|
Detailed Rules for The
Implementation of The Law on Wholly Foreign-Owned
Enterprises
(Approved 28 October 1990 by the State
Council. Issued 12 December 1990 by the Ministry, of Foreign
Economic Relations and Trade Revised 12 April 2001 in
accordance with the Decision of the State Council to Revise
the Detailed Rules for the Implementation of the Law of the
People's Republic of China on Sole Foreign Investment
Enterprise. Re-promulgated 12 April 2001 by Order No 301 of
the State Council)
TABLE OF CONTENTS
Chapter I General
Principles
Chapter II Establishment Procedures
Chapter III Organizational Structure and Registered Capital
Chapter IV Investment Contribution Methods and Period of
Investment
Chapter V Land Use and Its Related Fees
Chapter VI Purchasing and Selling
Chapter VII Taxation
Chapter VIII Foreign Exchange Control
Chapter IX Financial Affairs and Accounting
Chapter X Employees
Chapter XI Trade Unions
Chapter XII Duration, Termination and Liquidation
Chapter XIII Supplementary Provisions
CHAPITRE I
GENERAL PRINCIPLES
Article
1
These Detailed Rules are formulated in accordance with the
provisions of the Law of the People's Republic of China on
Wholly Foreign-owned Enterprises.
Article
2
Wholly foreign-owned enterprises shall be subject to the
jurisdiction of and receive the protection of Chinese laws.
Business activities which wholly foreign-owned enterprises
engage in within Chinese territory must comply with Chinese
laws and regulations and any activity detrimental to China's
social public interest shall be prohibited.
Article
3
The establishment of a wholly foreign-owned enterprise in
China must facilitate the development of China's economy and
be capable of achieving significant economic results. The
State encourages the wholly foreign-owned enterprises to
adopt advanced technology and equipment, engage in the
development of new products, achieve product upgrading and
replacement, and economise on the use of energy and raw
materials. The State also encourages ~he establishment of
export-oriented wholly foreign-owned enterprises
Article
4
Business and industries in which the establishment of wholly
foreign-owned enterprises is prohibited or restricted shall
be decided in accordance with State provisions on Foreign
Investment Guidelines and the Guideline Catalogue of Foreign
Investment Industries.
Article
5
An application to establish a wholly foreign-owned
enterprise shall not be granted in any of the following
circumstances:
(1) if
it is detrimental to China's sovereignty or the social
public interest
(2) if it endangers China's national security
(3) if it violates Chinese laws or regulation
(4) if it fails to conform with the requirements for
developing China's national economy
(5) if it is likely to cause environmental pollution
Article
6
A wholly foreign-owned enterprise conducting business within
its approved scope of operations shall have right of
autonomy in its operations and administration and shall not
be subject to any interference.
CHAPITRE II
ESTABLISHEMENT PROCEDURES
Article
7
After an application to establish a wholly foreign-owned
enterprise has been examined and approved by the Ministry
for Foreign Trade and Economic Cooperation (hereinafter
referred to as MOFTEC) a document of approval shall be
issued.
The
State Council shall entrust the people's governments of the
various provinces, autonomous regions, directly administered
municipalities, cities under separate planning and special
economic zones to examine and approve applications to
establish wholly foreign-owned enterprises, and to issue a
document of approval after the approval of an application,
in the following circumstances:
(1) the
total amount of investment is within the examination and
approval powers stipulated by the State Council
(2) no additional allocations of raw materials by the State
are required and the nation's overall balance with regard to
fuel, power, transportation and foreign trade export quotas
is not affected
(3) the people's governments of the various provinces,
autonomous regions, directly administered municipalities,
cities under separate planning and special economic zones
which are authorized by the State Council shall, after
approving the establishment of a wholly foreign-owned
enterprise, report the details to MOFTEC within 15 days for
its records. (MOFTEC and the people's governments of the
various provinces, autonomous regions, directly administered
municipalities, cities under separate planning and special
economic zones hereinafter shall be jointly referred to as
examining and approving authorities.)
