provisions of the State,and apply for them every 6 months. For machines, equipment and other objects a foreign joint
venturer has contributed as part of its investment, import licenses can be applied for directly with the
documents approved by the examination and approval authorities. For materials the import of which isS/C/N/209
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beyond the stipulated scope of the contract, separate applications for import licenses according to
provisions of the State are required.
A joint venture has the right to export its products by itself, whereas for those products which require
export licenses according to the provisions of the State, the joint venture shall make an export plan
every business year and apply for the needed licenses every 6 months.
Article 56 A joint venture, in the price of the materials purchases in China, and the payment of
fees for water, electricity, gas, heat, goods transportation, labour services, engineering design,
consultancy and advertisement services, etc., shall enjoy equal treatment with other domestic
enterprises in China.
Article 57 A joint venture, in its economic exchanges with another Chinese economic
organization, shall undertake economic responsibi lities and settle disputes over contracts in
accordance with relevant laws and the contract concluded between the two parties.
Article 58 A joint venture shall, according to the provisions of the Statistics Law of the People's
Republic of China and the statistical system for the utilization of foreign capital, provide statistical
data and submit statistical statements.
Chapter IX Taxes
Article 59 Joint ventures shall pay taxes according to the provisions of relevant laws of the
People's Republic of China.
Article 60 Staff members and workers employed by joint ventures shall pay individual income
tax according to the Individual Income Tax Law of the People's Republic of China.
Article 61 The following materials imported by a joint venture enjoy tax reduction or tax
exemption according to the relevant provisions of the tax law of China:
(1) machinery, equipment, parts and other materials (materials here and hereinafter mean
required materials for the joint venture's construction on the factory site and for
installation and reinforcement of machines) which are part of the foreign joint
venture's share of investment according to the provisions of the contract;
(2) machinery, equipment, parts and other materials imported with funds from the joint
venture's total investment;
(3) machinery, equipment, parts and other materials imported by the joint venture with
the additional capital and with the approval of the approval and examination
authorities, of which China cannot guarantee production and supply;
(4) raw materials, auxiliary materials, components, parts and packaging materials
imported by the joint venture for the production of export goods.
Duties and taxes shall be paid or paid retroactively according to regulations when the above
mentioned duty tax free materials are approved for sale inside China or diverted to the production ofitems to be sold on the Chinese domestic market.
Article 62 Except those export items restricted by China, export products of a joint venture
enjoy tax reduction, tax exemption or refund of tax according to the relevant provisions of the tax law
of China.S/C/N/209
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Chapter X Foreign Exchange Control
Article 63 All matters concerning foreign exchange for joint ventures shall be handled according
to the Regulations on Foreign Exchange Control of the People's Republic of China and relevant
administrative measures.
Article 64 On the basis of its business license, a joint venture may open a foreign exchange
account or a Renminbi account with a bank within the territory of China, and the depository bank
shall monitor its receipts and expenditures.
Article 65 A joint venture shall get permission from the State Administration of Foreign
Exchange or one of its branches to open a foreign exchange account with an overseas bank or one inHong Kong or Macao, and report to the State Administration of Foreign Exchange or one of its
branches its foreign exchange receipts and expenditures, and provide statements of account.
Article 66 Any branch office set up by a joint venture in a foreign country or in Hong Kong or
Macao shall submit its annual statement of assets and liabilities and annual statement of profit to theState Administration of Foreign Exchange or one of its branches through the joint venture.
Article 67 A joint venture may apply to the financial institutions within the territory of China for
foreign currency loans and Renminbi loans according to business needs; a joint venture may also
borrow foreign exchange as capital from banks abro ad or in Hong Kong or Macao according to the
relevant provisions of the State and go through the registration or record formalities with the State
Administration of Foreign Exchange or one of its branches.
Article 68 After foreign staff and workers or staff and workers from Hong Kong or Macao have
paid income tax on their salaries and other legitimat e income according to law, they may, with the
deduction of their living expenses in China, conver t the remaining portion into foreign exchange and
remit them out according to the relevant provisions of the State.
Article 69 The financial and accounting systems of a joint venture shall be instituted in
accordance with China's relevant laws and procedures on financial affairs and accounting, and in
consideration of the conditions of the joint venture, and then be filed with the local finance
departments and tax authorities for the record.
Article 70 A joint venture shall employ a chief accountant to assist the general manager in
handling the financial affairs of the enterprise. If necessary, a deputy chief accountant may be
appointed.
Article 71 A joint venture shall (unless it is a small venture) appoint an audit or to be
responsible for checking financial receipts, payments and accounts, and to submit reports to the board
of directors and the general manager .
Article 72 The fiscal year of a joint venture shall coincide with the calendar year, i.e. from
January 1 to December 31 on the Gregorian calendar.
