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Reference
Format for Contract of Chinese-Foreign Joint Venture Enterprises |
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Chapter 1
General Provisions
Chinese
Company (referred to as Party A hereinafter) and (Country)
Company (referred to as Party B hereinafter), in accordance with Law
of People’s Republic of China on Chinese-Foreign Joint Venture
Enterprises and other relevant laws of China and through friendly
consultation, agreed to set up joint venture enterprise in (at)
of People’s Republic of China and sign the Contract.
Chapter 2
Joint Venture Parties Article 1 Parties to the Contract:
Party A:
Registered in , China
Legal address:
(*registered office)
Legal representative: (*name, title, and nationality)
Party B
Registered in , China
Legal address:
(*registered office)
Legal representative: (*name, title, and nationality)
Any changes of the above shall be duly reported to the joint
venture and the other party to the contract, otherwise the joint venture
and the other party shall bear no legal obligations to any consequences
arising. Chapter 3 Establishment of
the Joint Venture Company Article
2 In accordance with
the Law of the People’s Republic of China on Joint Venture Using
Chinese and Foreign Investment and other relevant Chinese laws and
regulations, both parties of the joint venture agree to set up a joint
venture limited liability company (hereinafter referred to as the joint
venture company). Article
3 The name of joint
venture company is ________in Chinese and __________ in English. The legal
address of the company is at________________. Article
4 The joint venture company is Chinese legal person and therefore any
activity of the joint venture company must be in line with laws and
regulations of the People’s Republic of China. Legitimate rights and
interests of joint venture companies are under the protection of Chinese
law. Article
5 The organization form of
the joint venture company is a limited liability company. Each party to
the joint venture company is liable to the joint venture company within
the limit of the capital subscribed by it. The profits, risks and losses
of the joint venture company shall be shared by the parties in proportion
to their contributions of the registered capital. Article
6 Subject to the
approval of board of directors and concerned government departments of
China, joint venture companies may establish branches overseas.
Chapter 4 The
Purpose, Scope and Scale of Production and Business Article
7 The purpose of the parties
to the joint venture is in conformity with the wish of enhancing the
economic cooperation and technical exchanges, to improve the product
quality, develop new products, and gain competitive position in the world
market in quality and price by adopting advanced and appropriated
technology and scientific management method, so as to raise economic
results and ensure satisfactory economic benefits for each investor. Article
8 The productive and business
scope of the joint venture company is: Article
9 The minimum
production scale of the joint venture company will reach to : Chapter 5
Total Amount of Investment and the Registered Capital Article
10 The total amount of
investment of the joint venture company is________________ US dollars. Article
11 The total investment by Party A and Party B shall be ________ USD and
the funds shall be the registered capital of the joint venture company.
Including:
Party A should pay in capital of _____USD, making up___%; Party B, ____USD,
making up___%. Article
12 Both Party A and Party B
will contribute as follows to the registered capital and to the
investment: Party
A: cash ____________________ million USD kind,
amounting to
USD (For
details, read kind price list signed by both parties ) Land
use right, amounting to
USD Industrial
property right, amounting to USD Others,
amounting to USD
Party
B: cash ____________________ million USD Kind, amounting to
USD Industrial property right, amounting
to USD Others, amounting to
USD (*If
investing in the form of kind or industrial property right, both parties
shall sign another agreement which shall be an integral part of the
Contract.) Article
13 The registered capital shall be paid by both parties through
installment(s) according to their respective percentage of
investment. Details are as follows: Party
A:
Party
B:
For
parties investing in the form of kind or industrial property right, the
date the joint venture company has obtained the certificates of rights
shall serve as the contribution date.
Fund
payment shall be governed by the principle of simultaneous payment.
Neither party may not refuse to pay or put off paying his due amount under
the excuse that the funds of the other party have not been paid.
If
the funds were paid in currency other than US dollar, than the amount of
the currency should be translated into amount in US dollar at the middle
exchange rate publicized by the State Administration of Exchange Control.
Article
14 For the amount of payment by either party, the joint venture company
shall entrust Chinese certified public accountant for assessment. And a
capital assessment report should be provided by the abovementioned CPA.
The joint venture company shall, within 30 days upon receiving the capital
assessment report, issue investment certificates to the investors.