Article
8
If, when applying to establish a wholly foreign-owned
enterprise, related products are subject to export licenses,
export quotas, import licenses or are State-restricted
imports, prior approval snail be obtained from relevant
authority in charge of foreign trade and economy in
accordance with the relevant provisions on administrative
jurisdiction.
Article
9
Before submitting an application to establish a wholly
foreign-owned enterprise, a foreign investor shall provide
the local people's government at county level or above in
the locality of the proposed enterprise with a report on the
following matters: the purpose and aims of the proposed
enterprise, its scope and scale of operations, products to
be manufactured, technology and equipment to be used, areas
of land to be used and land requirements, conditions and
amounts in relation to water, electricity, coal, gas or
other fuel requirements and public utility requirements.
A local
people's government at county level or above shall issue a
foreign investor with a written response within 30 days of
receiving the aforesaid report.
Article
10
When applying to establish a wholly foreign-owned
enterprise, a foreign investor shall submit an application
to the examining and approving authorities through the local
people's government at county level or above in the locality
of the proposed enterprise, together with the following
documents:
(1) an
application to establish a wholly foreign-owned enterprise
(2) a feasibility study report
(3) articles of association of the wholly foreign-owned
enterprise
(4) a list of legal representatives (or candidates for
membership of the board of directors) of the wholly
foreign-owned enterprise
(5) testimony of the foreign investor's legal certification
and credit standing
(6) the written response of the local people's government at
county level or above in the locality of the proposed
enterprise
(7) a detailed list of goods and materials needed to be
imported
(8) other necessary documents
Items
(1) and (3) of the aforesaid list of documents must be
written in Chinese. Items (2), (4) and (5) may be written in
a foreign language, but a Chinese version of the text shall
be attached.
If two
or more foreign investors apply jointly to establish a
wholly foreign-owned enterprise, a copy of the contract
concluded between these parties shall be submitted to the
examining and approving authorities.
Article
11
The examining and approving authorities shall decide whether
or not to approve an application to establish a wholly
foreign-owned enterprise within 90 days of receiving all the
required documents. If the aforesaid documents are found to
be incomplete or inappropriate, the examining and approving
authorities may require a supplementary submission or
amendment within a specified period.
Article
12
After the approval of an application to establish a wholly
foreign-owned enterprise, a foreign investor shall register
with an administrative authority for industry and commerce
within 30 days of receiving the document of approval and
obtain a business license. The date of issue of business
license shall be deemed to be the date of establishment of
the enterprise.
If a
foreign investor fails to register with an administrative
authority for industry and commerce within 30 days of
receiving the document of approval, the wholly foreign-owned
enterprise's document of approval shall automatically become
invalid.
A
wholly foreign-owned enterprise shall register with tax
authorities within 30 days of its establishment.
Article
13
A foreign investor may commission a Chinese foreign
investment enterprise service organization or another
economic entity to act as its agent in completing the
provisions of Article 8, Article 9 paragraph 1 and Article
10, but shall be required to sign a commission contract.
Article
14
An application to establish a wholly foreign-owned
enterprise shall include the following contents:
(1)
name or title, address and registered address of the foreign
investor and name, nationality and position of its legal
representative
(2) name and address of the proposed wholly foreign-owned
enterprise
(3) scope of operations, product type and production scale
(4) total amount of investment in the proposed enterprise,
amount of registered capital, source of capital, method of
investment and term of investment
(5) organizational format and structure and the legal
representative of the proposed enterprise
(6) main types of production equipment to be used and
respective age of equipment, production technology, level of
technology and source of supply
(7) product sales direction, regions, sales channels, and
methods
(8) foreign exchange income and expenditure arrangements
(9) establishment provisions and personnel framework,
arrangements for employee recruitment, training, wages,
welfare benefits, insurance, labor protection, etc
(1O) amount of environmental pollution likely to the caused
and corresponding measures for solution
(11) site selection and area of land to be used
(12) capital construction and capital, resources and raw
materials required for production and operations and supply
measures
(13) progress plans for project implementation
(14) period of operation of the proposed enterprise
Article
15
The articles of association of a wholly foreign-owned
enterprise shall include the following contents:
(1)
name and address
(2) purpose and scope of Operations
(3) total amount of investment, registered capital and
investment term
(4) organizational framework
(5) internal organizational body, its powers of office and
rules of procedure, legal representative and the powers,
duties and functions of the general manager, chief engineer
and chief accountant
(6) principles governing finance, accounting and auditing
and related systems
(7) labor management
(8) duration of operations, termination and liquidation
(9) procedures for amendment of the articles of association
Article
16
The articles of association of a wholly foreign-owned
enterprise shall become effective after their approval by
relevant examining and approving authorities and similarly
when amendments are made.
