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| RULES FOR THE IMPLEMENTATION OF THE LAW OF THE PEOPLE S REPUBLIC OF CHINA ON FOREIGN-CAPITAL ENTERPRISES |
| 日期:2003-07-01 09:46 编辑: system 来源： |
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RULES FOR THE IMPLEMENTATION OF THE LAW OF THE PEOPLE'S REPUBLIC OF CHINA ON
FOREIGN-CAPITAL ENTERPRISES
[Note] (Approved by the State Council on October 28, 1990, and promulgated by
Decree No. 1 of the Ministry of Foreign Economic Relations and Trade on December
12, 1990)
Contents
Chapter I General Provisions
Chapter II Procedures for Establishment
Chapter III Form of Organization and Registered Capital
Chapter IV Methods of Contributing Investments and the Time Limit
Chapter V Use of Site and the Site Use Fees
Chapter VI Purchasing and Marketing
Chapter VII Taxation
Chapter VIII Control of Foreign Exchange
Chapter IX Financial Affairs and Accounting
Chapter X Workers and Staff Members
Chapter XI Trade Union
Chapter XII Term of Operations, Termination and Liquidation
Chapter XIII Supplementary Provisions
Chapter I General Provisions
Article 1 These Rules are formulated in accordance with the provisions in
Article 23 of The Law of the People's Republic of China on Foreign-Capital
Enterprises.
Article 2 Foreign-capital enterprises shall be under the jurisdiction of
and protection by China's laws.
Foreign-capital enterprises, while engaged in business operational
activities within the territory of China, must abide by Chinese laws and
regulations and must not jeopardize the social and public interests of China.
Article 3 A foreign-capital enterprise to be established in China must be
conducive to the development of China's national economy, be capable of gaining
remarkable economic results and shall meet at least one of the following
conditions:
(1) the enterprise is to adopt advanced technology and equipment, engage in
the development of new products, conserve energy and raw materials, and realize
the upgrading of products and the replacement of old products with new ones
which can be used for placing similar Imported goods;
(2) its annual output value of export products accounts for more than 50% of
the annual output value of all products, thereby realizing the balance between
revenues and expenditures in foreign exchange or with a surplus.
Article 4 No foreign-capital enterprise shall be established in the
following trades:
(1) the press, publication, broadcasting, television, and movies;
(2) domestic commerce, foreign trade, and insurance;
(3) post and telecommunications;
(4) other trades in which the establishment of foreign-capital enterprises
is forbidden, as prescribed by the Chinese government.
Article 5 The establishment of foreign-capital enterprises shall be
restricted in the following trades:
(1) public utilities;
(2) communications and transportation;
(3) real estate;
(4) trust investment;
(5) leasing.
The application for the establishment of a foreign-capital enterprise in the
trades mentioned in the preceding paragraph shall be submitted to the Ministry
of Foreign Economic Relations and Trade of the People's Republic of China
(hereinafter referred to the Ministry of Foreign Economic Relations and Trade)
for approval, except as otherwise provided by Chinese laws and regulations.
Article 6 Application for the establishment of a foreign-capital enterprise
shall not be approved if the proposed enterprise would involve one of the
following circumstances:
(1) injury to China's sovereignty or to social and public interests;
(2) impairment of China's national security;
(3) violation of Chinese laws and regulations;
(4) incompatibility with the requirements of China's national economic
development; or
(5) possible creation of environmental pollution.
Article 7 A foreign-capital enterprise shall make its own managerial
decisions within the approved scope of business operations and shall not be
subject to intervention.
Chapter II Procedures for Establishment
Article 8 The application for the establishment of a foreign-capital
enterprise shall be submitted to the Ministry of Foreign Economic Relations and
Trade, and after examination and approval, a certificate of approval shall be
issued by the Ministry.
With respect to the application for the establishment of a foreign-capital
enterprise that comes under one of the following circumstances, the State
Council shall authorize the people's government of the relevant province,
autonomous region, municipality directly under the Central Government,
municipality separately listed on the state plan, or the special economic zone,
to issue the certificate of approval after examining and approving the
application:
(1) the total amount of investment is within the limits of powers for the
examination and approval of investments stipulated by the State Council;
(2) the proposed enterprises does not need the raw and processed materials
to be allocated by the State, or does not influence unfavourably the national
comprehensive balance of energy resources, communications and transportation, as
well as export quotas for foreign trade.
Where the people's government of the province, autonomous region,
municipality directly under the Central Government, municipality separately
listed on the state plan, or the special economic zone has approved the
establishment of a foreign-capital enterprise within its limits of powers
granted by the State Council, it shall, within 15 days after the approval,
submit a report to the Ministry of Foreign Economic Relations and Trade for the
record (hereinafter the Ministry of Foreign Economic Relations and Trade, and
the people's government of the province, autonomous region, municipality,
directly under the Central Government, municipality separately listed on the
state plan, and the special economic zone shall be called generally as the
examining and approving organ).
