 
  WORLD TRADE  
ORGANIZATION  S/C/N/211 
17 December 2002 
 (02-6955) 
Council for Trade in Services Original:   English 
 
  
NOTIFICATION PURSUANT TO ARTICLE III:3 OF THE  
GENERAL AGREEMENT ON TRADE IN SERVICES  
 
 
 The following notification has been received fr om the delegation of the People's Republic of 
China. 
 
____________ 
 
 
1. Member notifying: 
 The People's Republic of China 
 2. Notification under: 
 Article III, paragraph 3 of the Gene ral Agreement on Trade in Services 
 
3. Date of entry into force/duration: 
 1995/09/04 
  
4. Agency responsible for implementation and enforcement of the measure: 
Ministry of Foreign Trade and Economic Co-operation 
 
5. Complete description of the measure
* indicating the modes of supply covered, the effect 
on trade in services (e.g., restrictions/lib eralization measures) and the impact of the 
measure on commitments in the Member's schedule and Article II (MFN) exemption 
list, if relevant: 
 
 Regulations for the Implementation of the Law of the People's Republic of China on Sino-
Foreign Contractual Joint Venture 
 
 Full text English translation of the regulation is attached.1  The English translation is for 
reference only and the Chinese version shall be authentic. 
 
6. Members specifically affected, if any: 
 All Members 
 
                                                      
* Including international agreements, recognition measures or other types. 
1 
In English only. 
 S/C/N/211 
Page 2  
 
 7. The texts are available from: 
 - Enquiry point   ; 
 - WTO Secretariat  ; 
 - Other sources (address, fax  
  and telephone of other body)   
 
 
_______________ 
  S/C/N/211 
 Page 3 
 
 
 Regulations for the Implementation of the Law of the People’s Republic of China on  
Sino-Foreign Contractual Joint Venture 
 (Approved by the State Council on August 7, 1995,  promulgated by Decree No.6 of the Ministry of 
Foreign Trade and Economic Cooperation on September 4, 1995)  
 
Chapter I General Provisions 
Article 1 These Rules are formulated in accordance with the Law of the People’s Republic of 
China on Chinese-Foreign Contractual Joint Ventures.  
 Article 2 The establishment of Chinese- Foreign contractual joint ventures (hereinafter referred 
to as contractual joint ventures) within the terr itory of China shall comply with the development 
policies and industrial policies of the State and shall abide by the State provisions governing guiding 
the direction of investment of foreign capital enterprises.  
 Article 3 Contractual joint ventures shall, within the scope of the approved agreements, 
contracts and articles of association of the contractual joint ventures, develop their own business and 
conduct operational and managerial activities freel y in accordance with the law and without any 
interference from any organization or individual. 
 
Article 4 Contractual joint ventures include those which have acquired the status of Chinese 
legal persons in accordance with the law and thos e which do not have the status of Chinese legal 
persons. 
 
Contractual joint ventures which do not have the stat us of legal persons shall be subject to the special 
provisions of Chapter IX of these Rules.  
 
Article 5 The competent department of the Chinese party is the competent department of the 
contractual joint venture. Where there are two or mo re Chinese parties, the authority for examination 
and approval shall, through consu ltation with the relevant departments, determine one department as 
the competent department, but except where the laws  or administrative regulations have otherwise 
provided.  The competent department of the contractual join t venture shall, in accordance with the law, 
coordinate the relevant matters concerning the c ontractual joint venture and provide assistance.  
 
Chapter II Establishment of Contractual Joint Ventures 
 
Article 6 The establishment of a contractual joint ve nture shall be examined and approved by 
the Ministry of Foreign Trade and Economic Cooperation or by the department o r the local people’s 
government authorized by the State Council. 
 