Article
17
A division, merger or significant transfer of capital due to
other reasons by a wholly foreign-owned enterprise must be
approved by examining and approving authorities and a public
accountant registered in China must be engaged to examine
the details and issue a capital verification report.
Procedures to register such a change shall be undertaken
with the relevant administrative authority for industry and
commerce after the approval by the examining and approving
authorities.
CHAPITRE III
ORGANISATIONAL STRUCTURE AND REGISTERED CAPITAL
Article
18
The organizational structure of a wholly foreign-owned
enterprise shall take the form of a limited liability
company. It may also take the form of other liability
structures subject to approval.
In the
case of a wholly foreign-owned enterprise in the form of a
limited liability enterprise, the foreign investor shall be
liable to the enterprise within the limits of the investment
it subscribes.
In the
case of a wholly foreign-owned enterprise with another type
of liability, the foreign investor's liability towards the
enterprise shall be determined pursuant to the provisions of
Chinese laws and regulations.
Article
19
The total amount of investment of a wholly foreign-owned
enterprise shall refer to the total amount of funds required
to establish the enterprise, namely, the sum total of
capital construction funds and the amount of production
liquid capital required in accordance with the enterprise's
production scale.
Article
20
The registered capital of a wholly foreign-owned enterprise
shall refer to the total amount of capital registered with
the administrative authority for industry and commerce for
the establishment of the enterprise, namely, the total
amount of investment subscribed by the foreign investor.
The
amount of registered capital of a wholly foreign-owned
enterprise shall suit its scale of operations and the ratio
of registered capital and total investment shall comply with
relevant Chinese regulations.
Article
21
A wholly foreign-owned enterprise shall not reduce its
registered capital during the duration of its operations.
However, if there is a genuine need to reduce its registered
capital as a result of changes in the total investment or in
production and business scale, etc, such reduction must be
approved by examining and approving authorities.
To
increase or assign the registered capital of a wholly
foreign-owned enterprise, the approval of examining and
approving authorities must be obtained and procedures for
registration of the change must be undertaken with an
administrative authority for industry and commerce.
Article
23
To mortgage or assign its assets or rights and interests, a
wholly foreign-owned enterprise must obtain the approval of
examining and approving authorities and report the details
to the administrative authority for industry and commerce.
Article
24
The legal representative of a wholly foreign-owned
enterprise shall be responsible for exercising the powers
and functions of the enterprise pursuant to the provisions
of its articles of association.
If a
legal representative is unable to exercise its powers and
functions, it shall commission in writing an agent to
exercise these powers of office on its behalf.
CHAPITRE IV
INVESTMENT CONTRIBUTION METHODS AND PERIOD OF INVESTMENT
Article
25
A foreign investor may contribute freely convertible foreign
currency or use machinery and equipment. industrial property
rights, proprietary technology or other items, the value of
which is capitalized, as investment.
Subject
to approval from examining and approving authorities, a
foreign investor may also invest Renminbi dividends obtained
from other wholly foreign-owned enterprises it has
established in China.
Article
26
If a foreign investor proposes to use machinery or equipment
as investment, such machinery or equipment must be essential
for use in production by the enterprise.
The
capitalized value of such machinery or equipment shall not
exceed the current normal price for the same type of items
on the international market.
