A Chinese-foreign joint venture refers to a company that is jointly organized by foreign enterprises and other economic organizations or individuals with Chinese enterprises or other economic organizations in accordance with the principle of equality and mutual benefit, and stipulates the investment or cooperation conditions, the distribution of income or products, the sharing of risks and losses, the way of operation and management, and the attribution of property at the termination of the cooperative enterprise and other matters in the contract of the cooperative enterprise in China.
Materials required for registration of Chinese-foreign joint venture
To apply for registration of a Chinese-foreign joint venture, the Chinese partner must submit the following documents to the licensing agency:
1.Application for registration of a joint venture, power of attorney for administrative licensing matters, and letter of authorization for service of legal documents
2.The project proposal of registering joint venture with the consent document issued by the competent authority.
3.Feasibility report jointly prepared by all parties to the cooperation, with the with the consent document issued by the competent authority.
4.Joint venture agreement contract and articles of association signed by the legal representatives of the parties to the joint venture.
5.The certificate of incorporation or identity certificate of the foreign investor certified by the notary public in the investorĄ¯s country and certified by the Chinese Embassy (Consulate) in that country, the qualification certificate of the legal representative of the investor, and a copy of the business license from the Chinese party. The credit certificate issued by the banks of Chinese and foreign parties at the place of registration.If the overseas investor is a natural person, in addition to the identity certificate, it should provide valid proof of his resume and credit status.
6.List of candidates for the chairman, vice chairman, director or director of the joint management committee, deputy director and members of the joint venture as determined by the parties of the joint venture.
Chinese-foreign joint venture investment and cooperation conditions
1.The Chinese and foreign parties of joint venture shall invest or provide cooperation conditions to the joint venture in accordance with the provisions of laws and regulations and the contract of the joint venture.
2.The investment or cooperation conditions provided by the Chinese and foreign parties of the joint venture may be money, may be in kind or property rights such as industrial property rights, proprietary technology, and land use rights. Among the joint venture that have obtained the legal person status in China according to law, the investment of foreign partners is generally not less than 25% of the registered capital of the joint venture.
3.If the parties of the joint venture fail to pay the investment or provide cooperation conditions in accordance with the contract of the joint venture, the industrial and commercial administration authority shall order it to perform within a time limit. If the investment has not finished within the time limit, the authority shall cancel the approval certificate of the joint venture, and the industry and commerce administration authority shall revoke the business license of the joint venture and make an announcement.
How Chinese-foreign joint ventures distribute income and recover investment
1.Chinese and foreign partners can distribute profits by distributing profits, distributing products, or other means mutually agreed by the partners. Where the distribution of products or other means of distribution of income is used, the taxable amount shall be calculated in accordance with the relevant provisions of the tax law.
2.If in the contract of the joint venture, the Chinese and foreign partners agree that all the fixed assets of the joint venture will be owned by the Chinese partner free of charge at the expiration of the cooperation period. The foreign partner may apply for the recovery of the investment in the following manner within the cooperation period.
(1)On the basis of the distribution is according to investment or providing cooperation conditions, in the joint venture contract to expand the proportion of income distribution of foreign partners.
(2)After review and approval by the financial and tax authorities, foreign partners may recover their investment before the joint venture pays income tax
(3)Other ways of recycling investment approved by the financial and tax authorities. If a foreign partner recovers the investment within the time limit of cooperation in accordance with the previous paragraph, the Chinese and foreign partners shall be liable for the debts of the joint venture in accordance with the relevant laws and the contract of the joint venture. Foreign partners may not reclaim investment before the loss of the joint venture is not covered.
