Article 102
A joint venture may be dissolved in the following situations: (1) termination of duration of the venture;
(2) inability to continue operations due to heavy losses;
(3) inability to continue operations due to the failure of one of the
contracting parties to fulfil its obligations prescribed in the agreement, contract and articles of association;
(4) inability to continue operations due to heavy losses caused by force majeure such as natural calamities and wars;
(5) failure to obtain the desired objectives of the operation and no prospects for future development;
(6) occurrence of other reasons for dissolution as prescribed in the contract and articles of association.
In cases described in (2), (3), (4), (5) and (6) of this Article, the board of directors shall make an application for dissolution to the examining and approving authorities for approval.
In the situation described in (3) of this Article, the party which has failed to fulfil its obligations prescribed in the agreement, contract and articles of association shall be liable for the losses arising therefrom. Article 103
Upon announcement of the dissolution of a joint venture, its board of directors shall work out procedures and principles governing the
liquidation and nominate candidates for the liquidation committee. It shall report to the department in charge of the joint venture for examination, verification and supervision of its liquidation. Article 104
Members of a liquidation committee shall generally be selected from among the directors of a joint venture. In case the directors cannot serve or are unsuitable to be members of the liquidation committee, the joint venture may invite accountants and lawyers registered in China to do the job. When the examining and approving authorities deems necessary, it may send personnel to supervise the process.
The liquidation expenses and remuneration for the members of the
liquidation committee shall be given priority in the disbursements from the existing assets of the joint venture. Article 105
The tasks of the liquidation committee are: to conduct thorough
investigation of the property of the joint venture concerned, its credits and debts; to work out the statement of assets and liabilities and an
inventory of its property; to put forward a basis on which its property is to be evaluated and calculated; and to formulate a liquidation plan. All these shall be carried out upon approval of the board of directors. During the process of liquidation, the liquidation committee shall represent the joint venture concerned in initiating legal action or
responding thereto. Article 106
A joint venture shall be liable for its debts with all of its assets. The remaining assets after the clearance of debts shall be distributed among the parties to the joint venture in proportion to each party's investment unless otherwise provided for in the agreement, contract and articles of association of the joint venture.
At the time when a joint venture is being dissolved, the portion of its net assets or remaining property that exceeds the value added to its registered capital is regarded as profit on which income tax shall be levied according to law. The foreign joint venturer shall pay income tax according to law on the portion of the net assets or remaining property due him that exceeds his investment when he remits it abroad. Article 107
On the completion of the liquidation of a dissolved joint venture, the liquidation committee shall submit a liquidation report approved by a meeting of the board of directors to the original examining and approving authorities, go through formalities for cancelling its registration and hand in its business license to the original registration authorities. Article 108
After the dissolution of a joint venture, its account books and documents shall be left in the custody of the former Chinese joint venturer.
Chapter XV Settlement of Disputes Article 109
Disputes arising over the interpretation or execution of the agreement, contract or articles of association between the parties to the joint venture shall, if possible, be settled through friendly consultation or mediation. If these means prove futile, the disputes shall be subject to arbitration or judicial settlement. Article 110
Parties to a joint venture shall apply for arbitration in accordance with the relevant written agreement. They may submit the disputes to the
Foreign Economic and Trade Arbitration Commission of the China Council for the Promotion of International Trade in accordance with its arbitration rules. With mutual consent of the parties concerned, arbitration can also be carried out by an arbitration agency in the country where the
respondent is located or by one in a third country in accordance with the arbitration agency's rules. Article 111
In the absence of a written agreement on arbitration between the parties to a joint venture, either party may bring a suit in a Chinese people's court.
Article 112
In the process of settling disputes, except for matters in dispute, parties to a joint venture shall continue to carry out other provisions stipulated by the agreement, contract and articles of association of the joint venture.
Chapter XVI Supplementary Provisions Article 113
The Chinese departments in charge of visas shall provide facility by simplifying procedures for staff and workers from foreign countries or from Hong Kong or Macao (including their family members) who have frequent needs of entry and exit into and out of the China. Article 114
The departments in charge of joint ventures shall make applications and go through the formalities for Chinese staff and workers going abroad for studies, business negotiations or training. Article 115
Staff and workers from foreign countries or from Hong Kong or Macao working for a joint venture may bring in needed means of transport and office equipment with payment of Customs duties and consolidated industrial and commercial taxes according to regulations. Article 116
Joint ventures set up in the special economic zones shall comply with the provisions otherwise provided, if any, in the laws and regulations adopted by the National People's Congress, its Standing Committee or the State Council. Article 117
The power to interpret these Regulations is vested in the Ministry of Foreign Economic Relations and Trade. Article 118
These Regulations shall go into force as of the date of promulgation. Note:
[*1] New provisions have been added to this Article. Therefore, the relevant provisions in the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures amended on April 4, 1990 shall prevail.