When
investment is in the form of machinery or equipment, a
detailed list of the items shall be provided. including
details such as the name of each item, type, quantity and
capitalized value. This list shall form an appendix to the
application to establish a wholly foreign-owned enterprise
and shall be submitted to the examining and approving
authorities.
Article
27
If a foreign investor proposes to use industrial property
rights or proprietary technology as investment, such
industrial property rights or proprietary technology must
belong to the foreign investor itself.
The
principles used for capitalizing the value of these
industrial property rights or proprietary technology shall
be the same as those used internationally and the
capitalized value shall not be permitted to exceed 20% of
the enterprise's registered capital.
When
investment is in the form of industrial property rights or
proprietary technology detailed information must be
provided, including a copy of the certificate of title,
conditions of validity, technical performance, practical
value and the basis of and standards for calculating the
capitalized value. These details shall form an appendix to
the application to establish a wholly foreign-owned
enterprise and shall be submitted to the examining and
approving authorities.
Article
28
When machinery or equipment contributed as capitalized
investment arrives at a Chinese port, the wholly
foreign-owned enterprise shall ask the relevant Chinese
commodity inspection authority to inspect the goods and
issue an inspection report.
If the
type, quality or quantity of the machinery or equipment
fails to comply with the details stipulated in the list
submitted by a foreign investor to examining and approving
authorities, the examining and approving authorities shall
have the right to require the foreign investor to rectify
the matte within a prescribed period.
Article
29
Examining and approving authorities shall have the right to
inspect capitalized investment in the form industrial
poverty rights or proprietary technology. If it is found to
differ from the details originally provided by the foreign
investor, the examining and approving authorities shall have
the right to require the foreign investor to rectify the
matter within a prescribed period.
Article
30
The time limit for the payment of investment shall be
stipulated in the wholly foreign-owned enterprise
application form and the enterprise's articles of
association. A foreign investor may pay its investment in
installments, but the final payment must be settled within
three years of the date of issue of the enterprise's
business license. The initial installment payment shall be
no less than 15% of the amount of investment to be
subscribed by the foreign investor and shall be paid within
90 days of the date of issue of the enterprise's business
license.
If a
foreign investor is unable to pay the initial installment
within the period prescribed above, the wholly foreign-owned
enterprise's document of approval shall automatically become
invalid. The enterprise shall undertake procedures with the
administrative authority for industry and commerce to cancel
its registration and shall hand in its business license.
Should an enterprise fail to undertake procedures to cancel
its registration and to hand in its business license, the
administrative authority for industry and commerce shall
revoke its business license and make a public announcement
to the effect.
Article
31
After payment of the initial installment, a foreign investor
shall pay the other installments on schedule. If payment is
30 days in arrears without a proper reason, the matter shall
be handled in accordan6e with the provisions of paragraph 2
of Article 30 of these Detailed Rules.
If a
foreign investor has just cause for requesting an extension
of the payment period, approval shall be obtained from the
examining and approving authorities and details shall be
filed with the administrative authority for industry and
commerce.
Article
32
After the payment of each installment by the foreign
investor, a wholly foreign-owned enterprise shall engage an
accountant registered in China to examine the payments and
issue a certificate of capital verification. Details shall
be filed with the examining and approving authorities and
the administrative authority for industry and commerce.
CHAPITRE V
LAND USE AND ITS RELATED FEES
Article
33
In the case of land to be used by a wholly foreign-owned
enterprise, the local people's government at county level or
above in the locality of the enterprise shall examine and
verify matters in accordance with the local situation and
make arrangements.
Article
34
A wholly foreign-owned enterprise shall, within 30 days of
receiving its business license, present its document of
approval and business license to the land management
department of the local people's government at county level
or above in the locality of the enterprise in order to carry
out land use procedures and obtain a land use certificate.
Article
35
A land use certificate shall be a wholly foreign-owned
enterprise's legal proof of its right to use land. A wholly
foreign-owned enterprise shall be prohibited from
transferring its land use rights without authorization
within its stipulated period of operations.