Article 9 With respect to a foreign-capital enterprise, the establishment
of which has been applied for, if its products are subject to export licence,
export quota, or import licenee, or are under restrictions by the State, prior
consent of the department of foreign economic relations and trade shall be
obtained in accordance with the limits of powers for administration.
Article 10 A foreign investor shall, prior to the filing of an application
for the establishment of a foreign-capital enterprise, submit a report to the
local people's government at or above the county level at the place where the
proposed enterprise is to be established. The report shall include: the aim of
the establishment of the proposed enterprise; the scope and scale of business
operation; the products to be produced; the technology and equipment to be
adopted and used; the proportion of the sales of products between the domestic
market and the foreign market; the area of land to be used and the related
requirements; the conditions and quantities of water, electricity, coal, coal
gas and other forms of energy resources required; and the requirement of public
facilities.
The local people's government at or above the county level shall within 30
days after receiving the report submitted by the foreign investor, give a reply
in writing to the said foreign investor.
Article 11 In case that a foreign investor wishes to establish a
foreign-capital enterprise, an application shall be submitted to the examining
and approving organ through the local people's government at or above the county
level at the place where the enterprise is to be established, together with the
following documents.
(1) the written application for the establishment of a foreign-capital
enterprise;
(2) a feasibility study report;
(3) the articles of association of the foreign-capital enterprise;
(4) the name-list of the legal representatives (or the candidates for
members of the board of directors) of the foreign-capital enterprise;
(5) the legal certifying documents and the credit position certifying
documents of the foreign investor;
(6) the written reply given by the people's government at or above the
county level at the place, where the enterprise is to be established;
(7) an inventory of goods and materials needed to be imported;
(8) other documents that are required to be submitted.
The documents mentioned in Items(1) and (3) in the preceding paragraph must
be written in the Chinese language; while the documents mentioned in Items (2),
(4) and (5) in the preceding paragraph may be written in a foreign language, but
a corresponding Chinese translation shall be attached.
In the event that two or more foreign investors jointly file an application
for the establishment of a foreign-capital enterprise, they shall submit a
duplicate of the contract concluded and signed between them to the examining and
approving organ for the record.
Article 12 The examining and approving organ shall, within 90 days after
receiving all the required documents with respect to an application for the
establishment of foreign-capital enterprise, make a decision whether to approve
or disapprove the application. In the event that the examining and approving
organ has found that the documents mentioned above are not complete, or that
some of them are inappropriate, it may call on the applicant to make up the
incomplete documents, or to make necessary revisions, within a prescribed time
limit.
Artricle 13 After the approval of the application for the establishment of
a foreign-capital enterprise by the examining and approving organ, the foreign
investor shall, within 30 days after receiving the certificate of approval,
file an application with the relevant administrative department for industry and
commerce for registration, and obtain a business licence. The date on which
the business licence is issued shall be the date of the establishment of the
said enterprise.
In the event that the foreign investor fails to file an application with the
administrative department for industry and commerce for registration on the
expiration of the 30 days after receiving the certificate of approval, the
certificate of approval for the establishment of the proposed enterprise shall
become invalid automatically,
A foreign-capital enterprise shall, within 30 days after its establishment,
go through the procedures for taxation registration with the tax authorities.
Article 14 Foreign investors may appoint a Chinese service agency for
enterprises with foreign investment or other economic organizations to handle,
on their behalf, the affairs stipulated in Article 9, the first paragraph of
Article 10 and Article 11 of these Rules, but a contract of entrustment shall be
concluded and signed between them.
Article 15 The written application for the establishment of a
foreign-capital enterprise shall include the following contents:
(1) the name or designation, the residence and the place of registration of
the foreign investor, and the name, nationality, and position of the legal
representative;
(2) the name and residence of the foreign-capital enterprise;
(3) the scope of business operations, the varieties of products, and the
scale of production;
(4) the total amount of investment, the registered capital, the source of
funds, and the method of investment contribution and the operation period;
(5) the organizational form and organs, and the legal representative of the
foreign-capital enterprise;
(6) the primary production equipment to be used and the degrees of
depreciation, production technology, technological level and their sources;
(7) the sales orientation and areas, the sales channels and methods, and the
sales proportion between China's market and foreign markets;
(8) the arrangements for the revenues and expenditures in foreign exchange;
(9) the arrangements for the establishment of relevant organs and the
authorized size of working personnel, the engagement and use of workers and
staff members, their training, salaries and wages, material benefits, insurance,
and labour protection;
(10) the degrees of probable environmental pollution and the measures for
tackling pollution;
(11) the selection of sites and the area of land to be used;
(12) the funds, energy resources, raw and processed materials needed in
capital construction and in production and business operations and the solutions
thereof;
(13) the progress plan for the construction of the project; and
(14) the period of business operations of the foreign-capital enterprise to
be established.