The establishment of a contractual joint venture unde r one of the follow in g circumstances shall be 
examined and approved by the department or the local peoples government authorized by the State 
Council:  
 
 1. where the total investment amount is with in the limit of the amount stipulated by the 
State Council which can be examined and approved by the department or the local people's government authorized by the State Council;  
 
 2. where the capital is self-financed and th e construction and production conditions are 
not required to be balanced by the State;  S/C/N/211 
Page 4  
 
  
 3. where the export of products does not require attaining an export quota  or permit 
issued by the relevant competent departments of the State, or although such a quota or 
permit is required, agreement is alread y obtained from the relevant competent 
departments of the State before the project proposal is submitted; or 
 
 4. where there are other cases as stipulated by the laws or administrative regulations to 
be examined and approved by the depart ment or the local people’s government 
authorized by the State Council. 
 Article 7 Where a contractual joint venture is to be established, the following documents shall 
be submitted to the examination and approv al authority by the Chinese party:  
 
 1. the project proposal for establishing a contractual joint venture, attached with the 
examination and approval document s of the competent department;  
  2. the feasibility study report jointly made by  all parties to the contractual joint venture, 
attached with the examination and approval  documents of the competent department;  
 
 3. the agreement, contract and articles of association for the contractual  joint venture 
signed by the legal representatives of the pa rties to the contractual joint venture or 
their authorized representatives; 
 
 4. the business licenses or registration cer tificates and credit standing certificates of the 
parties to the contractual joint venture, a nd the valid certification documents of their 
legal representatives; in case the foreign party is a natural person, the valid 
certification documents showing his identity, resume an d credit standing information; 
 
 5. the name list of the chairman, vice chairm en and directors of the board of directors or 
the director, vice directors and members of the joint management committee of the 
contractual joint venture as decided in consultation by the parties; and 
 
 6. other documents whose submission is required by the examination and approval 
authority.  
 
The documents listed in the preceding paragraph shal l be submitted in the Chinese language with the 
exception of the documents listed in Item (4) provided by the foreign party; the documents listed in 
Items (2), (3) and (5) may be simultaneously submitted in a foreign language as decided in 
consultation by the parties to the contractual joint venture.  
 
The examination and approval authority shall decide whether or not to grant approval within 45 days 
of receiving all the documents stipulated; in cases where the examination and approval authority 
deems that the documents submitted are incomplete or  unsuitable, it has the right to demand that the 
parties to the contractual joint venture complete or  amend them within the specified time limit.   
 
Article 8 The Ministry of Foreign Trade and Economic Cooperation shall issue an approval 
certificate to a contractual joint venture whose esta blishment is approved by the Ministry of Foreign 
Trade and Economic Cooperation or the department authorized by the State Council.  
 
The relevant local people’s government shall issu e an approval certificate to a contractual joint 
venture whose establishment is approved by the loca l people’s government authorized by the State 
Council, and shall, within 30 days from  the date  of approval, submit the approval documents to the 
Ministry of Foreign  Trade and Economic Cooperation for the record.  S/C/N/211 
 Page 5 
 
 
  
A contractual joint venture which is  approved to be established sha ll, in accordance with the law, 
apply to the administrative authority for industry and commerce for registration and obtain a business 
license.  
 
Article 9 Approval shall not be granted to an appli cation for establishmen t of a contractual 
joint venture under any of the following circumstances: 
 
(1) injuring the State sovereignty or social or public interests;  
(2) endangering the safety of the State;  
(3) causing pollution to the environment;  
(4) any other circumstances in violation of the law, administrative regulations or State 
industrial policies.  
Article 10 The term agreement of the contractual join t venture as referred to in these Rules 
means the written document drawn up by the parties to the contractual joint venture after they have 
come to a unanimous agreement on the principles and major matters for establishing the venture.  
The term contract of the contractual joint ventur e as referred to in these Rules means the written 
document drawn up by the parties to the contract ual joint venture after they have come to a 
unanimous agreement on their mutual rights and oblig ations for the establishment of the venture.  
 The term articles of association of the contractual joint venture as referred to in these Rules means the written document drawn up w ith the unanimous agreement of the parties to the contractual joint 
venture according to the agreements made in the contract of the contractual joint venture to agree on 
such matters as the organizational principles and the methods of management and operation. 
 
