|
RULES
FOR THE IMPLEMENTATION OF THE LAW
OF
THE PEOPLE'S REPUBLIC OF CHINA ON
FOREIGN-CAPITAL
ENTERPRISES
(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 as import substitutes;
(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 as 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.
top
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, 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 license, export quota, or import license, 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.
Article
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 license. The date on which the business
license 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 Artical 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 of working
personnel the engagement and use of workers and staff members,
their training, salaries and wages, material benefits, insurance,
and labor 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)
Labor 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 accountant 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 administrative department for industry and commerce.
top
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 arror-dance 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 registered 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 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.
top
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 guaranteed 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 proprty
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 duplicate 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 license
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 license 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 license for cancellation. In the event
of the failure to go through the procedure for registration cancellation
and to hand in the business license for cancellation, the administrative
department for industry and commerce shall revoke the business
license 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 prostponement 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.
top
Chapter
V Use
of Site and the Site Use Fees
Article
34 With respect 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 license 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 license 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 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 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.
top
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 use by foreign investors as contributing investment require,
according to the pertinent provisions of China, import licenses,
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 license-issuing organ for obtaining
due import licenses.
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 licenses, it shall work out an annual plan for importation,
and apply, every six months, to the license-issuing organ for
the licenses.
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 license, it shall
work out an annual plan for exportation, and apply, every six
months, to the license-issuing organ for the license.
Article
48 The prices of the goods and materials and technological
labor 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 that the reasonable export prices. With respect
to the evasion of tax by using such methods a 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.
top
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.
top
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 license 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 revenuse 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 revenuse and expenditure in foreign exchange would
be achieved by itself no government department shall be responsible
for the solution of the balance problem of revenuse 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 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 form 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.
top
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 be 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 deticits of previous fiscal years of a foreign-capital
have not been made up, it may not distribute the profits, while
the undistnibuted profits of previous fiscal year may be distributed
together with the distributable profits of the current fiscal
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
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 China 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 license.
top
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 labor contract.
Matters as employment, dismissal, salaries and wages, welfare
labor protection and, labor insurance shall be clearly stipulated
in the contract.
Foreign-capital
enterprises may not hire child labourers.
Article
68 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.
top
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 labor 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, labor protection and labor
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 Peoples' 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.
top
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 form the day when the business license 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
from the day 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 disasers, 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 preceding 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 enterprise 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 creditor's rights and to pay the debts;
(6)
To receive the payments from shareholders which have not yet been
made;
(7)
To distributs 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 license 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.
top
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
foreign-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.
top
|
