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Provisions for the Contribution of Capital by Parties to Joint Ventures Using Ch

Date: 2008-11-12 14:35 | Author: admin | From: | Read Times: 9

Approved by State Council on December 30,1987

Promulgated by Ministry of Foreign Economic

Relations and Trade and State Administration

of Industry and Commerce

  Article 1 In accordance with The Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment and other relevant laws and regulations,these Provisions are hereby formulated in order to protect the legitimate rights and interests of parties to joint ventures using Chinese and foreign investment( hereinafter referred to as joint venture)and safeguard social economic order.

  Article 2 Capital put up for the venture shall, according to the provisions of the joint venture contracts,be cash owned by the joint venture partners,or contributions made in kind which have not been used as security for guarantee purposes, industrial property and patent technology.

  In case of making contribution in kind or using industrial property and patented technology as capital,the joint venture partners shall provide proofs showing their ownership and right of disposition.

  Article 3 No joint venture partner shall use loans, leasehold equipment and other property obtained in the name of the joint venture as its investment to the joint venture. No joint venture partner is allowed to use property and equity of the joint venture or property and equity belonged to another joint venture partner as guarantee for the capital it put up for the joint venture.

  Article 4 Joint venture partners shall agree in the joint venture contract a time schedule that each partner should follow in putting up their capital for the joint venture. In accordance with the relevant regulations,the joint venture shall issue the contribution certificates to the joint venture partners and the certificates shall be submitted to the original examination and approval authority and the administration of industry and commerce for the record.

  In case the joint venture contract stipulates that contribution of capital shall be made in one single installment, all partners to the joint venture shall do so within six months upon the issuance of the joint venture's business license.

  In case the joint venture contract stipulates that contribution of capital shall be made in several separate installments, the first installment from each joint venture partner shall not be less than 15% of their respective agreed amounts of contribution. All joint venture partners shall put up their required amounts of capital for the first installment within three months upon issuance of the joint venture's business license.

  Article 5 If all partners to a joint venture have failed to put up their required amounts of capital according to the time schedule stipulated in Article 4 , the joint venture shall be considered as dissolved voluntarily.The joint venture's approval certificate become invalid .The joint venture should go through the formalities for nullifying the registration and hand in its business license to the administration of industry and commerce for cancellation.For those who fail to do so,the administration of industry and commerce shall have the right to revoke their business licenses and make a public announcement to that effect.

  Article 6 After the first installment,in case all joint venture partners to a joint venture have failed,either in part or in full, to put up their required amounts of capital in a period as long as three months after the time schedule stipulated in the joint venture contract .the administration of industry and commerce shall, together with the original examination and approval authority, issue a notice requiring all the joint venture partners to put up their capital contributions within one month.

  If the parties concerned still fail to put up the required amount of capital after the time period stipulated in the notice mentioned in the above paragraph,the original examination and approval authority shall have the right to revoke the joint venture's approval certificate . After the revocation, the joint venture shall go through the formalities for nullifying the registration and hand in its business license to the administration of industry and commerce for cancellation . The joint venture shall also settle its credits and debts . The administration of industry and commerce shall have the right to revoke the business license of a joint venture and make public announcement to that effect if the joint venture has failed to go through the formalities for nullifying the registration and hand in its business license for cancellation as required.

  Article 7 A joint venture partner will be considered "breaching the contract"if it has failed to put up or contribute fully its required capitals according to the agreed time schedule in the joint venture contract.The other joint venture partner(s)which has fulfilled the contribution obligation shall then inform and urge the breaching party to fulfill its obligation within an one- month period. If the breaching party still fails to fulfill the capital contribution obligations, the breaching party will be considered"voluntarily withdrawing"all its rights to the joint venture. The abiding party shall then apply to the original examination and approval authority to either dissolve the joint venture or to look for another joint venture partner to undertake the obligations and rights of the breaching party as provided in the original joint venture contract. The abiding party shall have the right to make claim for compensation as a result of the breaching party's failure to fulfill its capital contribution obligations.

  The partial contribution made by the breaching party according to the joint venture contract shall be settled or liquidated by the joint venture.

  In case the abiding party has failed to apply according to the first paragraph of Article 7 to the original examination and approval authority for dissolving the joint venture or to look for a new joint venture partner, the original examination and approval authority shall have the right to revoke the approval certificate of the joint venture shall go through the formalities for nullifying the registration and hand in its business license to the administration of industry and commerce for cancellation.For those who fail to do so, the administration of industry and commerce shall have the right to revoke their business licenses and make a public announcement to that effect.

  Article 8 Joint venture partner(all or an individual party) of any joint venture which has obtained its business license prior to the implementation of the present set of Provisions are required to fulfill their capital contribution obligations within a two- month period starting from the date of implementation of the present set of Provisions if they have not done so as required in the time schedule agreed in the joint venture contract.

  If a joint venture partner has not fulfilled its capital contribution obligations as required in the above paragraph, provisions contained in Article 5,Article 6 and Article 7 of the present set of Provisions shall apply.

  Article 9 Joint venture partners of any joint venture which has obtained its business license prior to the implementation of the present set of Provisions shall sign an additional agreement specifying the time limit for capital contribution according to requirements of the present set of Provisions within a two-month period starting from the original joint venture contract does not contain an item to that effect and they have not put up the required amounts of capital accordingly.The additional agreement shall be submitted to the original examination and approval authority for approval.If approval is granted ,the additional agreement shall be submitted to the administration of industry and commerce for the record.

  The original examination and approval authority shall have the right to revoke a joint venture approval certificate in case the joint venture partners have failed to sign an additional agreement and put up the required amounts of contribution within the two-month period as mentioned in the above paragraph and their failure has caused a delay in construction or operation of the joint venture for as long as six months starting from the date of issuance of its business license, After the revocation,the joint venture shall go through the formalities for nullifying the registra-tion and hand in its business license to the administration of industry and commerce for cancellation.For those who fail to do so,the administration of industry and commerce shall have the right to revoke their business licenses and make a public announcement to that effect.

  Article 10 Matters concerning the contribution of capital by parties to Chinese-foreign cooperative joint ventures shall be handled with reference to the present set of Provisions.

  Article 11 The present set of Provisions shall enter into force on March 1,1988.

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