In cases where discrepancies exist between the agreement or articles of association of the contractual 
joint venture and the contract of the contractual jo int venture, the contract of the contractual joint 
venture shall prevail. 
 
The parties to the contractual joint venture may choose not to conclude a contractual joint venture 
agreement.  Article 11 The agreement, the contract and the article s of association of the contractual joint 
venture shall enter into force as of the date when the certificate of approval is issued by the 
examination and approval authority. During the period of cooperation, any major changes to the 
agreement, the contract or articles of association of  the contractual joint venture shall be approved by 
the examination an d approval authority. 
 
Article 12 The contract of the contractual joint ve nture shall clearly state the following:  
 (1) the name, place of registration, and domicile of each party to the contractual joint 
venture and the name, position and nationality of its legal representatives (where the 
foreign party is a natural person, his name, nationality and domicile);  
 (2) the name, domicile and scope of busin ess of the contractual joint venture;  
 (3) the total investment and the registered cap ital of the contractual joint venture, and the 
manner and time limit of the investment or conditions for cooperation provided by 
each party to the contractual joint venture; 
 (4) the transfer of the investment or conditi ons provided by the parties to the contractual 
joint venture; 
 (5) the distribution of earnings or products and the sharing of risks and losses among the 
parties to the contractual joint venture; S/C/N/211 
Page 6  
 
  (6) the composition of the board of director s or the joint management committee of the 
contractual joint venture and the allocation of the number of people to be directors or 
committee members, the powers and responsibilities of the general manager and other 
high ranking managerial personnel and the measures for their appointment and 
dismissal;  
 (7) the major equipment used for production, the productive technology and their 
sources;  
 (8) marketing arrangements for products so ld inside and outside the Chinese territory; 
 (9) plans for foreign exchange revenue and expenditure; 
 (10) the period of operation, dissolution and liquidation of the contractual joint venture;   (11) other obligations of the parties to the contractual joint venture and responsibilities for 
breach of the contract; 
 (12) the operational principles fo r finance, accounting and auditing;  
 (13) the settlement of disputes among the parties to the contractual joint venture;  and 
 (14) the procedures for amending the contract of the contractual joint venture.  
 Article 13 The articles of association of the contractual joint venture shall clearly state the 
following:  
 (1) the name and domicile of the contractual joint venture;  
 (2) the business scope and the period of cooperation of the contractual joint venture;  
 (3) the name, place of registration and domicile of each party to the contractual joint 
venture, and the name, position and nationa lity of its legal repr esentative (where the 
foreign party is a natural person, his name, nationality and domicile);  
 (4) the total investment and the registered capital of the contractual joint venture, the 
manner and time limit of the investment or  the conditions for cooperation provided by 
each party to the contractual joint venture;  
 (5) the distribution of earnings or products and the sharing of risks and losses among the 
parties to the contractual joint venture; 
 (6) the composition, powers and rules of pro cedure of the board of directors or the joint 
management committee, the terms of office of directors of the board of directors or 
members of the joint management committee, the powers and responsibilities of the 
chairman and vice chairmen of the board of directors, or of the director and vice 
directors of the joint management committee;  
 (7) the establishment, powers and working procedures of operation and management 
organs, and the powers and responsibilities of the general manager and other high 
ranking managerial personnel, and the measures for their appointment  and dismissal;  
 (8) the provisions relating to such labor management matters as recruitment, training, 
work contracts, wages, social insurance, welfare, on the job safety and hygiene of the 
staff and workers;  
 (9) systems of finance, accounting and auditing of the contractual joint venture;  
 (10) the procedures for the dissolution and liquidation of the contractual joint venture; and 
 (11) the procedures for amending the articles of association of the contractual joint 
venture.  
 
Chapter III Organizational Forms and Registered Capital 
 
Article 14  A contractual joint venture wh ich has attained the status of a Chinese legal person in 
accordance with the law shall be a limited liability company. The parties to the venture shall bear 
responsibility for the contractual joint venture to the extent of their investment or of the conditions for 
cooperation they contribute, with the exception of  those cases otherwise agreed in the contract.  
 
