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(Adopted
at the Fourth Session of the Sixth National People's Congress on
April 12, 1986, promulgated by Order No. 39 of the President of
the People's Republic of China and effective as of April 12, 1986
Article
1 With a view to expanding economic cooperation and technical exchange
with foreign countries and promoting the development of China's
national economy, the People's Republic of China permits foreign
enterprises, other foreign economic organizations and individuals
(hereinafter collectively referred to as "foreign investors")
to set up enterprises with foreign capital in China and protects
the lawful rights and interests of such enterprises.
Article
2 As mentioned in this Law "enterprises with foreign capital"
refers to those enterprises established in China by foreign investors,
exclusively with their own capital, in accordance with relevant
Chinese laws. The term does not include branches set up in China
by foreign enterprises and other foreign economic organizations.
Article
3 Enterprises with foreign capital shall be established in such
a manner as to help the development of China's national economy;
they shall use advanced technology and equipment or market all or
most of their products outside China.
Provisions
shall be made by the State Council regarding the lines of business
which the State forbids enterprises with foreign capital to engage
in or on which it places certain restrictions.
Article
4 The investments of a foreign investor in China, the profits it
earns and its other lawful rights and interests are protected by
Chinese law.
Enterprises
with foreign capital must abide by Chinese laws and regulations
and must not engage in any activities detrimental to China's public
interest.
Article
5 The State shall not nationalize or requisition any enterprise
with foreign capital. Under special circumstances, when public interest
requires, enterprises with foreign capital may be requisitioned
by legal procedures and appropriate compensation shall be made.
Article
6 The application to establish an enterprise with foreign capital
shall be submitted for examination and approval to the department
under the State Council which is in charge of foreign economic relations
and trade, to another agency authorized by the State Council. The
authorities in charge of examination and approval shall, within
90 days from the date they receive such application, decide whether
or not to grant approval.
Article
7 After an application for the establishment of an enterprise with
foreign capital has been approved, the foreign investor shall, within
30 days from the date of receiving a certificate of approval, apply
to the industry and commerce administration authorities for registration
and obtain a business licence. The date of issue of the business
licence shall be the date of the establishment of the enterprise.
Article
8 An enterprise with foreign capital which meets the conditions
for being considered a legal person under Chinese law shall acquire
the status of a Chinese legal person, in accordance with the law.
Article
9 An enterprise with foreign capital shall make investments in China
within the period approved by the authorities in charge of examination
and approval. If it fails to do so, the industry and commerce administration
authorities may cancel its business licence. The industry and commerce
administration authorities shall inspect and supervise the investment
situation of an enterprise with foreign capital.
Article
10 In the event of separation, merger or other major changes, an
enterprise with foreign capital shall report to and seek approval
from the authorities in charge of examination and approval, and
register the change with industry and commerce administration authorities.
Article
11 The production and operating plans of enterprises with foreign
capital shall be reported to the competent authorities for the record.
Enterprises
with foreign capital shall conduct their operations and management
in accordance with the approved articles of association, and shall
be free from any interference.
Article
12 When employing Chinese workers and staff, an enterprise with
foreign capital shall conclude contracts with them according to
law, in which matters concerning employment, dismissal, remuneration,
welfare benefits, labour protection and labour insurance shall be
clearly prescribed.
Article
13 Workers and staff of enterprises with foreign capital may organize
trade unions in accordance with the law, in order to conduct trade
union activities and protect their lawful rights and interests.
The
enterprises shall provide the necessary conditions for the activities
of the trade unions in their respective enterprises.
Article
14 An enterprise with foreign capital must set up account books
in China, conduct independent accounting, submit the fiscal reports
and statements as required and accept supervision by the financial
and tax authorities.
If
an enterprise with foreign capital refuses to maintain account books
in China, the financial and tax authorities may impose a fine on
it, and the industry and commerce administration authorities may
order it to suspend operations or may revoke its business licence.
Article
15 Within the scope of the operations approved, enterprises with
foreign capital may purchase, either in China or from the world
market, raw and semi-processed materials, fuels and other materials
they need. When these materials are available from both sources
on similar terms, first priority should be given to purchases in
China.
Article
16 Enterprises with foreign capital shall apply to insurance companies
in China for such kinds of insurance coverage as are needed.
Article
17 Enterprises with foreign capital shall pay taxes in accordance
with reevant state provisions for tax payment, and may enjoy preferential
treatment for reduction or exemption from taxes.
An
enterprise that reinvests its profits in China after paying the
income tax ,may, in accordance with relevant state provisions, apply
for refund of a part of the income tax already paid on the reinvested
amount.
Article
18 Enterprises with foreign capital shall handle their foreign exchange
transactions in accordance with the state provisions for foreign
exchange control.
Enterprises
with foreign capital shall open an account with the Bank of China
or with a bank designated by the state agency exercising foreign
exchange control.
Enterprises
with foreign capital shall manage to balance their own foreign exchange
receipts and payments. If, with the approval of the competent authorities,
the enterprises market their products in China and consequently
experience an imbalance in foreign exchange, the said authorities
shall help them correct the imbalance.
Article
19 The foreign investor may remit abroad profits that are lawfully
earned from an enterprise with foreign capital, as well as other
lawful earnings and any funds remaining after the enterprise is
liquidated.
Wages,
salaries and other legitimate income earned by foreign employees
in an enterprise with foreign capital may be remitted abroad after
the payment of individual income tax in accordance with the law.
Article
20 With respect to the period of operations of an enterprise with
foreign capital, the foreign investor shall report to and secure
approval from the authorities in charge of examination and approval.
For an extension of the period of operations, an application shall
be submitted to the said authorities 180 days before the expiration
of the period. The authorities in charge of examination and approval
shall, within 30 days from the date such application is received,
decide whether or not to grant the extension.
Article
21 When terminating its operations, an enterprise with foreign capital
shall promptly issue a public notice and proceed with liquidation
in accordance with legal procedure.
Pending
the completion of liquidation, a foreign investor may not dispose
of the assets of the enterprise except for the purpose of liquidation.
Article
22 At the termination of operations, the enterprise with foreign
capital shall nullify its registration with the industry and commerce
administration authorities and hand in its business licence for
cancellation.
Article
23 The department under the State Council which is in charge of
foreign economic relations and trade shall, in accordance with this
Law, formulate rules for its implementation, which shall go into
effect after being submitted to and approved by the State Council.
Article
24 This Law shall go into effect as of the date of its promulgation.
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