Article
15 Any adjustment in registered capital and total amount of investment
shall be reported to examination and approval authority for examination
and approval. During the venturing period, the joint venture company may
not reduce its registered capital. If
any party is to transfer part or the whole of his investment to third
party, he must obtain written consent from the other party; but if the
other party neither agree nor willing to buy, this shall be considered as
consent. If any party is to transfer the whole or part of his investment,
under the same conditions, the other party shall have priority to buy. Transfer
agreement shall come into effect upon the approval of examination and
approval authority. Article
16 The joint venture company may obtain loans from both home and abroad to
cover the gap between registered capital and total amount of investment
and to provide circulating funds. Without
written consent from the other party, neither party may set up creditor's
rights in any form such as mortgage and pledge in the whole or part of his
stock right in the joint venture company.
Chapter 6
Responsibilities of Each Party to the Joint Venture Article
17 Party A and Party B shall
be respectively responsible for the following matters. Responsibilities
of Party A: Handing of applications for approval, registration, business
licenser and other matters concerning the establishment of the joint
venture company from relevant departments in charge of China; Processing
for applying the right to the use of a site to the authority in charge of
the land; Organizing the design and construction of the premises and other
engineering facilities of the joint venture company; Providing cash,
machinery and equipment and premises …in accordance with the
stipulations in Article 12 and Article 13; Assisting Party B for
processing import customs declaration for the machinery and equipments
contributed by Party B as investment and arranging the transportation
within the Chinese territory; Assisting the joint venture company in
purchasing or leasing equipments, materials, raw materials, articles for
office use, means of transportation and communication facilities etc.;
Assisting the joint venture in recruiting Chinese management personnel,
technical personnel, works and other personnel needs; Assisting foreign
workers and staff in applying for the entry visa, work license and
processing their traveling; Responsible for handing other matters
entrusted by the joint venture company. Responsibilities
of Party B: Providing cash, machinery and equipment, industrial
property…in accordance with the stipulations in Article 12 and 13, and
responsible for shipping capital goods such as machinery and equipment
etc. contributed as investment to a Chinese port; Handing the matters
entrusted by the joint venture company, such as selecting and purchasing
machinery and equipment, materials outside China, etc.; Providing needed
technical personnel for installing, testing and trial production of the
equipment, as well as the technical personnel for production and
inspecting; Training the technical personnel and workers of the joint
venture company. (*If Party B is also the technology transferor, he shall
be responsible for the joint venture company to produce qualified products
with designed capability within prescribed period;) and shall process
other matters entrusted by the joint venture company. (* Note: depending
on actual conditions.) Normal expenses spent by parties for setting up the
joint venture company shall be paid by the joint venture company upon the
confirmation by both parties. Chapter
7 Selling of Products Article
18 Products of the joint venture company, on the premise of meeting China
national standards, shall be mainly sold within China,
% of them to be marketed overseas,
% of them to be marketed domestically.
Article
19 Products may be sold to other countries directly by the joint venture
company. The joint venture company may sign sale contract with Chinese
foreign trade companies and entrust for sales, or Chinese foreign trade
companies may purchase its products and sell the products overseas, or the
foreign party may be responsible for selling the products overseas. Prices
shall be decided by the board of directors in light of cost and market.
Chapter
8 The Board of Directors Article
20 The date of registration
of the joint venture company shall be date of the establishment of the
board of directors of the joint venture company. Article
21 The board of directors shall be composed of directors, of which directors
are appointed by Party A, and directors are appointed by Party B. The board of directors
shall have one chairman of the board, appointed by Party ,
vice
chairman (chairmen), appointed by Party .
Each term of directors, board chairman and vice chairman shall be 4 years
(each term may not exceed 3 years for cooperative business), and they may
continue to serve their posts if they are re-appointed by the appointer. The
appointment or removal of director shall be informed of the other party in
writing and submitted to registration authority for record.
Article
22 Board of directors shall be the top authority of the joint venture
company, having right to make decisions about any major matter of the
company. Following
matters shall be decided by unanimous approval of directors present on
meeting of board of directors: 1)
Modification of articles of association of the joint venture company; 2)
Termination of the joint venture company; 3)
Adjustment of registered capital of the joint venture company; 4)
The company’s merging into or separating from other economic
organizations; 5)
The transferring of stock rights of one party or parties in the joint
venture companies; 6)
Pledging of stock rights by one party or parties; 7)
Mortgaging of assets of the joint venture company; 8)
Matters considered by board of directors to need unanimous approval of
directors present on meeting of board of directors.
Other
matters may be decided through approval by majority or simple majority
(Note: This should be specified in actual contract).
Article
23 The chairman of the board is the legal representative of the joint
venture company. Should the chairman be unable to exercise his
representative for some reasons, he shall authorize the vice-chairman or
any other directors to represent the joint venture company temporarily. If
the board chairman neither authorizes nor performs his duties,
vice-chairman shall perform the duties of the chairman.