The contractual joint venture shall be liable for cove ring the debts of the venture with all its assets.  
  S/C/N/211 
 Page 7 
 
 
 Article 15 The total investment in the contractual joint venture means the total funds which need 
to be contributed according to the scale of producti on and operation as stipul ated in the contract and 
the articles of association of the contractual joint venture. 
 
Article 16  The registered capital of the contract ual joint venture means the total capital 
contributed by the parties to the contractual joint venture as registered in the administrative authority 
for industry and commerce for the purpose of establishing the contractual joint venture. The registered 
capital shall be expressed in Renminbi or in a conver tible foreign currency agreed by the parties to the 
contractual joint venture.  
 The registered capital of the cont ractual joint venture may not decrea se in the period of cooperation. 
However, in cases where changes occurring in the total investment and the scale of production or 
operation mean that there is a real need to reduce th e registered capital, approval shall be granted by 
the authority for examination and approval.  
 
Chapter IV Investment or Conditions for Cooperation  
Article 17 The parties to the contractual joint venture shall provide investment or conditions for 
cooperation for the venture in accordance with the provisions of the relevant laws or administrative 
regulations and the agreement in the contra ct of the contractual joint venture.  
 Article 18 The investment or conditions for cooperation contributed by the parties to the 
contractual joint venture may be provided in cash, in kind, industrial prop erty rights, specialized 
technology, the right to the use of land or other property rights.  
 
In cases where the investment or conditions for co operation contributed by the Chinese parties are 
part of the State assets, they shall be valued acco rding to the provisions of  the relevant laws and 
administrative regulations. 
 
In cases where the contractual joint venture has attained the status of a Chinese legal person in 
accordance with the law, the investment contributed by foreign parties shall usually not be less than 
25% of the registered capital of the contractual jo int venture. In cases where the contractual joint 
venture has not attained the status of a Chinese legal person, the specific requirements as to the 
investment or conditions contributed by the parties to  the contractual joint venture shall be stipulated 
by the Ministry of Foreign Trade and Economic Cooperation.  
 Article 19 The parties to the contractual joint ventur e shall contribute their own property or 
property rights as an investment or conditions for cooperation, and may not  raise mortgages or other 
forms of guarantee on the contributed i nvestment or conditions for cooperation.  
 
Article 20 The parties to the contractual joint ventur e shall, according to the production and 
management needs of the contractual joint venture and in accordance with the provisions of the 
relevant laws or administrative regu lations, agree in the contract of the contractual joint venture upon 
a deadline before which each party shall provide th e investment or conditions for cooperation in the 
contractual joint venture. 
 
In cases where any party to the contractual joint ve nture fails to provide the investment or conditions 
for cooperation as agreed in the contractual joint venture’s contract, the administrative authority for 
industry and commerce shall prescribe a time limit for its performance of the obligation; in cases where the obligation is not performed before the time limit, the authority for examination and 
approval shall revoke the certificate of approval  of the contractual joint venture, and the 
administrative authority for industry and commerce shall revoke the business license of the 
contractual joint venture and shall publicly announce this decision.  S/C/N/211 
Page 8  
 
  
Article 21 In cases where any party to the contractual joint venture fails to provide the 
investment or conditions for coopera tion in accordance with the contr actual joint venture contract, he 
shall be liable for breach of the contract to th e other party who has provided an investment and 
conditions for cooperation in accordance with the contract of the contractual joint venture.  
 
