Regulations Concerning The Setting Up Of Foreign-Funded Construction Enterprises (FFCEs)

(Effective Date:1995.09.18--Ineffective Date:)

(Jointly adopted by the Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation in September, 1995)

Article 1 These regulations are formulated to suit the needs of the country's opening to the outside world, strengthen government administration over FFCEs and protect the market order of the building industry.

Article 2 FFCEs referred to in these regulations are those Sino-foreign joint equity or cooperative ventures engaging in civil engineering, pipe, line and equipment installation and architectural furnishing projects including those of newly construction, expansion and reconstruction.

The setting up of solely foreign-owned construction ventures is not permitted for the time being.

Article 3 The setting up of FFCEs should observe the Law of the People's Republic of China on Sino-Foreign Joint Equity Venture, the Law of the People's Republic of China on Sino-Foreign Cooperative Ventures, the Regulations on the Control of Business Classification of Construction Enterprises and other relevant laws, regulations and rules.

Article 4 The project proposals and feasibility study reports for the setting up of FFCEs shall be examined and approved by the administrative departments in charge of construction. The scope of engineering work contracted by FFCEs shall be fixed in accordance with the Regulations on the Control of Business Classification of Construction Enterprises and the Criteria for the Business Classification of Construction Enterprises, both issued by the Ministry of Construction. Contracts and articles of association of FFCEs shall be examined and approved by the departments in charge under the Ministry of Foreign Trade and Economic Cooperation (MOFTEC).

Article 5 The examination and approval of the setting up of FFCEs shall be undertaken by separate departments concerned at different levels. The application for the setting up of first-class FFCEs will be examined by the Ministry of Construction and approved by the MOFTEC. Projects of secondary and lower classes will be examined by construction administrative departments at the provincial level and approved by MOFTEC.

The setting of a FFCE with the Chinese partner being an enterprise directly under a department of the State Council shall be examined and approved by the Construction Ministry and MOFTEC.

Article 6 The setting up of a FFCE should follow the following procedures:

(1) The Chinese partner in a project submits the project proposal and feasibility study report and other relevant documents to the department in charge of construction which, upon finding the project qualified, will issue a Document on the Results of Examination and Confirmation of the Setting Up of the FFCEs to the applicants.

(2) The Chinese partner, while presenting the Document on the Results of Examination and Confirmation of the Setting Up of the FFCEs, submits the contract for the setting up of the articles of association and other relevant documents to the department in charge of foreign trade and economic cooperation which, upon finding the project qualified, will issue a Certificate of Approval of the FFCEs to the applicant.

(3) The Chinese partner goes to the office in charge of industrial and commercial administration for the registration of the legal person of the enterprise by presenting the Document and Certificate specified in (1) and (2) with other relevant documents.

(4) The FFCE enterprises, having obtained the license for business, shall perform the examination and certification of its business classification at the department in charge of construction administration.

Article 7 The setting up of a FFCE should be qualified with following conditions, apart from being conformed to the stipulations of relevant laws and regulations.

(1) The Chinese partner in the proposed enterprise has to be a construction enterprise with a second class or above business certificate. The foreign partner has to be a construction enterprise of legal person status with relatively high levels of technological and management capacities and good reputation.

(2) The proposed enterprise should be able to introduce into the country or adopt internationally advanced building technologies and equipment and give training to Chinese employees in engineering and management.

(3) Requirements for registered capital:

The minimum registered capital for a first class enterprise is U.S.$10 million, for a second class enterprise, U.S. $5 million and for a third class enterprise U.S.$ 1.6 million.

The minimum registered capital for a first class architectural furnishing enterprise is U.S.$2 million, for a second class, U.S.$ 1.5 million and a third class, U.S.$ 600,000.

Article 8 In the application for the setting up of FFCEs, the Chinese partner should, in accordance with the stipulations of Article 5 of the Regulations, supply the following documents to the department in charge of construction administration:

(1) Paper of application for setting up the FFCE.

(2) The Chinese partner's business classification certificate.

(3) Remarks of examination from the department in charge of the Chinese partner (except the Chinese enterprise is not directly under any department).

(4) Project proposal for the setting up of the proposed enterprise.

(5) Feasibility study report compiled jointly by all partners.

(6) Certificates of business registration of all participants in the project.

(7) Credit certificates of all the participants.

(8) Other documents as required.

Article 9 In the application for the setting up of FFCEs, the following documents should be submitted to the department in charge of foreign trade and economic cooperation in accordance with the stipulations of Article 5 of the Regulations:

(1) The Document on the Results of Examination and Confirmation of the Setting Up of the FFCE issued by the department in charge of construction administration.

(2) The contract for the setting up of the FFCE and the enterprise's articles of association.

(3) Project proposal and the feasibility study report.

(4) Certificates of business registration of all participants in the project.

(5) Credit certificates of all the participants.

(6) The document of certification of the name of the enterprise issued by the office in charge of industrial and commercial administration.

(7) The name list of the board directors of the joint project and their letters of appointment.

Article 10 Investors from the regions of Taiwan, Hong Kong and Macao who set up construction enterprises on the mainland with their own funds can proceed by referring to these Regulations.