Article 73 The accounting of a joint venture shall adopt the internationally used accrual basis
and debit and credit accounting system. All vouchers, account books, and statements prepared by the
enterprise shall be written in Chinese, or concurrently in a foreign language agreed upon by theparties.S/C/N/209
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Article 74 Joint ventures shall, in principle, adopt Renminbi as the standard accounting
currency; however, a foreign currency may also be used as the standard accounting currency, if so
agreed upon by the parties concerned.
Article 75 In addition to the use of a standard accounting currency, joint ventures shall record
accounts in currencies actually used in payments and receipts, if such currencies in cash, bank
deposits, funds of other currencies, assets and liabilities, gains, expenses, etc. are inconsistent with the
standard accounting currency. The account statement compiled and reported by a joint venture that
uses a foreign currency as the standard accounting currency shall be converted into Renminbi
equivalents. The differences, converted into the standard accounting currency and resulting from the
fluctuations in foreign exchange rates, shall be reco rded as current gains or losses in remittances for
the year in which they occur. The surplus appearin g in foreign currency accounts as the result of a
recorded fluctuation in the exchange rates shall be handled, while setting accounts at the end of the
year, by accountants in accordance with the provisions of relevant Chinese laws and financial and
accounting system.
Article 76 Principles of profit distribution after payment of taxes in accordance with the Income
Tax Law of the People's Republic of China for Enterprises with Foreign Investment and Foreign
Enterprises are as follows:
(1) Allocations for reserve funds, bonuses and welfare funds for staff and workers and
expansion funds of the joint venture. The proportion of allocations is to be decided by
the board of directors.
(2) Reserve funds which can be used to make up for the losses of the joint venture, or
with the consent of the examination and approval authorities, to increase the joint
venture's capital for the expansion of production.
(3) After the funds specified in Item (1) of this Article have been deducted and if the
board of directors decides to distribute the remaining profit, it shall be distributedproportionately according to each party's investment.
Article 77 Profits may not be distributed before the losses of the previous year have been made
up.  Remaining profits from a previous year (or years) may be distributed together with those of the
current year.
Article 78 A joint venture shall submit quarterly and annual accounting reports to parties to the
joint venture, the local tax authority and the financial authority .
Article 79 Only after being examined and certified by a certified public accountant of China
shall the following documents, certificates and reports be considered valid:
(1) certificates of investment from all the parties to a joint venture (lists of assessed value
agreed upon and signed by the parties to the joint venture and relevant written
agreements shall be attached if investment involves materials, site use rights,
industrial property and proprietary technology);
(2) annual accounting reports of the joint venture;
(3) accounting reports on liquidation of the joint venture.
Chapter XII Staff and Workers
Article 80 The employment, recruitment, dismissal and resignation of the staff and workers of
joint ventures, and their salary, welfare benefits, labor insurance, labor protection, labor discipline andother matters shall be handled according to the provisions of the State on labour and social security .S/C/N/209
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Article 81 Joint ventures shall make efforts to conduct professional and technical training of
their staff and workers and establish a strict examination system so that they can meet the
requirements of production and managerial skills in a modem enterprise.
Article 82 The salary and bonus system of joint ventures shall be in accord with the principle of
distribution to each according to his work, and more pay for more work.
Article 83 Salaries and remuneration of the general manager and deputy genera1 manager(s),
chief engineer, deputy chief engineer(s), chief accountant and deputy chief accountant, auditor and
other high ranking managerial personnel sha ll be decided upon by the board of directors.
Chapter XIII Trade Unions
Article 84 Staff and workers of a joint venture have the right to set up grassroots trade unions
and carry on trade union activities in accordance with the Trade Union Law of the People's Republic
of China and the Statute of the Trade Unions of China.
Article 85 Trade unions in joint ventures are representatives of the interests of the staff and
workers. They have the right to sign, on behalf of the staff and workers, labor contracts with joint
ventures and supervise the execution of these contracts.
Article 86 The basic tasks of the trade unions in joint ventures are: to protect the democratic
rights and material interests of the staff and workers according to law; to help the joint ventures with
the arrangement and rational use of welfare and bonus funds; to organize political, professional,
scientific and technical studies, carry out literary, art and sports activities; and to educate staff and
workers to observe labor discipline and strive to fulfill the economic tasks of the enterprises.
Article 87 Trade union representatives have the right to attend, without the right to vote,
meetings of the board of directors held to discuss important issues such as development plans,
production and operational activities of joint ventures and to air the opinions and demands of staff and
workers.
Trade union representatives have the right to attend, without the right to vote, meetings of the board of
directors held to discuss and decide on awards and penalties to staff and workers, the salary and wagesystem, welfare benefits, labor protection and labor insurance, etc. The board of directors shall heed
the opinions of the trade union and win its cooperation.
Article 88 A joint venture shall actively support the work of the trade union, and, in accordance
with the provisions of the Trade Union Law of  People's Republic of China, provide housing and
facilities for the trade union as offices, meeting halls, and for organizing welfare, cultural and sports
activities. The joint venture shall allot an amount of money totalling 2 per cent of all the salaries of
the joint venture's staff and workers as trade union funds, which the trade union of the joint venture
shall use according to the relevant administrative rules for trade union funds formulated by the All
China Federation of Trade Unions.
