THE CONTRACT FOR SINO-FOREIGN COOPERATIVE JOINT VENTUREWhole Doc. Chapter 1 General Provisions In accordance with the Law of the People’s Republic of China on Chinese-Foreign Cooperative Joint Ventures and other relevant Chinese laws and regulations, _______________Company and _________Company, in accordance with the principle of equality and mutual benefit and through friendly consultations, agree to jointly set up a Cooperative venture in _______ the People’s Republic of China. Chapter 2 Parties of the Cooperative Venture
Article 1 Parties to this contract are as follows: _________Company (hereinafter referred to as Party A), registered with ______in China, and its legal address is at____________(street)_______ (district)_____________(city)_____________China. Legal representative: Name: Position: Nationality: ___________Company (hereinafter referred to as Party B), registered with_______. Its legal address at___________. Legal representative: Name: Position: Nationality: (Note: In case there are more than two investors, they will be called Party C, D… in proper order). Chapter 3 Establishment of the Cooperative Venture Company
Article 2 In accordance with the Cooperative Venture Law and other relevant Chinese laws and regulations, both parties of the Cooperative venture agree to set up ___________Cooperative venture limited liability company (hereinafter referred to as the Cooperative venture company).
Article 3 The name of the Cooperative venture company is______________ Limited Liability Company. The name in foreign language is _________. The legal address of the joint venture company is at __________street________(city)____________province.
Article 4 All activities of the Cooperative venture company shall be governed by the laws, decrees and pertinent rules and regulations of the People’s Republic of China.
Article 5 The organization form of the Cooperative venture company is a limited liability company. The profits, risks and losses of the Cooperative venture company shall be shared by the parties according to the relevant provisions thereafter. Chapter 4 The Purpose, Scope and Scale of Production and Business
Article 6 The goals of the parties to the Cooperative venture are to enhance economic cooperation technical exchanges, to improve the product quality, develop new products, and gain a competitive position in the world market in quality and price by adopting advanced and appropriate technology and scientific management methods, so as to raise economic results and ensure satisfactory economic benefits for each Cooperator. (Note: This article shall be written according to the specific situations in the contract).
Article 7 The productive and business scope of the Cooperative venture company is to produce ________products; provide maintenance service after the sale of the products; study and develop new products. (Note: It shall be written in the contract according to the specific conditions).
Article 8 The production scale of the Cooperative venture company is as follows:
1. The production capacity after the Cooperative venture is put into operation is _________.
2. The production scale may be increased up to_____________ with the development of the production and operation. The product varieties may be developed into ____________. (Note: It shall be written according to the specific situation). Chapter 5 Total Amount of Investment and the Registered Capital
Article 9 The total amount of investment of the Cooperative venture company is RMB____________(or a foreign currency agreed upon by both parties).
Article 10 The registered capital of the joint venture company is RMB __________.(Exclusive of the right to the use of the site or the right to the exploitation of the natural resources and premises contributed by Party A.)
Article 11 Party A and Party B will contribute the following to the cooperative venture: Party A: premises__________
m2 the right to the use of the site_________m2 Party B: cash ______________Yuan machines and equipment ____________Yuan industrial property __________Yuan others _____________Yuan, ___________Yuan in all. (Note: When contributing industrial property as investment, Party A and Party B shall conclude a separate contract to be a part of this main contract).
Article 12 The right to the use of site contributed by Party A shall be for the use of the cooperative venture company within _______________days after the approval of the contract. The cash contributed by Party B shall be paid in_______________ installment. Each installment shall be as follows: (Note: it shall be written according to the concrete conditions).