Article 22 The investments or conditions for cooperation provided by the parties to the 
contractual joint venture shall be verified by a Ch inese certified public accountant, who shall make 
out a verification report. Based on the report, the cont ractual joint venture shall issue certificates of 
investment to the parties to the venture. The ce rtificates of investment shall clearly state the 
following:  
 (1) the name of the contractual joint venture; 
 (2) the date of establishment of  the contractual joint venture; 
 (3) the designation or name of each pa rty to the contractual joint venture; 
 (4) the contents of the investment or conditi ons for cooperation contributed by the parties 
to the contractual joint venture; 
 (5) the date on which the parties to the co ntractual joint venture provided the investment 
or conditions for cooperation; and 
 (6) the serial number and the date of  issue of the investment certificate. 
 Copies of the investment certificate shall be su bmitted to the examination and approval authority and 
the administrative authority for industry and commerce.  
 
Article 23 If the parties to the contractual joint vent ure transfer all or some of the rights 
stipulated in the contract of the contractual joint ve nture to each other, or if one party to the venture 
transfers all or some of the rights stipulated in the contract to a party other than the other party to the 
venture, it shall obtain the written consent of the other party and make a submission to the 
examination and approval authority for approval. 
 
The examination and approval authority shall decide whether or not to grant approval within 30 days 
of receiving the document regarding the transfer. 
 
Chapter V Organizational Structure 
 
Article 24 The contractual joint venture shall esta blish a board of directors or a joint 
management committee. The board of directors or the joint management committee is the power 
organ of the contractual joint venture, and decides the major issues of the contractual joint venture 
according to the provisions of the articles of association of the contractual joint venture.  
 
Article 25 The board of directors or the joint management committee shall be composed of not 
less than three members, and their distribution shall be determined through consultation by the 
Chinese and foreign parties with reference to the investment or conditions for cooperation contributed 
by each party.  
 
Article 26 The members of the board of directors or the joint management committee shall be 
appointed or dismissed by the parties to the ventur e respectively. The method of the selection of the 
chairman and vice chairman of the board of directors or the director and vice director of the joint management committee shall be stipulated in the articles of association of the contractual joint 
venture. Where the Chinese or the foreign party assu mes the chairmanship of the board of directors or 
the directorship of the joint management committee, the other party shall assume the vice 
chairmanship or the vice directorship.  
  S/C/N/211 
 Page 9 
 
 
 Article 27 The term of office of the members of the board of directors or the joint management 
committee shall be specified in the articles of associ ation of the contractual joint venture; however, 
each term may not be longer than three years. At the expiration of a director’s or a committee 
members term, he may serve another term if reappointed.  
 
Article 28 Meetings of the board of directors or the joint management committee shall be 
convened at least once a year, and shall be convened and presided over by the chairman or the 
director. When the chairman or the director is unable to perform his duties due to special reasons, the 
vice chairman, the vice director or another board or  committee member designated by the chairman or 
the director shall convene and preside over the meeting. A meeting of the board of directors or the joint management committee may be convened upon a proposal made by one third or more of the directors or committee members.  
 
Meetings of the board of directors or the joint ma nagement committee may be held only if two thirds 
or more of the directors or committee members are present. Directors or committee members who are 
unable to attend the meetings of the board of di rectors or the joint management committee shall 
entrust in a written form representa tives to attend and to vote. A resolution made at a meeting of the 
board of directors or joint management committee re quires the approval of more than half of all the 
directors or committee members before it is passed. A director or a committee member who does not 
attend the meeting of the board of directors or th e joint management committee without any just cause 
and does not entrust a representative to attend on his behalf shall be deemed to have been present at 
the meeting of the board of directors or the joint management committee and to have abstained from voting. 
 
All directors or committee members shall be notif ied ten days before a meeting of the board of 
directors or the joint management committee is convened.  
 
The meetings of the board of directors or the joint management committee may use means of 
communication to make a resolution. 
 
Article 29 A resolution on the following matters must be adopted unanimously by all directors 
or committee members attending the meeting of the board of the directors or the joint management 
committee:  
 
 (1) amendment to the articles of associ ation of the contractual joint venture; 
 (2) increase or decrease in the registered capital of the contractual joint venture;  (3) dissolution of the contractual joint venture; 
 (4) mortgage of the assets of the contractual joint venture; 
 (5) merger, division or change in the corpor ate form of the contractual joint venture; or 
 (6) other matters agreed by the parties to the contractual joint venture which must be 
adopted unanimously by all directors or committee members present at the meeting of 
the board of the directors or the joint management committee. 
 