Article 16 The articles of association of a foreign-capital enterprise
shall include the following contents:
(1) the name and the residence;
(2) the aim and the scope of business operations;
(3) the total amount of investments, the registered capital, and the time
limit for contributing investment;
(4) the form of organization;
(5) the internal organizational structures and their functions and powers as
well as their rules of procedures; the functions, duties and limits of powers of
the legal representative as well as of the general manager, chief engineer,
chief accountant and other staff members;
(6) the principles and system of financial affairs, accounting and auditing;
(7) labour administration;
(8) the term of business operations, termination, and liquidation; and
(9) the procedures for the amendment of the articles of association.
Article 17 The articles of association of a foreign-capital enterprise
shall become effective after the approval by the examining and approving organ.
The same procedure shall apply when amendments are made.
Article 18 The division or merge of foreign-capital enterprises, and the
significant change in capital resulting from other causes, shall be subject to
the approval by the examining and approving organ; in addition, the said
enterprises shall engage a Chinese registered acountant to carry out
verification, and to submit a report on the verification of capital; after the
approval by the examining and approving organ, the enterprises concerned shall
go through the procedures for the change of the registration with the relevant
administative department for industry and commerce.
Chapter III Form of Organization and Registered Capital
Article 19 The organizational form of a foreign-capital enterprise shall be
a limited liability company.
With approval, the enterprise may also take any other liability form.
With respect to a foreign-capital enterprise which is a limited liability
company, the liability of the foreign investor to the enterprise shall be
limited to the amount of investment subscribed and contributed to the enterprise
by the investor.
With respect to a foreign-capital enterprise which takes any other liability
form, the liability of the foreign investor to the enterprise shall be dealt
with in accordance with the provisions of Chinese laws and regulations.
Article 20 The total amount of investment of a foreign-capital enterprise
refers to the total amount of funds needed for the establishment of the
enterprises, i.e. the sum total of the funds invested in capital construction in
accordance with the scope of production and the circulating funds for
production.
Article 21 The registered capital of a foreign-capital enterprise refers to
the total amount of capital registered with the administrative department for
industry and commerce for the purpose of establishing the foreign-capital
enterprise, i.e. the total amount of investment the foreign investor undertakes
to contribute.
The registered capital of a foreign-capital enterprise shall fit in with the
enterprise's scope of business operations; and the proportion between the
registereed capital and the total amount of investment shall conform with the
provisions of the relevant Chinese laws and regulations.
Article 22 A foreign-capital enterprise shall not reduce the registered
capital during the term of business operations.
Article 23 The increase or assignment of the registered capital of a
foreign-capital enterprise shall be subject to the approval by the examining and
approving organ; in addition, the said enterprise shall go through the
procedures for the change of the registration with the administrative department
for industry and commerce.
Article 24 In case that a foreign-capital enterprise intends to mortgage or
assign its assets or rights and interests to a foreign unit, the case shall be
submitted to the examining and approving organ for approval, and then to the
administrative department for industry and commerce for the record.
Article 25 The legal representative of a foreign-capital enterprise shall
be the person-in-charge who, in accordance with the stipulations in the
enterprise's articles of association, executes his/her functions and powers on
behalf of the enterprise.
In the event that the legal representative is unable to execute his/her
functions and powers, he/she shall entrust in writing an agent with the
execution of his/her functions and powers.
Chapter IV Methods of Contributing Investment and the Time Limit
Article 26 Foreign investors may use convertible foreign currencies for the
contribution of investment, or use as their investment machinery and equipment,
industrial property rights, and proprietary technology that are assigned a fixed
price.
Foreign investors may, after approval by the examining and approving organ,
use, as their investment, their profits in Renminbi (RMB) earned from other
enterprises with foreign investment established within the territory of China.
Article 27 In case that foreign investors intend to use machinery and
equipment, being assigned a fixed price, as their investment, the said machinery
and equipment must meet the following requirements:
(1) those that are needed for the production of the foreign-capital
enterprise;
(2) those that cannot be produced in China, or that can be produced in China
but cannot be guaranted to meet the needs in terms of technical performance or
time of supply.
The price fixed for the aforesaid machinery and equipment shall not be
higher than the normal price for similar machinery and equipment sold on the
international market at the time.
With respect to the machinery and equipment, being assigned a fixed price
and used as contributing investment, an inventory listing in detail the
assigning of fixed prices as contributing investment, including the names,
categories, quantities, and the assignment of prices, shall be made and
submitted to the examining and approval organ as an appendix to the application
for the establishment of the foreign-capital enterprise.
Article 28 In case that foreign investors intend to use industrial property
rights and proprietary technology, being assigned a fixed price, as their
investment, the said industrial property rights and proprietary technology must
meet the following requirements:
(1) owned by the foreign investors themselves;
(2) capable of producing new products that are urgently needed by China, or
that are suitable for export and marketable abroad.
