Provisional Measures Governing The Establishment Of Sino-Foreign Joint-Foreign Trade Corporations On A Trial Basis

(Effective Date:1996.09.30--Ineffective Date:)

(Issued by the Ministry of Foreign Trade and Economic Cooperation on September 30, 1996)

Article 1 The measures are enacted in a bid to open wider to the outside world and to promote China's foreign trade development in accordance with the "Foreign Trade Law of the People's Republic of China", "Law Governing the Sino-Foreign Equity Joint Venture of the People's Republic of China", and other related laws and regulations.

Article 2 The measures are applicable to the Sino-foreign joint foreign trade corporations (hereinafter referred to as "joint foreign trade corporation") specializing in the import and export trade business, jointly established by foreign corporations and enterprises (hereinafter referred to as "Foreign corporation") and Chinese enterprises and companies (hereinafter referred to as -- "Chinese corporation") within the Chinese territory (trial area).

Article 3 The joint foreign trade corporation is a company with limited liabilities. No less than 51 per cent of the corporation's registered capital shall come from the Chinese side, and the foreign side shall provide at least 25 per cent of the registered capital. The legal representative shall be appointed by the Chinese side.

Article 4 The following conditions shall be met when establishing joint foreign trade corporations:

I. The foreign corporation shall meet the following requirements:

1. The annual business turnover shall exceed US$5 billion in the year before application;

2. The average annual foreign trade value with China shall reach above US$30 million in the three years before application;

3. It has set up representative offices for at least three years in China before application, or it has invested more than US$30 Million in China.

II. The Chinese corporation shall meet the following requirements:

1. It is entitled to handle foreign trade business;

2. The annual average import and export value for the three years before application shall surpass US$200 million, among which export value shall be no less than US100 million;

3. It has set up at least three overseas branches or subsidiaries, and the average annual business turnover of the overseas companies shall exceed US$10 million for the three years before application.

III. The joint foreign trade corporation shall meet the following requirements:

1. Its registered capital shall be no less than 100 million yuan;

2. It has its own name and organizations;

3. It has operation area suitable for foreign trade business, specialized professionals and other necessary conditions.

Article 5 The Chinese corporation shall submit the following documents to the state-level foreign trade authority for review through the local foreign trade supervisory department:

I. Project proposal, feasibility study report signed by all parties involved, contract, and regulations;

II. The proof documents for company registration (copy version), company credit, and legal representatives from all parties involved;

III. The authorization letter for the establishment of the foreign- funded enterprise (copy version) or approval document (copy version) for setting up resident representative office in China, business license (copy version), and asset verification report (copy version) produced by the Certified Accountant Agency of China;

IV. The proof documents for the registration of China's overseas branch companies, subsidiaries and joint ventures (copy version);

V. The statement of assets and liabilities for the recent three years from all parties involved, and the confirmation documents from the auditing organizations;

VI. The business scope of the proposed joint foreign trade corporation;

VII. Other documents requested by the state foreign trade supervisory department;

After it is reviewed by the state foreign trade supervisory department and approved by the State Council, the approval certificate will be given to the joint foreign trade corporation by the state foreign trade supervisory department.

Article 6 After obtaining state approval for establishing the joint foreign trade corporation, the Chinese corporation shall produce the approval certificate to the administration of industry and commerce and go through the registration procedures within one month from the date of the approval. Then, the corporation shall proceed with the financial registration with the supervisory financial authority within one month from the date of the previous registration.

Article 7 The foreign corporation shall provide funds for the registered capital in convertible currency, and the Chinese corporation can pay with Renminbi, in kind, with intangible assets, or other property rights. All the parties of the joint foreign trade corporation shall pay up the investment to the prescribed volume within one month from the date of the business license being issued.

Article 8 The joint foreign trade corporation shall deal in or serve as agent for the import and export of cargoes and technology within the approved business scope. The corporation is forbidden to deal in other transactions unless approved.

Article 9 For the import and export commodities under the state quota and permit control, the joint foreign trade corporation can not handle them unless they have applied to the related state supervisory department in accordance with related laws and regulations and obtained the approval. As for the import and export commodities under the state control of quota bidding, the joint foreign trade corporation shall enter the bid in accordance with the bidding regulations set by the supervisory department.

Article 10 The joint foreign corporation shall go through the settlement, sales, and payment of foreign exchange in conformity with the related rules regulating the state-owned foreign trade companies.

Article 11 The joint foreign trade corporation shall pay taxes according to related laws and regulations on taxation. The state will provide tax rebates according to the same regulations applicable to the state-owned foreign trade companies.

Article 12 The joint foreign trade corporation shall submit statements of finance, accounting, and statistics on a regular basis to the local supervisory departments in accordance with the related laws and regulations on finance, accounting and statistics.

Article 13 The joint foreign trade corporation shall apply to join the Import and Export Chamber or the Association for Foreign-funded Enterprises and shall obey the coordination of the Chamber or the Association.

Article 14 The joint foreign trade corporation shall comply with the Chinese laws and regulations, and is under the jurisdiction of Chinese laws and regulations. Its legal rights will be protected by Chinese laws and regulations. If the joint foreign trade corporation violates Chinese laws and regulations, it will be punished accordingly. If the joint foreign trade corporation violates the afore-said measures, it will be punished by the foreign trade supervisory department.

Article 15 The measures apply to the joint foreign trade corporations jointly established by companies or enterprises from Hong Kong, Macao, and Taiwan with counterparts from the Chinese mainland.

Article 16 The region on trial and the number of the companies on trial will be specified by the State Council. Currently, the trial areas include only Shanghai Pudong New Area and Shenzhen Special Economic Zone.

Article 17 The measures take effect as of the issue date, and the state foreign trade supervisory department shall be responsible for interpretering the measures