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Provisional Measures on the Establishment of Sino-Foreign Joint Venture Trading Companies on A Pilot Basis
(Promulgated by Decree No.3 Ministry of Foreign
Trade and Economic Cooperation on September 30, 1996)
Article 1 With a view to further expanding opening-up to the outside
world and promoting the development of China's foreign trade, these Measures are hereby
formulated in accordance with the Foreign Trade Law of the People's Republic
of China and
the Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign
Investment as well as other relevant laws and regulations.
Article 2 These Measures shall be applicable to Sino-foreign joint
venture trading companies ( hereinafter referred to as "joint venture trading
companies" ) specialized in import and export trade which are established by foreign
companies or enterprises ( hereinafter referred to "foreign companies" and
Chinese companies or enterprises ( hereinafter referred to as "Chinese
companies") within the territory of China ( the pilot places ).
Article 3 A joint venture trading company shall be a company of
limited liabilities. The shares of the Chinese company in the registered capital of a
joint venture trading company shall be no less than 51% and that of the foreign company
shall be at least 25%. The legal representative shall be appointed by the Chinese company.
Article 4 The establishment of a joint venture trading company shall
satisfy the following conditions upon its establishment:
1. The foreign company shall
(1) enjoy a turnover of over US $ 5 billion in the year prior to the application;
(2) enjoy an average annual trading volume of over US $ 30 million with China in the
three years prior to the application;
(3) have established representative office within the territory of China for more than
three years or have made an investment of over US $ 30 million within the territory of
China prior to the application.
2. The Chinese company shall
(1) enjoy foreign trade rights;
(2) enjoy an average annual foreign trade volume of over US $ 200 million, among which
the export volume shall be no less than US $ 100 million in the three years prior to the
application; and
(3) have established more than 3 branches, subsidiaries and joint ventures outside
China, each with an average annual turnover of over US $ 10 million in the three years
prior to the application.
3. A joint venture trading company shall
(1) have a registered capital of no less than RMB100 million
Yuan;
(2) have its own name and organization;
(3) have its own operational venue, professionals and other necessary physical
conditions compatible with its foreign trade operations.
Article 5 In applying for the establishment of a joint venture trading
company, the Chinese company shall submit, through the local department responsible for
foreign trade and economic cooperation, the following documents for examination to the
national authorities in charge of foreign trade and economic cooperation:
1. A project proposal, a feasibility study report signed by both the Chinese and
foreign parties, the relevant contract and articles of association;
2.(Copies of) Documents certifying the registrations of all Chinese and foreign
parties, and documents certifying the credit-worthiness and the legal representatives of
the Chinese and foreign parties;
3.(Copies of) Certificates of approval of the enterprises invested by the foreign
company in China or (copies of) certificates of approval of the representative office
established in China, (copies of) business licenses and report of registered capital
verification issued by accounting firms registered in China;
4.(Copies of) Certificates of the registration of the branches, subsidiaries and joint
ventures established by the Chinese company outside China;
5. Balance sheets of all Chinese and foreign parties in the recent three years and
certificates of confirmation issued by auditing organizations;
6. Business scope of the proposed joint venture trading company ; and
7. Other documents required by the state competent authorities responsible for foreign
trade and economic cooperation.
An approving certificate shall be issued by national authorities responsible for
foreign trade and economic cooperation to a joint venture trading company after the
approval by the State Council following the examination by national authorities
responsible for foreign trade and economic cooperation.
Article 6 Once an application for the establishment of a joint venture
trading company is approved by the state, the Chinese company shall go through, upon
presentation of the approval certificate, the registration procedures with administrative
authorities for industry and commerce within one month from the date of the approval, and
shall go through the financial registration procedures with the competent financial
authorities within one month from the date of the business registration.
Article 7 The foreign company shall make its contribution to the
registered capital of the joint venture trading company in freely convertible currencies
while the Chinese company may contribute in Renminbi-the Chinese currency, in kind, in
tangible assets or other property rights.
Joint venture partners to a joint venture trading company shall pay up the full amount
of their respective subscribed contributions within one month from the date of the
issuance of the business license.
Article 8 A joint venture trading company shall undertake import and
export of goods and technology either for itself or on proxy within the approved business
scope and shall not undertake other business without approval.
Article 9 A joint venture trading company which imports and exports
commodities subject to state quota and licensing administration shall file an application
with competent authorities concerned according to relevant state provisions, and shall only
undertake import or export of such commodities upon approval of the application. A joint
venture trading company which imports and exports commodities subject to quota tendering
of the state shall participate in the tendering in line with rules on tender invitation
and bidding of import and export commodities formulated by the competent authorities
concerned.
Article 10 A joint venture trading company shall settle, purchase and
transfer foreign exchange according to relevant provisions applicable to state-owned
foreign trading companies. A joint venture trading company must maintain foreign exchange
balance. Specific administrative rules for this purpose shall be formulated by the
People's Bank of China in consultation with national authorities responsible for foreign
trade and economic cooperation.
Article 11 A joint venture trading company shall pay taxes according
to the state's taxation laws and regulations, while the state shall refund taxes for the
exported products according to provisions on the export tax refund for state-owned foreign
trading companies.
Article 12 A joint venture trading company shall submit financial,
accounting and statistical statements and reports to the local competent authorities in a
timely fashion and in line with Chinese laws and regulations governing financial,
accounting and statistical procedures.
Article 13 A joint venture trading company shall apply for membership
in a chamber of commerce for importers and exporters or association of enterprises with
foreign investment and shall subordinate itself to the coordination of the chamber of
commerce or association.
Article 14 A joint venture trading company shall abide by laws and
regulations of China and subordinate itself to the jurisdiction of Chinese laws and
regulations, and shall have its legitimate rights and interests protected by Chinese laws
and regulations.
A joint venture trading company which has violated Chinese law or regulations shall be
dealt with according to relevant laws and regulations, and a joint venture trading company
which has violated these Measures shall be dealt with by the competent authorities
administering foreign trade and economic cooperation's.
Article 15 Joint venture foreign trading companies set up by companies
or enterprises in Hongkong, Macao and Taiwan regions and companies or enterprises in the
mainland of China shall be treated in reference to these Measures.
Article 16 The places for the experimentation and the number of pilot
companies shall be determined by the State Council. For the time being, the pilot program
shall be conducted only in the Pudong New Development Area in Shanghai and Shenzhen
Special Economic Zone.
Article 17 These Measures shall enter into force on the date of
promulgation, and the power of interpretation is vested in the national competent
authorities for foreign trade and economic cooperation.
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