Article 12A contractual joint venture shall establish a board of directors or a joint managerial institution, which shall, according to the contract or the articles of association for the contractual joint venture, decide on the major issues concerning the venture. If the Chinese or foreign party assumes the chairmanship of the board of directors or the directorship of the joint managerial institution, the other party shall assume the vice-chairmanship of the board or the deputy directorship of the joint managerial institution. The board of directors or the joint managerial institution may decide on the appointment or employment of a general manager, who shall take charge of the daily operation and management of the contractual joint venture. The general manager shall be accountable to the board of directors or the joint managerial institution.
If a contractual joint venture, after its establishment, chooses to entrust a third party with its operation and management, it shall be subject to the unanimous consent of the board of directors or the joint managerial institution, report to the examination and approval authority for approval, and register the change with the administrative department for industry and commerce.
Article 13The employment, dismissal, remuneration, welfare benefits, and occupational protection, labour insurance, etc. of the staff members and workers of a contractual joint venture shall be specified in contracts concluded in accordance with law.
Article 14The staff and workers of a contractual joint venture shall, in accordance with law, establish their trade union organization to carry out trade union activities and protect their lawful rights and interests.
A contractual joint venture shall provide the necessary conditions for the venture's trade union to carry out its activities.
Article 15A contractual joint venture shall establish its account books within the territory of China file its accounting statements according to relevant regulations and accept supervision by the financial and tax authorities.
If a contractual joint venture, in violation of the provisions prescribed in the preceding paragraph, does not establish its account books within the territory of China, the financial and tax authorities may impose a fine on it, and the administrative department for industry and commerce may order it to suspend its business operation or may revoke its business license.
Article 16A contractual joint venture shall, by presenting its business license, open a foreign exchange account with a bank or any other financial institution, which is permitted by the exchange control authorities of the State to conduct transactions in foreign exchange.
A contractual joint venture shall handle its foreign exchange transactions in accordance with the State regulations on foreign exchange control.
Article 17A contractual joint venture may obtain loans from financial institutions within the territory of China and may also obtain loans outside the territory of China.
Loans to be used by the Chinese and foreign parties as investment or conditions for cooperation, and their guarantees shall be provided by each party on its own.
Article 18The various kinds of insurance coverage of a contractual joint venture shall be furnished by insurance institutions within the territory of China.
Article 19A contractual joint venture may, within its scope of operation approved, import materials it needs and export products it produces. A contractual joint venture may, in adherence to the principles of fairness and rationality, purchase on both the Chinese and the world market the raw and semi-processed materials, fuels and other materials it needs within the approved scope of operation.
Article 20A contractual joint venture shall, in accordance with State regulations on tax, pay taxes and may enjoy the preferential treatment of tax reduction or exemption.
Article 21The Chinese and foreign parties shall share earnings or products, undertake risks and losses in accordance with the agreements prescribed in the contractual joint venture contract.
If, upon the expiration of the period of a venture's operation, all the fixed assets of the contractual joint venture, as agreed upon by the Chinese and foreign parties in the contractual joint venture contract, are to belong to the Chinese party, the Chinese and foreign parties may prescribe in the contractual joint venture contract the ways for the foreign party to recover its investment ahead of time during the period of the venture's operation. If the foreign party, as agreed upon in the contractual joint venture contract, is to recover its investment prior to the payment of income tax, it shall apply to the financial and tax authorities, which shall examine and approve the application in accordance with State regulations concerning taxes.
If, according to the provisions of the preceding paragraph, the foreign party is to recover its investment ahead of time during the period of the venture's operation, the Chinese and foreign parties shall, as stipulated by the relevant laws and agreed in the contractual joint venture contract, be liable for the debts of the venture.
Article 22After the foreign party has fulfilled its obligations under the law and the contractual joint venture contract, the profits it receives as its share, its other legitimate income and the funds it receives as its share upon the termination of the venture, may be remitted abroad according to law.
The wages, salaries or other legitimate income earned by the foreign staff and workers of contractual joint ventures, after the payment of the individual income tax according to law, may be remitted abroad.
Article 23Upon the expiration or termination in advance of the term of a contractual joint venture, its assets, claims and debts shall be liquidated according to legal procedures. The Chinese and foreign parties shall, in accordance with the agreement specified in the contractual joint venture contract, determine the ownership of the venture's property.
A contractual joint venture shall, upon the expiration or termination in advance of its term, cancel its registration with the administrative department for industry and commerce and the tax authorities.
Article 24The period of operation of a contractual joint venture shall be determined through consultation by the Chinese and foreign parties and shall be clearly specified in the contractual joint venture contract. If the Chinese and foreign parties agree to extend the period of operation, they shall apply to the examination and approval authority 180 days prior to the expiration of the venture's term. The examination and approval authority shall decide whether or not to grant approval within 30 days from the date of receiving the application.
Article 25Any dispute between the Chinese and foreign parties arising from the execution of the contract or the articles of association for a contractual joint venture shall be settled through consultation or mediation. In case of a dispute which the Chinese or foreign parties is unwilling to settle through consultation or mediation, or of a dispute which they have failed to settle through consultation or mediation, the Chinese and foreign parties may submit it to a Chinese arbitration agency or any other arbitration agency for arbitration in accordance with the arbitration clause in the contractual joint venture contract or a written agreement on arbitration concluded afterwards.
The Chinese or foreign party may bring a suit in a Chinese court, if no arbitration clause is provided in the contractual joint venture contract and if no written agreement is concluded afterwards.
Article 26The detailed rules for the implementation of this Law shall be formulated by the department in charge of foreign economic relations and trade under the State Council and reported to the State Council for approval before implementation.
Article 27This Law shall come into force as of the date of its promulgation.