Article
36
When obtaining its land use certificate, a wholly
foreign-owned enterprise shall pay a land use fee to its
local land management department.
Article
37
If using land that has undergone development, a wholly
foreign-owned enterprise shall pay a land development fee.
The
aforesaid land development fee shall include a land
appropriation, reallocation and settlement fee and an
infrastructure construction fee for auxiliary facilities
available to the enterprise. The land development fee may be
levied by the land development unit as a once-only payment
or be paid in installments over a number of years.
Article
38
If using land yet to be developed, a wholly foreign-owned
enterprise may develop the and itself or commission relevant
Chinese units to develop it. Infrastructure construction
shall be uniformly arranged by the local people's government
at county level or above in the locality of the enterprise.
Article
39
The land use fees and land development fee standards levied
in relation to wholly foreign-owned enterprises shall be
determined pursuant to relevant Chinese regulations.
Article
40
The duration of a wholly foreign-owned enterprise's land use
term shall be the same as its approved period of operations.
Article
41
In addition to obtaining land use rights pursuant to the
provisions of this Chapter, a wholly foreign-owned
enterprise may also obtain land use rights in accordance
with the provisions of other Chinese laws and regulations.
CHAPITRE VI
PURCHASING AND SELLING
Article
42
A wholly foreign-owned enterprise shall have the right to
decide matters relating to the purchase of items for its own
use, such as machinery and equipment, raw materials, fuel,
spare parts, accessories, components, means of transport and
office equipment (hereinafter referred to as commodities)
When
purchasing commodities in China under the same conditions as
Chinese enterprises, a wholly foreign-owned enterprise shall
be granted the same treatment as applies to Chinese
enterprises.
Article
43
A wholly foreign-owned enterprise may sell its products on
the Chinese domestic market. The State encourages wholly
foreign-owned enterprises to export their products
Article
44
A wholly foreign-owned enterprise shall have the right to
export its products itself or may also commission a Chinese
foreign trade company or a company outside Chinese territory
to sell the products on its behalf.
A
wholly foreign-owned enterprise may sell its products itself
on the Chinese domestic market or may also commission a
Chinese commercial organization to sell the products on its
behalf.
Article
45
If machinery or equipment contributed by a foreign investor
as investment requires an import license in accordance with
Chinese regulations, the wholly foreign-owned enterprise
itself or an agent engaged by the enterprise shall base its
application to the license issuing authority for an import
license on the detailed list of equipment and commodities
approved for importation by the enterprise.
Article
46
The price of commodities imported by a wholly foreign-owned
enterprise and of related skilled labor shall not exceed the
current normal price of the same type of goods and skilled
labor on the international market. The price of export
products of a wholly foreign-owned enterprise shall be
determined by the enterprise itself with reference to
current international market prices, but shall not be
permitted to be less than the appropriate export price. If
measures such as high import prices and low export prices
are used to evade taxation, tax authorities shall have the
right to pursue legal liability in accordance with tax laws.
Article
47
A wholly foreign-owned enterprise shall provide statistical
data and submit statistical statements in accordance with
the provisions of the Law of the People's Republic of China
on Statistics and China's statistical system for the use of
foreign capital.
CHAPITRE VII
TAXATION
Article
48
A wholly foreign-owned enterprise shall pay taxes in
accordance with the provisions of Chinese laws and
regulations.
Article
49
Employees of a wholly foreign-owned enterprise shall pay
individual income tax in accordance with the provisions of
Chinese laws and regulations.
Article
50
A wholly foreign-owned enterprise may reduce or be exempted
from tax on the following imported
commodities in accordance with Chinese laws on taxation:
(1)
machinery, equipment, spare parts, building materials for
use in construction and materials required for installation
and reinforcement of machines which are subscribed by a
foreign investor as part of its investment contribution
(2) machinery, equipment, spare parts, means of transport
for use in production and production control equipment
required by a wholly foreign-owned enterprise for its own
production operations that are imported with funds which are
part of the enterprise's total investment
(3) raw materials, auxiliary materials, components, spare
parts and packaging materials imported by a wholly
foreign-owned enterprise for use in producing exports
Payment
of the supplementary payment of duty and taxes shall be
required pursuant to Chinese tax laws if the aforesaid
import Commodities are approved for domestic sale or resold
or transferred for use in the production of goods for
domestic sales
Article
51
Except for state-restricted exports, taxes on export
products of a wholly foreign-owned enterprise may be
reduced, exempted or refunded in accordance with Chinese
laws on taxation.