Article
24 The board of directors
shall convene at least one meeting every year. The meeting shall be called
and presided over by the chairman of the board. The chairman may convene
an interim meeting based on a proposal made by more than one third of the
total number of directors. Minutes of the meeting shall be placed on file. Notice
for convening meeting of board of directors shall involve date, site and
agenda, and shall be sent to each director in writing 30 days prior to the
meeting. . Article
25 Meeting of board of directors may not be held unless more than
_________ directors are present on the meeting. (*more than 2/3 the total
of directors) Each director shall have a one-vote power. Article
26 Each party is under the obligation to ensure its appointed directors to
attend the meeting of board. If the director is not able to attend the
meeting for reasons, he shall write an authorization letter and authorize
another person to attend the meeting on behalf of himself.
Article
27 If directors appointed by one party or parties neither attend the board
meeting nor authorize other persons to attend the board meeting, and
therefore making the board meeting unable to make decisions about law and
regulations, or major questions or matters prescribed in the Contract and
articles of association within ______ day(s), other parties shall resend
absent directors and their appointers written notices addressed to legal
addresses of the said parties, urging them to attend the board meeting
within the prescribed time.
Article
28 The urging notice said in the preceding paragraph shall be sent out at
least 60 days before the meeting by double-registered letter and it should
be noted in the notice that notified party is required to, within at lease
45 days after the sending of the notice, reply in writing about whether to
attend the board meeting. If the notified party has not replied to the
notifying party within 45 days after the sending of the notice, or replied
that he will not attend the board meeting, then this shall be considered
as waiver. After the notifying party received the return receipt, his
appointed directors and other directors may hold special meeting of board
of directors, even if the number of present directors did not reach the
legal number, decisions on major questions or matters of the company shall
be effective upon the unanimous approval of directors present.
Article
28 Directors not holding posts in the joint venture company shall not be
salaried by the joint venture company. Any expense incurred in relation to
the meeting of board of directors shall be paid by the joint venture
company. Chapter
9 Business Management Office Article
30 The joint venture company
shall establish a management office which shall be responsible for its
daily management. The management office will have a general manager,
appointed by____ and one deputy general manager, appointed by_________.
General manager and deputy general manager, subject to the employment of
board of directors，Their
term of office is ___ years and can be renewed of they are continuously
appointed by the relevant party. Article
31 The responsibility of the
general manger is to carry out the decisions of the board meeting and
organize and conduct the daily management of the joint venture company.
The deputy general manager shall assist the general manager in his work,
and exercise due powers of office for daily operation in the absence of
general manager。Decisions
about important matters shall be made jointly by general manager and
deputy general manager. Several
department managers may be appointed by the management office; they shall
be responsible for the works in various departments respectively, handle
the matters handed over by the general manager and the deputy general
manager and shall by responsible to them. Article
32 General manager and the deputy general manager and other managers shall
perform their duties earnestly, and may not hold post of manager or stuff
members concurrently in other companies。 Chapter
10 Purchase of Equipment and Field Article
33 Site of the joint venture
company covers an area of____m2, located in_______, shall be
leased (bought) by the joint venture company. Article
34 In its purchase of
required raw materials, fuel, parts, means of transportation and articles
for office use, etc. the joint venture company shall give first priority
to purchase in China where conditions are the same. Article
35 If Party B is entrusted by the joint venture company to purchase abroad
equipments, service and other materials, Party B shall conduct full
consultation with Party A.