Article 30 Except as otherwise stipulated in these Ru les, the methods of discussion and voting 
procedures used in the meetings of the board of directors or the joint management committee shall be 
stipulated in the articles of association of the contractual joint venture.  
 
Article 31 The chairman or the director is the lega l representative of th e contractual joint 
venture. In cases when the chairman or the direct or is unable to perform his duties due to special 
reasons, he must authorize the vice chairman, th e vice director or another director or committee 
member to represent the contractual join t venture in its external relations.  
 S/C/N/211 
Page 10  
 
 Article 32 The contractual joint venture shall ha ve one general manager who shall be 
responsible for the day-to-day operation and management of the contractual joint venture and shall be 
responsible to the board of directors or the joint management committee.  
 
The general manager of the contractual joint venture shall be appointed and dismissed by the board of 
directors or the joint management committee. 
 
Article 33 The general manager and other high-ranking managerial personnel may be either 
Chinese or foreign citizens. 
 Directors or committee members, when appointed by the board of directors or the joint management 
committee, may concurrently hold the position of ge neral manager or other high-ranking managerial 
positions of the contractual joint venture.  
 
Article 34 When the general manager or other high-ranking managerial personnel are not 
competent in their jobs, neglect their duties seriously or engage in fraudulent practices or embezzlement, they may be dismissed through a resolution adopted by the board of directors or the 
joint management committee; in cases where damage  is caused to the contractual joint venture, 
liability for the damages shall be assu med in accordance with the law.  
 
Article 35 When a contractual joint venture, after its establishment, entrusts its operation and 
management to any other person other than the pa rty to the venture, unanimous consent shall be 
obtained from the board of the directors or the joint management committee, and a contract for 
entrusting the operation and management shall be concluded with the person thus entrusted. 
 
The contractual joint venture shall submit such docum ents as the resolution of the board of directors 
or the joint management committee, the signed cont ract for entrusting the operation and management 
and the credit certificate of the person thus entrusted to the examination and approval authority for 
approval. The examination and approval authority sha ll decide whether or not to grant approval within 
30 days of receiving the relevant documents.  
 
Chapter VI Purchase of Mat erials and Sale of Products 
 
Article 36 The contractual joint venture shall formulate its own plans regarding production and 
operation in accordance with the scope of the business and the scale of operation and production 
approved.  
 
Government departments may not force contractual joint ventures to carry out plans regarding 
production and operation determined by them. 
 
Article 37 The contractual joint venture may decide by itself to buy the machinery, equipment, 
raw materials, fuel, components, auxiliary equipment,  means of transportation and office appliances 
etc. used by it (hereinafter referred to as materials) inside or outside Chinese territory.  
 
Article 38 The State shall encourage contractual joint ventures to sell their products on the 
international market. Contractual joint ventures may sell their products on the international market by 
themselves, or may entrust foreign sales organizatio ns or Chinese-Foreign trade companies to sell 
their products on a commission basis or distribute their products.   The sale price of the products of the contractual joint venture shall be independently determined by 
the contractual joint venture in accordance with the law.  
  S/C/N/211 
 Page 11 
 
 
 Article 39 The machinery, equipment, components and other materials imported by the foreign 
party as an investment and those imported by the contractual joint venture as required for the purposes 
of production and operation using funds which are part of the total invested amount are exempt from 
import duty and circulation tax during the process of importation. The duty-free materials mentioned 
above, approved to be resold within the Chinese territo ry or used as domestic sales, shall be taxed or 
the overdue tax upon them shall be paid according to law.  
 
Article 40 The contractual joint venture may not export products at a price which is clearly 
lower than a reasonable price for the same type of  products on the international market, nor may the 
contractual joint venture import materials at a price which is clearly higher than that of the same type of products on the international market.  
Article 41 The contractual joint venture shall sell its pr oducts in accordance  with the agreement 
in the approved contractual joint venture contract.  
 