CHAPITRE VIII
FOREIGN EXCHANGE CONTROL
Article
52
Foreign exchange matters concerning wholly foreign-owned
enterprises shall be handled in accordance with relevant
Chinese laws on foreign exchange control.
Article
53
A wholly foreign-owned enterprise shall open an account with
a bank in China authorized to engage in foreign exchange
dealings by presenting its business license issued by an
administrative authority for industry and commerce. A bank
handling the account of a wholly foreign-owned enterprise
shall supervise the enterprise's receipts and expenditure.
The
foreign exchange income of a wholly foreign-owned enterprise
shall be deposited in its foreign exchange account. All
foreign exchange payments by the enterprise shall be made
from this account.
Article
54
A wholly foreign-owned enterprise which, due to production
or operational requirements, needs to establish a foreign
exchange bank account with a bank outside Chinese territory
must obtain approval from Chinese foreign exchange control
authorities and, pursuant to the provisions of the exchange
control authorities, report periodically on its foreign
exchange receipts and expenditure situation and submit its
bank reconciliation statement.
Article
55
After tax is paid on the wages and other legitimate foreign
exchange income of an employee of a wholly foreign-owned
enterprise of foreign nationality or from Hong Kong or
Macao, in accordance with China tax laws, the balance may be
freely remitted abroad.
CHAPITRE IX
FINANCIAL AFFAIRS AND ACCOUNTING
Article
56
A wholly foreign-owned enterprise shall establish financial
and accounting Systems in accordance with Chinese laws and
regulations and the provisions of finance authorities and
shall report the details to its local finance and taxation
authorities for their records.
Article
57
The fiscal year of a wholly foreign-owned enterprise shall
be from 1 January to 31 December of the Gregorian calendar
year.
Article
58
From the profit remaining after payment of income tax n
accordance with Chinese tax law provisions, a wholly
foreign-owned enterprise shall allocate money for a reserve
fund and employee bonus and welfare funds. That allocated as
the. reserve fund shall be no less their 10% of the
after-tax profit amount. If the accumulative total of
allocated funds reaches 50% of an enterprise registered
capital. the enterprise shall not be required to make any
further allocation. The allocation ratio for the employee
bonus and welfare funds may be determined by a wholly
foreign-owned enterprise itself.
A
wholly foreign-owned enterprise shall be prohibited from
distributing dividends unless the losses of previous years
have been made up. Dividends not distributed in previous
years may be distributed together with those of the current
year.
Article
59
All vouchers, account books and accounting statements
prepared by a wholly foreign-owned enterprise shall be
written in Chinese. If written in a foreign language, a
Chinese translation shall be attached.
Article
60
A wholly foreign-owned enterprise shall undertake its
accounting independently.
A
wholly foreign-owned enterprise's annual accounting
statements and liquidation accounting statements shall be
drawn up pursuant to the provisions of China's finance and
taxation authorities. If submitting an accounting statement
drawn up in foreign currency, another accounting statement
showing the renminbi equivalent of the foreign currency
statement shall be required to be submitted at the same
time.
A
wholly foreign-owned enterprise's annual accounting
statements and liquidation accounting statements shall be
examined and verified by a public accountant registered in
China and a report shall be issued.
A
wholly foreign-owned enterprise's annual accounting
statements and liquidation accounting statements as per the
provisions of paragraphs two and three above shall, together
with reports issued by a public accountant registered in
China, be submitted to finance and taxation authorities
within the prescribed period and details shall be reported
to the examining and approving authorities and the
administrative authority for industry and commerce for their
records.
