Law of the People's Republic of China on Sino-Foreign Cooperative Enterprises

(Approved by the First Session of the Seventh National People's Congress on April 13, 1988, revised in accordance with the Decision to Revise the Law of the People's Republic of China on Sino-Foreign Cooperative Enterprises made at the 18th meeting of the Standing Committee of the Ninth National People's Congress on October 31, 2000, promulgated by Order No.41 of the President of the People's Republic of China to go into effect on the day of promulgation)

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.

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