The assigning of a fixed price for the aforesaid industrial property rights
and proprietary technology shall be in conformity with the general pricing
principles of the international market, and the amount of pricing thereof shall
not exceed 20% of the registered capital of the foreign-capital enterprise.
With respect to those industrial property rights and proprietary technology,
being assigned a fixed price for contributing investment, a detailed inventory
of relevant data, including a duplcate of the proprietary rights certificate,
the effective condition, technological performance, the practical value, the
basis and standard for the calculation of pricing, shall be prepared and
submitted to the examining and approving organ as an appendix to the application
for the establishment of the foreign-capital enterprise.
Article 29 When the machinery and equipment, being assigned a fixed price
and used as contributing investment, have arrived at China's port, the
foreign-capital enterprise shall apply to China's commodity inspection
authorities for inspection, which shall then issue an inspection report.
In the event that the variety, quality and quantity of the machinery and
equipment, being assigned a fixed price and used as contributing investment, are
not in conformity with the variety, quality and quantity of the machinery and
equipment, being assigned a fixed price as contributing investment and listed in
the inventory submitted to the examining and approving organ, the examining and
approving organ has the power to require the foreign investors to
make corrections within a prescribed time limit.
Article 30 After the industrial property rights and proprietary technology
priced as contributing investment have been put to use, the examining and
approving organ has the power to carry out inspection. In the event that the
said industrial property rights and proprietary technology are not in conformity
with the data originally provided by the foreign investors, the examining and
approving organ has the power to require the foreign investors to
make corrections within a prescribed time limit.
Article 31 The time limit for a foreign investor to make the investment
contributions shall be clearly stipulated in the written application for the
establishment of the foreign-capital enterprise and also in the articles of
association of the enterprise. A foreign investor may make the investment
contribution by instalments, but the last instalment of the contribution shall
be made within the period of three years beginning from the day when the
business licenee is issued. The first instalment of investment contribution
shall not be less than 15% of the total amount of investment contribution that
the foreign investor undertakes to make, and shall be made in full within a
period of 90 days beginning from the day when the business licenee is issued.
In the event that a foreign investor fails to make in full the first
instalment of the investment contribution within the time limit stipulated in
the preceding paragraph, the certificate of approval for the establishment of
the proposed foreign-capital enterprise shall become invalid automatically. The
foreign-capital enterprise in question shall go through the procedure for
registration cancellation with the relevant administrative department for
industry and commerce, and hand in its business licence for cancellation.
In the event of the failure to go through the procedure for registration
cancellation and to hand in the business licence for cancellation, the
administrative department for industry and commerce shall revoke the business
licence and announce the case publicly.
Article 32 After making the first instalment of investment contribution,
the foreign investor shall make the remaining instalments of contribution
strictly as scheduled. In the event that a foreign investor is in arrears with
the contribution for 30 days without any justification, the case shall be
handled in accordance with the provisions of paragraph 2 of Article 31 of these
Rules.
In the event that a foreign investor has proper reasons for requesting the
postponement of investment contribution, prior consent of the examining and
approving organ shall be obtained, and the case shall also be reported to the
administrative department for industry and commerce for the record.
Article 33 After the foreign investor's each instalment of investment
contribution, the foreign-capital enterprise shall engage a Chinese registered
accountant to carry out verification, and to prepare a report on the
verification of capital, which shall be submitted to the examining and approving
organ and the administrative department for industry and commerce for
the record.
Chapter V Use of Site and the Site Use Fees
Article 34 With espect to the site to be used by a foreign-capital
enterprise, the local people's government at or above the county level in the
place where the enterprise is to be located, shall make arrangements after
examination and verification in the light of the local conditions.
Article 35 A foreign-capital enterprise shall, within 30 days from the day
the business licence is issued, go through the procedure for the use of land
and obtain the land certificate by presenting the certificate of approval and
the business licence to the land administration department under the local
people's government at or above the county level in the place where the
enterprise is to be located.
Article 36 The land certificate shall be the legal instrument for the
foreign-capital enterprise to use land. The foreign-capital enterprise within
its term of operations, may not assign its land-use right without permission.
Article 37 A foreign-capital enterprise shall, when obtaining the land
certificate, pay its land use fee to the land administrative department in the
place where the enterprise is located.
Article 38 In case that a foreign-capital enterprise uses land that has
already been developed, it shall pay the land development fee.
The land development fee, as mentioned in the preceding paragraph, includes
the expense for the requisition of land, the expense for the pulling down of
houses and the settlement allowance, and the expense for the construction of
basic installations that match the foreign-capital enterprise. The land
development fee may be calculated and collected by the land development unit in
a lump-sum, or by yearly instalments.