Article
61
A foreign investor may engage an accountant in China or
overseas to examine an enterprise's account books. All
related costs shall be borne by the foreign investor.
Article
62
A wholly foreign-owned enterprise shall submit its annual
balance sheets and profit and loss statements to finance and
taxation authorities and report the details to the examining
and approving authorities and the administrative authority
for industry and commerce for their records
Article
63
A wholly foreign-owned enterprise shall set up accounts
books in the locality of the enterprise and shall accept
supervision from finance and taxation authorities.
In the
event of a violation of the aforesaid provisions, finance
and taxation authorities may impose a fine and the
administrative authority for industry and commerce may order
the suspension of operations or revoke an enterprise's
business license
CHAPITRE X
EMLPOYEES
Article
64
When a wholly foreign-owner enterprise recruits employees
from within Chinese territory, the two parties, namely the
enterprise and the employee, shall sign a labor contract in
accordance with Chinese laws and regulations Provisions on
matters such as employment, dismissal, remuneration welfare,
labor protection and labor insurance shall be stipulated in
the contract
A
wholly foreign-owned enterprise shall not be permitted to
use child labor
Article
65
A wholly foreign-owned enterprise shall be responsible for
its employees' occupational and technical training and for
establishing an assessment system so that its employees'
production and management skills are able to meet the
enterprise's production and development requirements.
CHAPITRE XI
TRADE UNIONS
Article
66
The employees of a wholly foreign-owned enterprise shall
have the right, in accordance with the provisions of the
Trade Union Law of the People's Republic of China, to
establish grass-roots trade union organizations and conduct
trade union activities.
Article
67
A wholly foreign-owned enterprise trade union shall
represent the rights and interests of employees and shall
have the right to represent employees in the signing of a
labor contract with the enterprise and in supervising the
contract's implementation.
Article
68
The primary duties of a wholly foreign-owned enterprise
trade union shall be to protect the legal rights and
interests of employees pursuant to Chinese laws and
regulations, assist the enterprise in rationally arranging
and using welfare and bonus funds, organize political,
scientific, technical and professional studies for
employees, develop cultural and sports activities, educate
employees to observe labor disciplines and to strive to
fulfill an enterprise's various economic tasks.
Trade
union representatives shall have the right to attend as
non-voting members those meetings of an enterprise held to
discuss and decide issues on employee awards and penalties,
wage systems welfare, labor protection and insurance. A
wholly foreign-owned enterprise shall listen to the opinions
of the trade union and obtain its co-operation.
Article
69
A wholly foreign-owned enterprise shall actively support the
work of the enterprise trade union and, pursuant to the
provisions of the Trade Union Law of the People's Republic
of China, shall provide rooms and equipment for use by the
trade union for office work, meetings and collective
welfare, cultural and sports activities held for employees.
A wholly foreign-owned enterprise shall each month allocate
funds equaling 2% of the total actual wages of its employees
as a trade union fund to be used by the trade union in
accordance with trade union fund control measures formulated
by the All China Federation of Trade Unions.
CHAPITRE XII
DURATION - TERMINATION AND LIQUIDATION
Article
70
The duration of the term of operations of a wholly
foreign-owned enterprises shall be proposed in the
enterprise establishment application submitted by a foreign
investor and shall be subject to approval by the examining
and approving authorities in accordance with the actual
conditions of the particular line of business and type of
enterprise.
Article
71
Calculation of the term of operations of a wholly
foreign-owned enterprise shall begin from the day the
enterprise is issued a business license
If an
extension of the term of operations of an enterprise is
required an application for an extension shall be submitted
to the examining and approving authorities 180 days prior to
the expiry of the term of operations. The examining and
approving authorities shall decide whether or not to approve
the extension application within 30 days of receiving the
application.
Subject
to approval of its application to extend its term of
operations a wholly foreign-owned enterprise shall undertake
procedures to register the amendment with the administrative
authority for industry and commerce within 30 days of
receiving the extension approval document.
