Article 74
On the strength of the business license issued by the State Administration for Industry and Commerce of the People's Republic of China, a joint venture may open foreign exchange deposit accounts and Renminbi deposit accounts with the Bank of China, or any other designated bank. The bank handling the accounts of the joint venture shall monitor its receipts and expenditures.
All foreign exchange incomes of a joint venture must be deposited in the foreign exchange deposit account in the bank where an account has been opened; all payments by the joint venture in foreign exchange are to be effected from its foreign exchange deposit account. The deposit interest rate shall be set according to the announced rates by the Bank of China. Article 75
A joint venture shall in general maintain a balance between its foreign exchange receipts and expenditures. When a joint venture whose products are mainly sold on the domestic market under its approved feasibility study report and contract sustains an imbalance of its foreign exchange receipts and expenditures, the imbalance shall be remedied by the people's government of a relevant province, autonomous region or municipality directly under the Central Government or the department in charge under the State Council from their own foreign exchange reserves. If the imbalance defies solution through such adjustment, it shall be solved through inclusion into the plan after the examination and approval by the MOFERT in conjunction with the State Planning Commission of the People's Republic of China. Article 76
A joint venture shall get permission from the State Administration of
Foreign Exchange Control or one of its branches to open a foreign exchange deposit account with an overseas bank or one in Hong Kong or Macao, and report to the State Administration of Foreign Exchange Control or one of its branches its foreign exchange receipts and expenditures, and provide bank statements. Article 77
Any branch office set up by a joint venture in a foreign country or in Hong Kong or Macao shall open an account with the Bank of China wherever there is a branch of the bank. The branch office shall submit its annual statement of assets and liabilities and annual profit report to the State Administration of Foreign Exchange Control or one of its branches through the joint venture. Article 78
A joint venture may apply to the Bank of China for foreign currency loans and Renminbi loans according to business needs and according to the Provisional Regulations for Providing Loans by the Bank of China to Chinese-Foreign Equity Joint Ventures. Interest rates on loans to joint
ventures are as announced by the Bank of China. A joint venture may also borrow foreign exchange as capital from banks abroad or in Hong Kong or Macao, but shall file a report with the State Administration of Foreign Exchange Control or one of its branches for the record. Article 79
After foreign staff and workers or staff and workers from Hong Kong or Macao have paid income tax on their salaries and other legitimate incomes according to law, they may apply to the Bank of China for permission to remit out all the remaining foreign exchange after deduction of their living expenses in China.
Chapter XI Financial Affairs and Accounting Article 80
The financial and accounting systems of a joint venture shall be
instituted in accordance with China's relevant laws and procedures on financial affairs and accounting, and in consideration of the conditions of the joint venture, and then be filed with the local financial departments and tax authorities for the record. Article 81
A joint venture shall employ a chief accountant to assist the general manager in handling the financial affairs of the enterprises. If necessary, a deputy chief accountant may be appointed. Article 82
A joint venture shall (unless it is a small venture) appoint an auditor to be responsible for checking financial receipts, payments and accounts, and to submit reports to the board of directors and the general manager. Article 83
The fiscal year of a joint venture shall coincide with the calendar year, i.e. from January 1 to December 31 on the Gregorian calendar. Article 84
The accounting of a joint venture shall adopt the internationally used accrual basis and debit and credit accounting system in their work. All vouchers, account books, statistic statements and reports prepared by the enterprise shall be written in Chinese, or concurrently in a foreign language agreed upon by the parties. Article 85
Joint ventures shall, in principle, adopt Renminbi as the standard
accounting currency, however, a foreign currency may also be used as the standard accounting currency, if so agreed upon by the parties concerned. Article 86
In addition to the use of a standard accounting currency, joint ventures shall record accounts in currencies actually used in payments and receipts, if such currencies in cash, bank deposits, funds of other
currencies, assets and liabilities, gains, expenses, etc. are inconsistent
with the standard accounting currency.
Joint ventures using a foreign currency in accounting shall work out a statement of accounts in Renminbi equivalents in addition to those in the foreign currency. Losses or gains in remittances resulting from
differences in exchange rates shall be recorded as current gains or losses for the year in which they occur. No adjustments shall be made to a balance in a foreign currency account as the result of a recorded fluctuation in the exchange rate such a currency. Article 87
Principles of profit distribution after payment of taxes in accordance with the Income Tax Law of the People's Republic of China Concerning Chinese-Foreign Equity Joint Ventures are as follows:
(1) Allocations for reserve funds, bonuses and welfare funds for staff and workers and expansion funds of the joint venture. The proportion of allocations is to be decided by the board of directors.