Article 39 In case that a foreign-capital uses land that has not been
developed, it may develop the land by itself, or it may entrust a department
concerned in China to develop the land. The infrastructure construction shall be
carried out under the unified arrangement of the local people's government at or
above the county level in the place where the enterprise is to be located.
Article 40 The standard for the calculation and collection of land use fee
and land development fee shall be handled in accordance with the pertinent
provisions of China.
Article 41 The term for the use of land by a foreign-capital enterprise
shall be the same as the approved operation period of the said enterprise.
Article 42 A foreign-capital enterprise, besides obtaining the land-use
right in accordance with the provisions of this Chapter, may also obtain the
same right in accordance with the pertinent provisions of other Chinese laws and
regulations.
Chapter VI Purchasing and Marketing
Article 43 A foreign-capital enterprise shall formulate and execute its
production and operation plans on its own; the said production and operation
plans shall be submitted to the competent department in charge of the trade, in
the place where the said enterprise is located, for the record,
Article 44 A foreign-capital enterprise is entitled to make decisions for
itself on the purchase, for its own use, of machinery and equipment, raw and
processed materials, fuels, parts and components, fittings, primary parts, means
of transport, and articles for office use (hereinafter uniformly called "goods
and materials").
A foreign-capital enterprise shall, when purchasing goods and materials in
China under the same conditions, enjoy the same treatment as enjoyed by the
Chinese enterprises.
Article 45 In case that a foreign-capital enterprise sells its products on
the Chinese market, it shall conduct its sales in accordance with the approved
sales proportion.
In the event that sales of products on the Chinese market by a
foreign-capital enterprise exceed the approved sales proportion, the case shall
be subjected to the approval by the examining and approving organ.
Article 46 A foreign-capital enterprise is entitled to export of its own
accord, goods produced by itself; it may also appoint a Chinese foreign trade
company or a company outside the territory of China to sell its goods on a
commission basis.
A foreign-capital enterprise is entitled to sell, of its own accord, the
products produced by itself on the Chinese market in accordance with the
approved sales proportion; it may also appoint a Chinese commercial agency to
sell its products on a commission basis.
Article 47 Where machinery and equipment being assigned a fixed price and
used by foreign investors as contributing investment rcquire, according to the
pertinent provisions of China, import licences, the foreign investors shall, on
the strength of the approved inventory of equipment and goods and materials of
the said enterprise to be imported, file an application directly, or through an
agency entrusted by them, with the licence-issuing organ for obtaining due
import licences.
Where a foreign-capital enterprise has to import, in accordance with the
approved scope of business, goods and materials for its own use and needed by
its production and if, according to the pertinent provisions of China, it is
necessary for the said enterprise to obtain import licences, it shall work out
an annual plan for importation, and apply, every six months, to the
licence-issuing organ for the licences.
With respect to products to be exported by a foreign-capital enterprise, if,
according to the pertinent provisions of China, it is necessary for the said
enterprise to obtain an export licence, it shall work out an annual plan for
exportation, and apply, every six months, to the licence-issuing organ for the
licence.
Article 48 The prices of the goods and materials and technological labour
service imported by a foreign-capital enterprise shall not be higher than the
normal prices of similar goods and materials and technological labour service on
the international market at the time.
The price of export products produced by a foreign capital enterprise shall
be fixed by the enterprise itself with reference to the international market
prices at the time, but the prices must not be lower than the reasonable export
prices. With respect to the evasion of tax by using such methods as importing
at high prices while exporting at low prices, the tax authorities shall have the
power, in accordance with the pertinent provisions of the tax law, to
investigate the legal responsibilities therefor.
The pricing of products to be sold by a foreign-capital enterprise on the
Chinese market in accordance with the approved sales proportion shall be
governed by the pertinent provisions of China concerning the administration of
prices.
The pricing mentioned in the preceding paragraph shall be reported to the
administrative authorities for prices and the tax authorities for the record,
and shall be placed under their supervision.
Article 49 A foreign-capital enterprise shall provide statistical data and
submit statistical statements to the departments concerned in accordance with
the provisions in the Statistics Law of the People's Republic of China and the
relevant provisions of China concerning the statistical system for the
utilization of foreign capital.
Chapter VII Taxation
Article 50 A foreign-capital enterprise shall pay taxes and duties in
accordance with the provisions of Chinese laws and regulations.
Article 51 The workers and staff members of a foreign-capital enterprise
shall pay individual income tax in accordance with the provisions of Chinese
laws and regulations.
Article 52 The following goods and materials imported by a foreign-capital
enterprise shall be exempted from Customs duties and consolidated industrial
and commercial tax:
(1) the machinery and equipment, parts and components, building materials as
well as other materials used as investment by the foreign investor and needed
for construction, as well as the installation and reinforcement of machinery;
(2) the machinery and equipment, parts and components, means of
communications and transportation for use in production, and equipment for use
in production and management, imported, for their own use, by a foreign-capital
enterprise with the funds included in the total amount of investment;
(3) the raw materials and processed materials, auxiliary materials, primary
parts, parts and components, and articles and materials for packaging imported
by a foreign-capital enterprise for the production of export products.
