Article 7 The workers and staff members of an equity joint venture shall, in accordance with law, establish a trade union to carry out trade union activities and safeguard their lawful rights and interests.
The equity joint venture shall provide the necessary conditions for the trade union to conduct activities.
Article 8 The net profit of an equity joint venture shall be distributed among the parties to the venture in proportion to their respective contributions to the registered capital, after payment out of its gross profit of the equity joint venture income tax, pursuant to the provisions of the tax laws of the People's Republic of China, and after deductions from the gross profit of a reserve fund, a bonus and welfare fund for workers and staff members and a venture expansion fund, as stipulated in the venture's articles of association.
An equity joint venture may, in accordance with the provisions of the relevant laws and administrative regulations of the State on taxation, enjoy preferential treatment of tax reductions or exemptions.
A foreign joint venturer that reinvests its share of the net profit within Chinese territory may apply for a partial refund of the income tax already paid.
Article 9 An equity joint venture shall, on the strength of its business license, open a foreign exchange account with a bank or any other financial institution which is permitted by the State agency for foreign exchange control to handle foreign exchange transactions.
An equity joint venture shall handle its foreign exchange transactions in accordance with the regulations on foreign exchange control of the People's Republic of China.
An equity joint venture may, in its business operations, directly raise funds from foreign banks.
The various kinds of insurance coverage of an equity joint venture shall be furnished by insurance companies established within the territory of China.
Article 10 An equity joint venture may, in adherence to the principles of fairness and rationality, purchase on both the Chinese and the world market the raw and semi-processed materials, fuels and other materials it needs within the approved scope of operation.
An equity joint venture shall be encouraged to market its products outside China. It may sell its export products on foreign markets directly or through associated agencies or China's foreign trade agencies. Its products may also be sold on the Chinese market.
When necessary, an equity joint venture may set up branches and subbranches outside China.
Article 11 The net profit which a foreign joint venturer receives as its share after performing its obligations under the laws, and the agreements or the contract, the funds it receives upon the expiration of the venture's term of operation or the suspension thereof, and its other funds may be remitted abroad in accordance with foreign exchange control regulations and in the currency or currencies specified in the contract concerning the equity joint venture.
A foreign joint venturer shall be encouraged to deposit in the Bank of China the foreign exchange which it is entitled to remit abroad.
Article 12 The wages, salaries or other legitimate income earned by a foreign worker or staff member of an equity joint venture, after payment of the individual income tax under the tax laws of the People's Republic of China, may be remitted abroad in accordance with foreign exchange control regulations.
Article 13 Based on different lines of trade and different circumstances, arrangements for the duration of equity joint ventures may be made differently through agreement by the parties to the venture. Equity joint ventures engaged in certain lines of trade shall specify their duration in the contracts, while equity joint ventures engaged in certain other lines of trade may choose to or not to specify their duration in the contracts. Where an equity joint venture has had its duration specified and the parties to the venture agree to extend the duration, the venture shall file an application for the purpose with the examination and approval authorities six months before its expiration. The examination and approval authorities shall, within one month after receipt of the application, decide on its approval or disapproval.
Article 14 In case of heavy losses, or failure of a party to perform its obligations under the contract and the articles of association, or force majeure, etc., the parties to the joint venture may, subject to their agreement through consultation, approval of their report by the examination and approval authorities and registration with the State's competent department in charge of industry and commerce administration, terminate the contract. In case of losses caused by a breach of contract, the party that has breached the contract shall bear the economic responsibilities.
Article 15 Disputes arising between the parties to an equity joint venture which the board of directors has failed to settle through consultation may be settled through conciliation or arbitration by an arbitration agency of China or through arbitration by another arbitration agency agreed upon by the parties.
Where the parties to an equity joint venture fail to stipulate an arbitration clause in the contract or does not reach a written arbitration agreement afterwards, they may bring a lawsuit to the People's Court.
Article 16 This Law shall go into effect as of the date of promulgation.
(Legislative Affairs Commission of the Standing Committee of the National People's Congress)
