Law of the People's Republic of China on Sino-Foreign Equity Joint Ventures

Law of the People's Republic of China on Sino-Foreign Equity Joint Ventures

Order No.7 of the Chairman of the Standing Committee of the National People's Congress

July 8,1979

Adopted at the Second Session of the Fifth National People's Congress on July 1, 1979

Article 1 With a view to expanding international economic cooperation and technological exchange, the People's Republic of China shall permit foreign companies, enterprises, other economic organizations or individuals (hereinafter referred to as "foreign joint ventures") to establish equity joint ventures together with Chinese companies, enterprises or other economic organizations (hereinafter referred to as "Chinese joint venturers" within the territory of the People's Republic of China, on the principle of equality and mutual benefit, and subject to approval by the Chinese Government.

Article 2 The Chinese Government shall protect, according to the law, the investment of foreign joint ventures, the profits due them and their other lawful rights and interests in an equity joint venture, pursuant to the agreement, contract and articles of association approved by the Chinese Government.
All activities of an equity joint venture shall comply with the provisions of the laws, decrees and pertinent regulations of the People's Republic of China.
The state shall not nationalize or requisition any equity joint venture. Under special circumstances, when public interest requires, equity joint ventures may be requisitioned by following legal procedures and appropriate compensation shall be made.

Article 3 The equity joint venture agreement, contract and articles of association signed by the parties to the venture shall be submitted to the state's competent department in charge of foreign eonomic relations and trade(hereinafter referred to as the examination and approval authorities) for examination and approval. The examination and approval authorities shall decide to approve or disapprove the venture within three months. When approved, the equity joint venture shall register with the state's competent department in charge of industry and commerce administration, acquire a business license and start operations.

Article 4 An equity joint venture shall take the form of a limited liability company.
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