In the event that the imported goods and materials, as mentioned in the
preceding paragraph, are resold within the territory of China, or are used in
the production of products to be sold within the territory of China, the
foreign-capital enterprise concerned shall pay the taxes or make up the taxes in
accordance with the provisions of the tax law of China.
Article 53 The export commodities produced by a foreign-capital enterprise,
except those whose exportation is restricted by China, shall be exempted form
Customs duties and consolidated industrial and commercial tax in accordance with
the tax law of China.
Chapter VIII Control of Foreign Exchange
Article 54 Foreign exchange affairs of a foreign-capital enterprise shall
be handled in accordance with the pertinent laws and regulations of China
concerning foreign exchange control.
Article 55 A foreign-capital enterprise shall, on the strength of the
business licence issued by the administrative department for industry and
commerce, open an account at a bank which may handle foreign exchange business
within the territory of China, and its receipts and payments in foreign exchange
shall be subject to the supervision by the interested bank.
The foreign exchange revenue of a foreign-capital enterprise shall be
deposited in the foreign exchange account of the bank where it has opened an
account; and the foreign exchange expenses shall be paid from the foreign
exchange account.
Article 56 A foreign-capital enterprise shall achieve by itself the balance
of revenues and expenditures in foreign exchange.
In the event that a foreign-capital enterprise is unable to strike by itself
the balance between revenues and expenditure in foreign exchange, the foreign
investor shall indicate it clearly in the application for the establishment of
the enterprise, and put forward a specific plan for solving the problem; the
examining and approving organ shall give a reply after consultation with
departments concerned.
In the event that the foreign investor has indicated in the application for
the establishment of the foreign-capital enterprise, that the balance of
revenues and expenditure in foreign exchange would be achieved by itself, no
government department shall be responsible for the solution of the balance
problem of revenues and expenditure in foreign exchange for the said enterprise.
With respect to products, manufactured by a foreign-capital enterprise,
urgently needed in China, capable of replacing similar imported goods, and
permitted to be sold in China, the payments may be made in foreign exchange,
subject to the approval by the Chinese administrative department for foreign
exchange control,
Article 57 In case that a foreign-capital enterprise has the necessity to
open a foreign exchange account at a bank outside the territory of China to meet
the needs of production and business operations, the case shall be submitted to
the Chinese administrative department for foreign exchange control
for approval and, in accordance with the provisions of the Chinese
administrative department for foreign exchange control, regular reports on the
conditions of revenues and expenditures in foreign exchange and statements of
account shall be submitted.
Article 58 The wages and salaries as well as other rightful earnings in
foreign exchange of foreign workers and staff members and of those from Hong
Kong, Macao and Taiwan working in a foreign-capital enterprise may be remitted
freely out of the country after taxes have been paid in accordance with the
provisions of the Chinese tax law.
Chapter IX Financial Affairs and Accounting
Article 59 A foreign capital enterprise shall, in accordance with Chinese
laws, regulations and the provisions of financial organs, set up financial and
accounting systems, which shall be reported, for the record, to the financial
departments and the tax authorities at the place where the enterprise is
located.
Article 60 The fiscal year of a foreign-capital enterprise shall begin from
January 1 and end on December 31 of Gregorian calendar.
Article 61 Reserve funds and bonus and welfare funds for workers and staff
members shall he withdrawn from the profits after a foreign-capital enterprise
has paid income tax in accordance with the provisions of the Chinese tax law.
The proportion of reverse funds to be withdrawn shall not be lower than 10% of
the total amount of profits after payment of tax; the withdrawal of reserve
funds may be stopped when the total cumulative reserve has reached 50% of the
registered capital. The proportion of bonus and welfare funds for workers and
staff members to be withdrawn shall be determined by the foreign-capital
enterprise of its own accord.
In the event that deficits of previous fiscal years of a foreign-capital
enterprise have not been made up, it may not distribute the profits, while the
undistributed profits of previous fiscal years may be distributed together with
the distributable profits of the current fiscaI year.
Article 62 Accounting vouchers, account books and accounting statements
made by a foreign-capital enterprise shall be written in the Chinese language;
if they are written in a foreign language, notes in the Chinese language are
required.
Article 63 Business accounting of a foreign-capital enterprise shall be
conducted independently.
The annual accounting statements and liquidation accounting statements of a
foreign-capital enterprise shall be prepared in accordance with the provisions
of the Chinese competent departments for financial and tax affairs. If
accounting statements are prepared in foreign currencies, accounting statements
in which the foreign currencies are converted into Renminbi (RMB) shall be
prepared at the same time.