(2) Reserve funds which can be used to make up for the losses of the joint venture, or with the consent of the examining and approving authorities, to increase the joint venture's capital for the expansion of production. (3) After the funds specified in (1) of this Article have been deducted and if the board of directors decides to distribute the remaining profit, it shall be distributed proportionately to each party's investment. Article 88
Profits may not be distributed before the losses of the previous year have been made up. Remaining profits from previous year (or years) may be distributed together with those of the current year. Article 89
A joint venture shall submit quarterly and annual fiscal reports to parties to the joint venture, the local tax authority, department in
charge of the joint venture and the financial department at the same level to those departments.
A copy of the annual fiscal report shall be submitted to the original examining and approving authorities. Article 90
Only after being examined and certified by an accountant registered in China shall the following documents, certificates and reports be considered valid:
(1) certificates of investment from all the parties to a joint venture (lists of assessed value agreed upon and signed by the parties to the joint venture and relevant written agreements shall be attached if
investment involves materials, site use rights, industrial property and proprietary technology);
(2) annual fiscal reports of the joint venture;
(3) fiscal reports on liquidation of the joint venture.
Chapter XII Staff and Workers Article 91
The employment, recruitment, dismissal and resignation of staff and workers of joint ventures, and their salary, welfare benefits, labour
insurance, labour protection, labour discipline and other matters shall be handled according to the Regulations of the People's Republic of China on Labour Management in Chinese-Foreign Equity Joint Ventures. Article 92
Joint ventures shall make efforts to conduct professional and technical training of their staff and workers and establish a strict examination system so that they can meet the requirements of production and managerial skills in a modernized enterprise. Article 93
The salary and bonus system of joint ventures shall be in accord with the principle of distribution to each according to his work, and more pay for more work. Article 94
Salaries and remuneration of the general manager and deputy general
manager(s), chief engineer, deputy chief engineer(s), chief accountant and deputy chief accountant, auditor and other high-ranking managerial personnel shall be decided upon by the board of directors.
Chapter XIII Trade Union Article 95
Staff and workers of a joint venture have the right to set up grass-roots trade unions and carry on trade union activities in accordance with the Trade Union Law of the People's Republic of China (hereinafter referred to as Chinese Trade Union Law) and the Statute of the Trade Unions of China. Article 96
Trade unions in joint ventures are representatives of the interests of the staff and workers. They have the power to sign, on behalf of the staff and workers, labour contracts with joint ventures and supervise the execution of these contracts. Article 97
The basic tasks of the trade unions in joint ventures are: to protect the democratic rights and material interests of the staff and workers according to law; to help the joint ventures with the arrangement and rational use of welfare and bonus funds; to organize political,
professional, scientific and technical studies, carry out literary, art and sports activities; and to educate staff and workers to observe labour discipline and strive to fulfil the economic tasks of the enterprises. Article 98
Trade union representatives have the right to attend, without the right to vote, meetings of the board of directors held to discuss important issues
such as development plans, production and operational activities of joint ventures and to air the opinions and demands of staff and workers.
Trade union representatives have the right to attend, without the right to vote, meetings of the board of directors held to discuss and decide on awards and penalties to staff and workers, salary and wage system, welfare benefits, labour protection and labour insurance, etc. The board of directors shall heed the opinions of the trade union and win its co- operation. Article 99
A joint venture shall actively support the work of the trade union, and, in accordance with the stipulations of the Chinese Trade Union Law, provide housing and facilities for the trade union as offices, meeting- halls, and for organizing welfare, cultural and sports activities. The joint venture shall allot an amount of money totalling 2 per cent of all the salaries of the joint venture's staff and workers as trade union funds, which the trade union of the joint venture shall use according to the relevant administration rules for trade union funds formulated by the All-China Federation of Trade Unions.
Chapter XIV Duration, Dissolution and Liquidation Article 100
The duration of a joint venture shall be decided upon through consultation among all the parties to the joint venture according to the actual
conditions of the particular lines of business and projects. The duration of a joint venture engaged in an ordinary project shall, in principle, be between 10 to 30 years. Duration for those engaged in projects requiring large amounts of investment, long construction cycles and low profit rates on the capital may be longer than 30 years. Article 101
The duration of a joint venture shall be determined by all the parties to the joint venture in the agreement, contract and activities of
association. The duration begins from the date when the joint venture is issued a business license.
When all parties to a joint venture agree to extend the duration, the joint venture shall file an application for extending the duration signed by representatives authorized by the parties with the examining and approving authorities 6 months before the date of expiration of the
duration. The examining and approving authorities shall give an official written reply to the applicant within one month as of the date of receipt of the application. Upon approval of the extension of the duration, the joint venture concerned shall go through registration formalities for the alteration in accordance with the Measures of the People's Republic of China for the Registration Administration of Chinese-Foreign Equity Joint Ventures.