Article 42 Where the commodities imported or exported by the contractual joint venture are 
those which are controlled by import or export perm its or quotas, the application procedures must be 
handled in accordance with the relevant provisions of the State.  
 
Chapter VII Distribution of Earnings and Recovery of Investments 
 
Article 43 The Chinese and foreign parties may distribute the earnings by distributing profits, 
distributing products or by other means decided through consultation by all parties to the contractual 
joint venture. 
 
Where earnings are distributed through the method of distributing the products or other methods, the 
amount of tax to be paid shall be calculated in acc ordance with the relevant provisions of the tax law. 
 
Article 44 Where it is agreed upon by the Chinese and foreign parties in the contract of the 
contractual joint venture that upon the expiration of the period of the venture’s operation all the fixed 
assets of the contractual joint venture shall be retu rned gratis to the Chinese party, the foreign party 
may, in the period of the venture’s operation, appl y to recover the investment ahead of time in the 
following ways: 
 
 (1) to reach agreement in the contractual jo int venture contract to enlarge the foreign 
party’s proportion in the distribution of earnings on the basis of distribution according to the investment or conditions for cooperation provided;  
 
 (2) when examined and approved by the fina ncial and tax authorities in accordance with 
the relevant tax provisions of the State, to recover its investment prior to the payment 
of income tax by the contractual joint venture; or 
 
 (3) to recover the investment by other methods which have been approved by the 
financial and tax authorities and the ex amination and approval authorities.  
 
If the foreign party is to recover its investment ahead of time during the period of the ventures 
operation according to the provisions of the preceding paragraph, the Chinese and foreign parties shall 
be liable for the debts of the contractual joint venture according to the relevant laws and the agreement in the contractual joint venture contract.   
Article 45 The foreign party who, in accordance with the provisions of Items (2) and (3) of 
Article 44 of these Rules,  applies to recover its investment ahea d of time shall clearly state the total 
investment which it wishes to recover ahead of ti me, the time schedule and the method of recovery. S/C/N/211 
Page 12  
 
 When the application has been exam ined and agreed upon by the fina ncial and tax authorities, it shall 
be submitted to the examination and approval authorities for approval. 
 
No foreign party may recover its investment before  the losses of the contractual joint venture are 
recompensed. 
 
Article 46 The contractual joint venture shall employ a Chinese certified public accountant to 
check the accounts and verify them in accordance with the relevant provision’s of the State. Each 
party to the contractual joint venture may, together w ith the other parties or by  itself, entrust a Chinese 
certified public accountant in China to check the acc ounts. The accountant’s fees shall be paid by the 
party by whom he is employed.  
Article 47 The period of operation of a contractual joint venture shall be determined by the 
Chinese and foreign parties through consultation, and sh all be clearly specified in the contract of the 
contractual joint venture.  
 Where the parties to the contractual joint venture agree through consultation to extend the period of 
operation of the contractual joint venture after the expiration of its period of operation, they shall 
apply to the examination and approval authority 18 0 days prior to the expiration of the period, 
explaining the conditions of implementation of the existing contract of the contractual joint venture 
and the reason for extending the period of the venture’s operation, and shall submit an agreement reached between all pa rties to the venture on such matters as the rights and obligations of each party 
in the extended period of operation. The examination and approval authority shall decide whether or 
not to grant approval within 30 days of receiving the application. 
 
Where approval is granted to extend the period of op eration, the contractual joint venture shall apply 
to the administrative authority for industry and commer ce to alter the registration on the basis of the 
document of approval. The extended period of operation sh all be calculated as of the first day after the 
expiration of the operation period. 
 