The annunal accounting statements and liquidation accounting statements of a
foreign-capital enterprise shall be verified by a Chinese registered accountant,
who shall submit a verification report.
The annual accounting statements and liquidation accounting statements of a
foreign-capital enterprise, as stipulated in the second and third paragraphs of
this Article, together with the verification report prepared by a Chinese
registered accountant, shall be submitted, within a prescribed time limit, to
the Chinese competent departments for financial and tax affairs and also to the
examining and approving organ and the administrative department for industry
and commerce for the record.
Article 64 The foreign investor may engage Chinese or foreign accounting
personnel to consult the account books of a foreign-capital enterprise, and the
expenses thus entailed shall be borne by the foreign investor.
Article 65 A foreign-capital enterprise shall submit its annual statement
of assets and liabilities and annual statement of profit and loss to the
competent departments for financial and tax affairs, and also to the examining
and approving organ as well as the administrative department for industry and
commerce for the record.
Article 66 A foreign-capital enterprise shall set up account books at the
place where the said enterprise is located, and shall receive supervision of the
competent departments for financial and tax affairs.
With respect to any foreign-capital enterprise which violates the provisions
in the preceding paragraph, the competent departments for financial and tax
affairs may impose a fine, and the administrative department for industry and
commerce may order to suspend its business operations or revoke its business
licence.
Chapter X Workers and Staff Members
Article 67 In case that a foreign-capital enterprise employs workers and
staff members within the territory of China, both the enterprise and the workers
and staff members shall, in accordance with the Chinese laws and regulations,
conclude and sign a labour contract. Matters as employment, dismissal, salaries
and wages, welfare, labour protection and labour insurance shall be clearly
stipulated in the contract.
Foreign-capital enterprises may not hire child labourers.
Article 68 A foreign-capital enterprise shall be responsible for the
vocational and technical training of its workers and staff members, and shall
set up a check-up and appraisal system, so that workers and staff members are
capable of meeting the needs of the enterprise's production and development in
terms of production and managerial skills.
Chapter XI Trade Union
Article 69 The workers and staff members of a foreign-capital enterprise
shall have the right to set up a grass-roots trade union organization and carry
out trade union activities in accordance with the provisions of the Trade Union
Law of the People's Republic of China.
Article 70 The trade union in a foreign-capital enterprise shall represent
the interests of workers and staff members, and have the right to conclude
labour contracts with the enterprise on their behalf, and to supervise the
execution of the labour contracts.
Article 71 The basic tasks of the trade union in a foreign-capital
enterprise shall be as follows: to safeguard the lawful rights and interests of
workers and staff members in accordance with the provisions of Chinese laws and
regulations, and to assist the enterprise in the rational arrangements and use
of welfare and bonus funds for the workers and staff members; to organize
workers and staff members in carrying on political study, in learning
scientific, technical and professional knowledge, in carrying out cultural,
artistic and sports activities; to educate workers and staff members in
complying with labour discipline and in striving to fulfil various economic
tasks of the enterprise.
When a foreign-capital enterprise holds discussions on problems concerning
the commendation and punishment of workers and staff members, the wage system,
welfare benefits, labour protection and labour insurance, representatives of the
trade union shall have the right to attend the discussions as nonvoting
attendants. A foreign-capital enterprise shall listen to the opinions of the
trade union, and win its cooperation.
Article 72 A foreign-capital enterprise shall give an active support to the
work of the trade union of the enterprise, and, in accordance with the
provisions of the Trade Union Law of the People's Republic of China, provide the
trade union organization with the necessary houses and equipment for handling
trade union work, holding meetings, and conducting such collective undertakings
as welfare benefits, and sports activities for workers and staff members. Every
month, the enterprise shall appropriate a sum equal to 2% of the
actual total amount of wages and salaries of workers and staff members to the
trade union as outlay, and the trade union of the enterprise shall use this sum
of money in accordance with the measures for the administration of trade union
outlay, as formulated by the All-China Federation of Trade Unions.
Chapter XII Term of Operations, Termination and Liquidation
Article 73 The term of operations of a foreign-capital enterprise shall be
proposed by the foreign investor in the written application for the
establishment of the enterprise in the light of the specific conditions of
different enterprises, and shall be subjected to the approval by the examining
and approving organ.
Article 74 The term of operations of a foreign-capital enterprise shall be
calculated from the day when the business licence is issued.
In the event that the term of operations of a foreign-capital enterprise has
to be extended upon its expiration, the enterprise shall, 180 days before the
expiration of the term of operations, file an application for the extension
of the term of operations with the examining and approving organ. The examining
and approving organ shall, within 30 days from the day of receiving the
application, determine whether to approve or disapprove the extension.