Article
72
The operations of a wholly foreign-owned enterprise may be
terminated in any of the following instances:
(1)expiry of the term of operations
(2)the foreign investor deciding to dissolve the enterprise
due to operations not running well and heavy losses being
suffered
(3)inability to continue operations due to heavy 1055e5
caused by force majeure, such as natural disasters and wars
(4)bankruptcy
(5)the enterprise's right to operate being revoked pursuant
to the law due to the enterprise violating Chinese laws or
regulations or harming the social public interest
(6)occurrence of other reasons for the dissolution as
prescribed in the enterprise's articles of association
In
cases described in items (2), (3) or (4) above, the wholly
foreign-owned enterprise shall voluntarily submit an
application for termination to the examining and approving
authorities for approval. The date of ratification by the
examining and approving authorities shall be deemed to be
the date of termination of the enterprise.
Article
73
If an enterprise terminates its operations pursuant to the
provisions of items (1), (2), (3) or (6) of Article 72 it
shall, within 15 days of the date of termination, make a
public announcement to the fact and notify its creditors.
Within 15 days of announcing its termination, the enterprise
shall determine procedures and principles for the
liquidation and nominate candidates for a liquidation
committee. Liquidation shall be undertaken after the
examining and approving authorities examine and approve
these details.
Article
74
A liquidation committee shall comprise of the legal
representative of the enterprise, a representative of its
creditors and representatives of the relevant authorities.
as well as public accountants and lawyers registered in
China who are invited to participate.
Priority shall be given to the payment of liquidation
expenses from the existing assets of the enterprise.
Article
75
A liquidation committee shall exercise the following rights
and functions:
(1)
convene a creditors' meeting
(2) take over the management of and sort out the
enterprise's assets and draw up a balance sheet and a list
of assets
(3) formulate a basis on which to evaluate and calculate the
value of assets
(4) formulate a liquidation plan
(5) collect claims and repay debts
(6) pursue payment of items payable by shareholders which
are yet to be paid
(7) distribute any remaining assets
(8) represent the enterprise in taking or defending legal
action
Article
76
Before the completion of liquidation, a foreign investor
shall not be permitted to remit or carry any of the
enterprise's assets out of Chinese territory.
On
completion of the liquidation of a wholly foreign-owned
enterprise, the portion of its net assets or remaining
property that exceeds the registered capital of the
enterprise shall be deemed to be profit and subject to
income tax in accordance with the provisions of Chinese tax
laws.
Article
77
On completion of liquidation, a wholly foreign-owned
enterprise shall carry out procedures with the
administrative authority for industry and commerce for
nullifying its registration and shall hand in its business
license.
Article
78
When a wholly foreign-owned enterprise is liquidating its
assets, Chinese enterprises or other economic entities
shall, under the same conditions, have priority right of
purchase.
Article
79
If the operations of a wholly foreign-owned enterprise are
terminated pursuant to the provisions of item (4) of Article
72, liquidation shall be carried out with reference to
relevant Chinese laws and regulations.
If the
operations of a wholly foreign-owned enterprise are
terminated pursuant to the provisions of item (5) of Article
72, liquidation shall be carried out in accordance with
relevant Chinese regulations.
CHAPITRE XIII
SUPPLEMENTARY PROVISIONS
Article
80
The various items of insurance taken out by a wholly
foreign-owned enterprise shall be underwritten with an
insurance company within Chinese territory.
Article
81
Where a wholly foreign-owned enterprise signs a contract
with another company, enterprise or other economic entity,
or an individual, the Contract Law of the People's Republic
of China shall apply.
Article
82
Enterprises established in China that are fully funded and
owned by companies, enterprises, other economic entities or
individuals from the regions of Hong Kong, Macao and Taiwan
or by Chinese citizens residing abroad shall be handled with
reference to these Detailed Rules.
Article
83
Employees of a wholly foreign-owned enterprise of foreign
nationality or from Hong Kong or Macao may bring into China
in reasonable quantities means of transport and household
items for personal use. Import procedures shall be handled
in accordance with relevant Chinese regulations.
Article
84
These Detailed Rules shall take effect from the date of
promulgation.
|