Article 13 The machines and equipment contributed by Party B as investment shall meet the needs of the cooperative venture company, and shall be carried to the Chinese port_________ days before the completion of the premises construction. Chapter 6 Responsibilities of Each Party to the Joint Venture
Article 14 Party A and Party B shall be respectively responsible for the following matters: Responsibilities of Party A: Handling of applications for approval, registration, business license and other matters concerning the establishment of the cooperative venture company from relevant departments in charge of China; Processing the application for the right to the use of a site to the authority in charge of the land; Organizing the design and construction of the premises and other engineering facilities of the cooperative venture company; Assisting Party B to process import customs declaration for the machinery and equipment contributed by Party B as investment and arranging the transportation within the Chinese territory; Assisting the cooperative venture company in purchasing or leasing equipment, materials, raw materials, articles for office use, means of transportation and communication facilities etc.; Assisting the cooperative venture company in contacting and settling the fundamental facilities such as water, electricity, transportation etc.; Assisting the cooperative venture in recruiting Chinese management personnel, technical personnel, workers and other personnel needed; Assisting foreign workers and staff in applying for entry visas, work licenses and handling their travel procedures; Responsible for handling other matters entrusted by the cooperative venture company. Responsibilities of Party B: Providing cash, machinery and equipment, industrial property… in accordance with the provisions of Article 11 and Article 12, 13, and responsible for shipping capital goods such as machinery and equipment etc. contributed as investment to a Chinese port; Handling the matters entrusted by the cooperative venture company, such as selecting and purchasing machinery and equipment outside China, etc.; Providing necessary technical personnel for installing, testing and trial production of the equipment as well as the technical personnel for production and inspecting; Training the technical personnel and workers of the cooperative venture company; In case Party B is the licensor, it shall be responsible for the stable production of qualified products of the cooperative venture company in the light of design capacity within the specified period; Responsible for other matters entrusted by the joint venture company. (note: It shall be written according to the specific situation). Chapter 7 Distribution of Profits and Repayment for Party B’s Investment
Article 15 The cooperative venture company shall distribute its profits in accordance with the following procedure after paying the income tax: ____________% as allocations for reserve funds, expansion funds, welfare funds and bonuses for staff and workers of the cooperative venture company; ____________% as repayment for Party B’s Investment and ___________Years scheduled to pay back all Party B’s Investment; ____________% of the left distributed to Party A and ___________% to Party B. Chapter 8 Selling of Products
Article 16 The products of cooperative venture company will be sold both on the Chinese and the overseas market, the export portion accounts for ____________%, ____________% for the domestic market. (Note: An annual percentage and amount for outside and domestic selling will be written out according to practical operations, in normal conditions, the amount for export shall at least meet the needs of foreign exchange expenses of the joint venture company).
Article 17 Products may be sold on overseas markets through the following channels: The cooperative venture company may directly sell its products on the international market, accounting for _________%. The cooperative venture company may sign sales contracts with Chinese foreign trade companies, entrusting them to be the sales agencies or exclusive sales agencies, accounting for __________%. The cooperative venture company may entrust Party B to sell its products, accounting for ________%.
Article 18 The cooperative venture’s products to be sold in China may be handled by the Chinese materials and commercial departments by means of agency or exclusive sales, or may be sold by the cooperative venture company directly.
Article 19 In order to provide maintenance service to the products sold both in China or abroad, the cooperative venture company may set up sales branches for maintenance service both in China or abroad subject to the approval of the relevant Chinese department. Chapter 9 The Board of Directors
Article 20 The date of registration of the cooperative venture company shall be the date of the establishment of the board of directors of the cooperative venture company.
Article 21 The board of directors is composed of ____________directors, of which ___________shall be appointed by Party A, ____________by Party B. The chairman of the board shall be appointed by Party A, and its vice-chairman by Party B. The term of office for the directors, chairman and vice-chairmans four years, their term of office may be renewed if continuously appointed by the relevant party.
Article 22 The highest authority of the cooperative venture company shall be its board of directors. It shall decide all major issues concerning the cooperative venture company. Unanimous approval shall be required for any decisions concerning major issues. As for other matters, approval by majority or a simple majority shall be required. (Note: It shall be explicitly set out in the contract).
Article 23 The chairman of the board is the legal representative of the cooperative venture company. Should the chairman be unable to exercise his responsibilities for any reason, he shall authorize the vice-chairman or any other directors to represent the joint venture company temporarily.
Article 24 The board of directors shall convene at least one meeting every year. The meeting shall be called and presided over by the chairman of the board. The chairman may convene an interim meeting based on a proposal made by more than one third of the total number of directors. Minutes of the meetings shall be placed on file.
Article 25 The meeting shall be valid only when more than two thirds of the total number of directors attend. In case of absence, the director shall entrust another person to attend and vote for him with a trust deed. Chapter 10 Business Management Office
Article 26 The cooperative venture company shall establish a management office which shall be responsible for its daily management. The management office shall have a general manager, appointed by Party _____, ______deputy general managers, _____by Party _____; _____by Party ______. The general manager and deputy general managers whose terms of office is _____years shall be appointed by the board of directors.
Article 27 The responsibility of the general manager is to carry out the decisions of the board and organize and conduct the daily management of the cooperative venture company. The deputy general managers shall assist the general manager in his work.
Article 28 The general manager shall report to the board of directors the operation conditions of the cooperative company every three months, and make a financial report every six months.