The foreign-capital enterprise shall, after obtaining the approval for an
extension of its term of operations and within 30 days of receiving the approval
for the extension, go through the procedure for the change of registration with
the administrative department for industry and commerce.
Article 75 A foreign-capital enterprise that falls under one of the
following circumstances shall terminate its business operations:
(1) the term of operations expires;
(2) the foreign investor decides to dissolve it because of poor operation
and management resulting in serious losses;
(3) business cannot be carried on because of heavy losses as a result of
natural disasters, wars or other force majeure;
(4) bankrupcy;
(5) disbanded by law because it has violated Chinese laws and regulations or
jeopardized social and public interests;
(6) other causes for dissolution, as stipulated in the enterprise's articles
of association, have occurred.
If a foreign-capital enterprise falls under any of the circumstances as
stipulated in Items (2), (3) and (4) of the perceding paragraph, it shall
submit, of its own accord, an application for the termination of business
operations to the examining and approving organ for verification and approval.
The date of approval after verification by the examining and approving organ
shall be the date of the said enterprise's termination.
Article 76 In case that a foreign-capital enterprise terminates its
business operations in accordance with the provisions in Items (1), (2), (3) and
(6) of Article 75, the enferprise shall, make a public announcement and notify
the creditors; and, it shall, within 15 days from the day of the public
termination announcement for liquidation, the principles of liquidation, and the
candidates for the liquidation committee to the examining and approving organ
for verification and approval before liquidation is carried out.
Article 77 The liquidation committee shall be composed of the legal
representatives of the foreign-capital enterprise, the representatives of the
creditors, the representatives from the competent authorities concerned; Chinese
registered accountants and lawyers shall be engaged in the liquidation.
Priority shall be given to the payment of expenses for liquidation made from
the existing property of the foreign-capital enterprise.
Article 78 The liquidation committee shall execute the following functions
and powers:
(1) to convene a meeting of creditors;
(2) to take over and liquidate the property of the enterprise in question,
and to prepare the statement of assets and liabilities and the inventory of
property;
(3) to propose a basis for the valuation and computation of the property of
the enterprise in question;
(4) to work out a liquidation plan;
(5) to recover creditors' rights and to pay the debts;
(6) to receive the payments from shareholders which have not yet been made;
(7) to distribute the remaining property;
(8) to represent the foreign-capital enterprise in bringing a suit or
responding to a suit.
Article 79 Prior to the conclusion of the liquidation of foreign-capital
enterprise, the foreign investor shall not remit or carry the said enterprise's
funds out of the territory of China, nor dispose of the enterprise's property
privately.
If, upon the conclusion of the liquidation of a foreign-capital enterprise,
its net assets and remaining property exceed its registered capital, the excess
portion shall be regarded as profit on which income tax shall be imposed
in accordance with the Chinese tax law.
Article 80 Upon the conclusion of the liquidation of a foreign-capital
enterprise, it shall go through the procedures for the cancellation of
registration with the administrative department for industry and commerce, and
to hand in the business licence for cancellation.
Article 81 While disposing of the assets and properties of a
foreign-capital enterprise, Chinese enterprises or other economic organizations
shall, under equal conditions, have the priority in purchasing the aforesaid
assets and properties.
Article 82 In case that a foreign-capital enterprise terminates its
business operations in accordance with the provisions in Item (4) of Article 75,
its liquidation shall be carried out with reference to the pertinent laws and
regulations of China.
In case that a foreign-capital enterprise terminates its business operations
in accordance with the provisions in Item (5) of Article 75, its liquidation
shall be carried out in accordance with the pertinent provisions of
China.
Chapter XIII Supplementary Provisions
Article 83 With respect to the various categories of insurance for a
foreign-capital enterprise, it shall take out insurance from insurance companies
within the territory of China.
Article 84 If a foreign-capital enterprise concludes economic contracts
with any other Chinese enterprise or economic organization, the Economic
Contract Law of the People's Republic of China shall be applied.
If a foreign-capital enterprise concludes economic contracts with any
foreign company, enterprise or individual, the Law of the People's Republic of
China on Economic Contracts Involving Foreign Interests shall be applied.
Article 85 Cases concerning the establishment, in China's mainland, of
enterprises, the capital of which is owned solely by the companies, enterprises,
and other economic organizations or individuals in the regions of Hong Kong,
Macao or Taiwan, or by Chinese citizens residing in foreign countries, shall be
handled with reference to these Rules.
Article 86 Foreign workers and staff members, and workers and staff members
from Hong Kong, Macao and Taiwan, who are working in a foregin-capital
enterprise, may carry into the country means of transport and articles for daily
use that are within reasonable quantities and for their own use, and they
shall go through the import procedures in accordance with pertinent provisions
of China.
Article 87 The right to interpret these Rules shall reside in the Ministry
of Foreign Economic Relations and Trade.
Article 88 These Rules shall go into effect as of the date of promulgation. |
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