Where it is agreed upon in the contractual joint vent ure contract that the foreign party may recover its 
investment ahead of time and the investment has already been recovered, the operation period of the 
contractual joint venture shall not be extended; however, where the foreign party increases its 
investment, when agreed by all th e parties through consultation, they may apply to the examination 
and approval authority to extend the period of op eration in accordance with Paragraph 2 of this 
Article.   
Article 48 The contractual joint venture shall dissolve in any of the following situations:  
 
 (1) The operation period expires; 
 (2) The contractual joint venture is unable to continue to operate because of serious 
losses, or suffers from serious losses due to force majeure;  
 (3) One or more of the Chinese or fore ign parties fail to perform the obligations 
stipulated in the contract or the articles of association of the contractual joint venture, 
which causes the venture unable to continue to operate;  
 (4) There appears any other cause for dissolving the venture as stipulated in the contract 
or the articles of association of the contractual joint venture; or 
 (5) The contractual joint venture is ordere d to be closed down according to law for its 
violation of laws or administrative regulations. 
 
Where the situations listed in Items (2) and (4) of the preceding paragraph occur, the board of 
directors or the joint management committee of the contractual joint venture shall come to a decision 
and shall submit it to the examination and approval authority for approval. Where the situations listed  S/C/N/211 
 Page 13 
 
 
 in Item (3) of the preceding paragraph occur, the Chinese or foreign party or parties who fail to 
perform the obligations stipulated in the contract or  the articles of associatio n of the venture shall be 
liable to compensate other parties who are carrying out the contract for losses resulting there from; 
one or more parties who are carrying out the contract  have the right to apply to the examination and 
approval authority to dissolve th e contractual joint venture. 
 
Article 49 The liquidation of the contr actual joint venture shall be dealt with according to the 
laws and administrative regulations of the State, and the contract or the articles of association of the 
contractual joint venture. 
 
Chapter IX Special Provisions for contractual Joint Ventures without the Status of Legal 
Persons 
 Article 50 Contractual joint ventures which have not acquired the status of legal persons and the 
parties to such ventures shall be liable for civil responsibility according to the relevant provisions of 
Chinese civil law.   
Article 51 Contractual joint ventures which have not acquired the status of legal persons shall 
register the investments or conditions for cooperati on provided by the parties to the venture with the 
administrative authority for industry and commerce. 
 Article 52 The investments or conditions for cooperation provided by the parties to a contractual 
joint venture which has not acquired the status of a legal person shall be owned by the respective 
parties. When all parties to the contractual joint ve nture are in agreement, they may be co-owned by 
all parties, or part of them may be owned by re spective parties while othe r parts may be co-owned. 
The property accumulated during the operation of the co ntractual joint venture belongs to all parties to 
the venture. 
 
The investment or conditions for cooperation provided  by the parties to the contractual joint venture 
which has not acquired the status of a legal person  shall be managed and used by the whole venture. 
One single party may not dispose of any of the prop erties without the consent of the other parties. 
 
Article 53 A contractual joint venture which has not acquired the status of a legal person shall 
establish a joint managerial institution. The institution shall be made up of representatives appointed 
by the parties to the venture and shall represent th e respective parties in co -managing the venture.  
 
The joint managerial institution shall make all the major decisions concerning the contractual joint 
venture.  
 
Article 54 A contractual joint venture which has not acquired the status of a legal person shall 
set up joint account books at the place where the ventur e is located; the parties to the venture shall set 
up their own respective account books.  
 
Chapter X Supplementary Provisions  Article 55 Chinese law shall apply to the conclusion , validity, interpretati on, performance and 
dispute settlement of the contractual joint venture contract.  
 Article 56 The provisions of the relevant laws and administrative regulations shall apply to 
matters which are not specified in these Rules including finance, accounting, auditing, foreign 
exchange, tax, labor management, trade unions and other matters. 
 S/C/N/211 
Page 14  
 
 Article 57 Any company, enterprise or other economic organization or individual from Hong 
Kong, Macao or Taiwan or any Chinese citizen living abroad who wishes to establish a contractual 
joint venture shall go through the proce dures with reference to these Rules. 
 
Article 58 These Rules shall come into force as of the date of promulgation.   
 
__________ 