Chapter 11 Preparation and Construction Article
36 During the period of
preparation and construction, a preparation and construction office shall
be set up under the board of directors. The preparation and construction
office shall consist of ____ persons, among whom ___ persons will be from
Party A, _____ persons form Party B. The preparation and construction
office shall have one manager recommended by Party ____, and one deputy
manager by Party ____. The manager and deputy manager shall be appointed
by the board of directors. Article
37 The preparation and
construction office is responsible for the following concrete activities:
examining the designs of the project, signing project construction
contract, organizing the purchasing and inspecting of relevant equipment,
materials, etc. working out the general schedule of project construction,
compiling the expenditure plans, controlling project financial payments
and final accounts of the project, drawing up managerial methods and
keeping and piling documents, drawings, files and materials, etc. during
the construction period of the project. Article
38 A technical group with
several technical personnel appointed by Party A and Party B shall be
organized. The group, under the leadership of preparation and construction
office, is in charge of examining, supervising, inspecting, testing,
checking and accepting, evaluating the project design, the project
quality, the equipment and the imported technology. Article
39 The establishment,
remuneration and the expenses of the staff of the preparation and
construction office, when endorsed by both parties, shall be covered in
the project budget. Article
40 After completing the
project and finishing the turning-over procedures, the preparation and
construction office shall be dissolved upon the approval of the board of
directors. Chapter
12 Labor Management Article
41 Matters concerning workers such as employment, dismiss, wages, labor
insurance, welfare, reward and punishment, shall be stipulated through
labor contract signed by the joint venture company and its trade union
collectively or individually in accordance with Provision of People’s
Republic of China on Labor Administration of Enterprises with Foreign
Investment and its implementation measures,
After
being signed, be filed with the local labor management department. Article
42 The appointed of high-ranking administrative personnel recommended by
both parties, their salaries, social insurance, welfare and the standard
of traveling expenses etc. shall be decided by the meeting of the board of
directors. Chapter 13
Finance, Audit and Taxes Article
44 The joint venture company shall, in accordance with Financial System
of People’s Republic of China for Foreign-Invested Enterprises and
other relevant regulations, institute its financial system and working
procedure. Article
45 The joint venture company shall adopt RMB as the standard currency of
accounting. Article
46 The fiscal year of the
joint venture company shall be from January 1 to December 31. all
vouchers, receipts, statistic and reports, account books, shall be written
in Chinese and be keep. Article
47 The joint venture company shall, in accordance with relevant
provisions, appropriate reserve fund, enterprise development fund and
welfare fund at the rate decided by the board meeting in light of the
operation situation of the joint venture company. Article
48 The joint venture shall entrust its annual financial audit and check to
Chinese certified public accountant, and report the outcomes to the board
of directors and the general manager.
If
any party deems it necessary to entrust the annual audit to accountants of
other countries, the joint venture company shall give consent to it, but
all the expenses incurred shall be paid by the party. Article
49 In the first three months
of each fiscal year, the manager shall prepare previous year’s balance
sheet, profit and loss statement and proposal regarding the disposal of
profits, and submit them to the board of directors for examination and
approval. Article
50 The joint venture company shall establish foreign currency account with
Bank of China or other banks approved by People’s Bank of China to
engage in foreign exchange transactions. Article
51 The joint venture company shall, on its own, be responsible for its
balance of foreign exchanges. Article
52 Within 4 months upon the end of each fiscal year, the board of
directors may, in light of actual conditions of the enterprise, make
decisions as regards whether to distribute dividend after taxes and
charges have been paid and funds been withdrawn from profit. The dividends
shall be distributed at the actual percentage of investment by investor in
the registered capital. The dividends may not be distributed before the
losses of previous years are covered. Article
53 The joint venture company shall supervise and urge Chinese and foreign
workers to pay individual income tax in accordance with Individual
Income Tax Law of People’s Republic of China. Article
54 The joint venture company shall timely declare and report its taxable
income to local tax authority and pay taxes in accordance with law.
Article
55 The joint venture company shall procure all its insurances from
insurance companies within China. Types of insurances, insurance amount
and insurance period shall be decided by the meeting of board of directors
of the joint venture company in accordance with regulations of insurance
company. Chapter
14 Duration of the Joint Venture Article
56 The duration of the joint
venture company is _________ years. The establishment of the joint venture
company shall be from the date on which the business license of the joint
venture company is issued. Both
parties agree to apply to examination and approval authority for renewing
joint venturing period 6 months before the expiration of joint venturing
period.
Chapter 15 The Disposal of Assets After the Expiration of the
Duration Upon
the expiration of the duration or termination before the date of
expiration of the joint venture company, the joint venture company shall
conduct liquidation in accordance with relevant provisions of liquidation
measures for enterprises with foreign investment. If there are disputes
between two parties over the liquidation and thus making it impossible to
smoothly proceed with the liquidation, they may apply for special
liquidation. Assets after liquidation shall be distributed to two parties
according to their actual respective percentage of investment. Non-cash
assets shall, in principle, be sold to Party A after these assets are
evaluated in terms of money, or non-cash assets may be distributed between
two parties through auction.
Chapter 16 Modification
and Termination of Contract Article
58 Modification to the Contract and its attachments shall not be effective
before written agreement concerning the modification is signed by both
parties and submitted for approval to original examination and approval
authority. Article
58 Under the following circumstances, the Contract may be terminated and
the joint venture company may be disbanded in advance: 1)
The Contract can not be fulfilled due to force majeure; 2)
Because of losses, the joint venture company is no longer able to operate; 3)
One party or parties substantially breach the Contract, making it
unnecessary to continually fulfill the Contract; 4)
Both parties agree that the joint venture company failed to meet their
operation purpose and that it is unpromising.
5)
Other reasons for terminating Contract prescribed in the Contract,
articles of association of the joint venture and laws and regulations.