Chapter XIV Duration, Diss olution and Liquidation
Article 89 The duration of a joint venture is governed by the Interim Provisions Concerning
Contract Period of Chinese-Foreign Equity Joint Ventures.
Article 90 A joint venture may be dissolved in the following situations:
(l) expiration of the duration of joint operation;
(2) inability to continue operations due to heavy losses;S/C/N/209
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(3) inability to continue operations due to the failure of one of the contracting parties to
fulfill its obligations stipulated in the agreement, contract and articles of association;
(4) inability to continue operations due to heavy losses caused by force majeure such as
natural calamities and war;
(5) failure to obtain the desired objectives of the operation and having no prospects for
future development;
(6) occurrence of other reasons for dissolution as stipulated in the contract and articles of
association. In cases described in items (2), (4), (5) and (6) of the preceding
paragraph, the board of directors may make an application for dissolution to the
examination and approval authorities for approval. In case described in item (3) of the
preceding paragraph, the party that is carrying out or has fulfilled the contract may
make an application for dissolution to the examination and approval authorities forapproval.
In the situation described in (3) of this Article, the party that has failed to fulfill its obligations
stipulated in the agreement, contract and articles of association shall be liable for the losses
arising therefrom.
Article 91 Upon announcement of the dissolution of a joint venture, its liquidation shall be
carried out; the said joint venture shall, accordin g to the Measures for the Liquidation of Foreign
Investment Enterprises, establish a liquidation committee that is responsible for the liquidation matter.
Article 92 Members of a liquidation committee shall generally be selected from among the
directors of a joint venture. In case the directors cannot serve or are unsuitable to be members of the
liquidation committee, the joint venture may invite Chinese certified public accountants and lawyers
to do the job. When the examination and approval authorities deems necessary, it may send personnel
to supervise the process.
The liquidation expenses and remuneration for the members of the liquidation committee shall be
given priority in the disbursements from the existing assets of the joint venture.
Article 93 The tasks of the liquidation committee are: to conduct a thorough investigation of the
property of the joint venture concerned, its credits and debts; to work out the statement of assets and
liabilities and an inventory of its property; to put forward a basis on which its property is to beevaluated and calculated; and to formulate a liquidation plan. All these shall be carried out upon
approval of the board of directors.
During the process of liquidation, the liquidation committee shall represent the joint venture
concerned in initiating legal actions or responding thereto.
Article 94 A joint venture shall be liable for its debts with all of its assets. The remaining assets
after the clearance of debts shall be distributed among the parties to the joint venture in proportion to
each party's investment unless otherwise provided for in the agreement, contract and articles of
association of the joint venture.
At the time when a joint venture is being dissolved, if the balance of its net assets or the balance of its
remaining property with deduction of the enterprises undistributed profit, various funds and
liquidation expenses exceeds the enterprises paid in capital, the excess portion is the liquidation
income on which the income tax shall be paid according to law.
Article 95 On the completion of the liquidation of a dissolved joint venture, the liquidation
committee shall submit a liquidation report approved by a meeting of the board of directors to theS/C/N/209
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examination and approval authorities, go through formalities for cancelling its registration and hand in
its business license to the registration administration agency.
Article 96 After the dissolution of a joint venture, its account books and documents shall be left
in the custody of the former Chinese joint venturer.
Chapter XV Settlement of Disputes
Article 97 Disputes arising over the interpretation or execution of the agreement, contract or
articles of association between the parties to the joint venture shall, if possible, be settled through
friendly consultation or mediation. If these means prove futile, the disputes shall be subject to
arbitration or judicial settlement.
Article 98 Parties to a joint venture, in accordance with the written agreement on arbitration,
may have an arbitration carried out by an arbitral institution in China or by other arbitral institutions.
Article 99 In the absence of a written agreement on arbitration between the parties to a joint
venture, either party may bring a suit in the Chinese people's court.
Article 100 In the process of settling disputes, except for matters in dispute, parties to a joint
venture shall continue to carry out other provisions stipulated by the agreement, contract and articles
of association of the joint venture
Chapter XVI Supplementary Provision
Article 101 The Chinese departments in charge of visas shall provide facility by simplifying
procedures for staff and workers from foreign countries or from Hong Kong or Macao, (includingtheir family members) who have frequent needs for entry and exit into and out of the territory of
China.
Article 102 The Chinese staff and workers going abroad for study, business negotiations or
training because of work requirements shall go th rough the exit formalities according to the relevant
provisions of the State.
Article 103 Staff and workers from foreign countries or from Hong Kong or Macao working for a
joint venture may bring in needed means of transport and office equipment with payment of taxes
according to the relevant provisions of the tax law of China.
Article 104 Where laws or administrative regulations provide otherwise for joint ventures set up
in the special economic zones, such provisions prevail.
Article 105 These Regulations shall be effective as of the date of promulgation.
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