For
disband of the joint venture company, the board of directors shall submit
application to examination and approval authority for approval. But if
directors of one party or parties, for more than 2 years, have not
attended or convened meeting of board of directors, making board of
directors unable to make effective decisions about the disband, and no
information is obtained about these directors though other shareholders
have noticed to urge them in writing for at least three times, upon the
notarization by Chinese public notary offices upon witness by Chinese
lawyers, other shareholders may apply for disbanding the enterprise to its
original examination and approval authority
Chapter 17 Liabilities
for Breach of Contract Article
60 If any party fails to make his investment at due time in accordance
with provisions of Chapter 5 of the Contract, for every month from the
first month overdue, the party shall pay fine for breach to observant
party at the rate of 3% his due amount of investment. The observant party
may require the breaching party to, within one month, make investment, if
the breaching party has still not performed his obligations within the
time limit, in addition to requiring breaching fine from him, the
observant party shall consider this as that the breaching party
automatically waived all his rights and obligations for the joint venture
company and quitted the joint venture company. Under such circumstances,
the observant party shall have the right to terminate the Contract and
apply to examination and approval authority for disbanding the joint
venture in advance, or seek another partner to undertake all rights and
obligations of the breaching party for the joint venture company.
Investment already made by the breaching party shall be liquidated by the
joint venture company in accordance with law.
Article 61 Failure or partial failure
in fulfillment of the Contract and its attachments results from the breach
by any party, the breach party shall be responsible for the breach. If
both parties breached the Contract and its attachments, each party shall
take its due responsibility in light of facts.
Chapter 18 Force Majeure Article
62 Owing to force majeure such as earthquake, typhoon, flood, fire war and
other circumstances that are unforeseeable and whose consequences are
beyond prevention and avoidance, the fulfillment of the Contract is
directly affected or the Contract is unable to be fulfilled in accordance
with provisions of the Contract, the party confronting force majeure shall
inform the other party by telegraph and within 15 days, provide details of
the force majeure and effective proof documents describing reasons for not
being able to completely or partly fulfill the Contract, or reasons for
postponing fulfillment of the Contract, and the proof documents shall be
issued by public notary offices in the area where the force majeure took
place. In light of the degree to which the fulfillment is affected, both
parties may, through consultation, decide whether to terminate the
Contract, or to release partial obligations under the Contract, or to
postpone fulfilling the Contract.
Chapter 19 Applicable Law Article
63 The formation of this
contract, its validity, interpretation, execution and settlement of the
disputes, shall be governed by the related laws of the People’s Republic
of China. Chapter 20 Settlement of
Disputes Article
64 Disputes arising from the fulfillment of the Contract or in connection
with the Contract shall be settled through friendly consultation; If the
disputes remain unsettled after consultation, they shall be submitted for
arbitration to Karamay Arbitration Committee or China International
Economic and Trade Arbitration Committee, and they shall be arbitrated by
the said arbitration committee in accordance with its arbitration rules
existing when the arbitration application is received. Findings of
arbitration shall be final and both parties shall be bound by the
findings. Article
65 During the arbitration, in the process of arbitration, except items
herein that are being disputed and under arbitration, the fulfillment of
the Contract may not be terminated.
Chapter 21 Effectiveness of the Contract and Miscellaneous Article
66 The Contract is executed in Chinese and___________. Both versions shall
have equal force. However, if there is any discrepancy between the Chinese
version and the version in any other language, the Chinese version shall
prevail. Article
67 The following attached agreements signed in accordance with principles
prescribed by the Contract，including:
the project agreement, the technology transfer agreement, the sales
agreement etc. are all integral parts of the Contract. Article
68 After the contract and its attachments are signed by both parties, it
shall be required to be approved by __________ Foreign Economic and Trade
Commission and shall come into effect from day the approval certificate is
issued. The
Contract is signed in___counterparts, and each party shall hold one copy,
examination and approval authority and administrative department for
industry and commerce shall hold one copy respectively. Article
69 If both parties send advice by means such as telegraph and telex, for
any content that involves rights and obligations of both parties, written
advice shall be sent to the other party on the sending of telegraph or
telex. Article
70 Written advice shall be sent through double-registered letter and it
shall be considered as service if the sender receives the acknowledgement,
Legal
addresses of both parties written in the Contract shall serve as post
addresses of both parties. Article
71 the Contract is signed by authorized representatives of both parties
in______, China on _______ (month) _________
(day), 199_________. Party A: Party A: **** Company **** Company Legal representative: Legal representative Authorized representative: Authorized representative This format is only for reference, no reprinting shall be made without the authorization of China Foreign Invested Net. |