Article 29 In case of graft or serious dereliction of duty on the part of the general manager and deputy general managers, the board of directors shall have the power to dismiss them at any time. Chapter 11 Labor Management
Article 30 Labor contract covering the recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalties and other matters concerning the staff and workers of the cooperative venture company shall be drawn up between the cooperative venture company and the trade union of the cooperative venture company as a whole, or the individual employees in the cooperative venture company as a whole or individual employees in accordance with the law of the People’s Republic of China on Chinese-Foreign Cooperative Joint Ventures. The labor contracts shall, after being signed, be filed with the local labor management department.
Article 31 The appointment of high-ranking administrative personnel recommended by both parties, their salaries, social insurance, welfare and the standard of travelling expenses etc. shall be decided by the meeting of the board of directors. Chapter 12 Taxes, Finance and Audit
Article 32 The cooperative venture company shall pay taxes in accordance with the provisions of Chinese laws and other relative regulations.
Article 33 Staff members and workers of the cooperative venture company shall pay individual income tax according to the Individual Income Tax Law of the People’s Republic of China.
Article 34 The fiscal year of the joint venture company shall be from January 1 to December 31. All vouchers, receipts, statistic statements and reports shall be written in Chinese. (Note: A foreign language can be used concurrently with mutual consent).
Article 35 Financial checking and examination of the cooperative venture company shall be conducted by an auditor registered in China and reports shall be submitted to the board of directors and the general manager. In case Party B considers it necessary to employ a foreign auditor registered in another country to undertake annual financial checking and examination, Party A shall give its consent. All the expenses thereof shall be borne by Party B.
Article 36 In the first three months of each fiscal year, the manager shall prepare the previous year’s balance sheet, profit and loss statement and proposal regarding the disposal of profits, and submit them to the board of directors for examination and approval. Chapter 13 Duration of the Cooperative Venture
Article 37 The duration of the cooperative venture company is______ years. The establishment date of the joint venture company shall be the date on which the business license of the cooperative venture company is issued. An application for the extension of the duration, proposed by one party and unanimously approved by the board of directors, shall be submitted to the Ministry of Foreign Trade and Economic Cooperation (or the examination and approval authority entrusted by it) six months prior to the expiry date of the joint venture. Chapter 14 The Disposal of Assets after the Expiration of the Duration
Article 38 Upon the expiration of the duration, the assets shall belong to Party A. Chapter 15 Insurance
Article 39 Insurance policies of the joint venture company on various kinds of risks shall be underwritten with the People’s Republic of China. Types, value and duration of insurance shall be decided by the board of directors in accordance with the provisions of the People’s Insurance Company of China. Chapter 16 The Amendment, Alteration and Termination of the Con- tract
Article 40 The amendment of the contract or other appendices shall come into force only after a written agreement has been signed by Party A and Party B and approved by the original examination and approval authority.
Article 41 In case of inability to fulfil the contract or to continue operation due to heavy losses in successive years as a result of force majeure, the duration of the cooperative venture and the contract shall be terminated before the time of expiration after being unanimously agreed upon by the board of directors and approved by the original examination and approval authority. Chapter 17 Liability for Breach of Contract
Article 42 Should the cooperative venture company be unable to continue its operation or achieve its business purpose due to the fact that one of the contracting parties fails to fulfil the obligations prescribed by the contract and articles of association, or seriously violates the provisions of the contract and articles of association, that party shall be deemed to have unilaterally terminated the contract. The other party shall have the right to terminate the contract in accordance with the provisions of the contract after approval by the original examination and approval authority, and to claim damages. In case Party A and Party B of the cooperative venture company agree to continue the operation, the party who fails to fulfil its obligations shall be liable for the economic losses caused thereby to the joint venture company.
Article 43 Should either Party A or Party B fail to provide on schedule the contributions in accordance with the provisions defined in Chapter 5 of this contract, the party in breach shall pay to the other party ________Yuan, or __________% of the contribution starting from the first month after exceeding the time limit. Should the party in breach fail to provide after ______months, _________Yuan, or _________% of the contribution shall be paid to the other party, who shall have the right to terminate the contract and to claim damages from the party in breach in accordance with the provisions of Article 42 of the contract.
Article 44 Should all or part of the contract and its appendices be unable to be fulfilled owing to the fault of one party, the party in breach shall bear the liability therefor. Should it be the fault of both parties, they shall bear their respective liabilities according to the actual situation.
Article 45 In order to guarantee the performance of the contract and its appendices, both Party A and Party B shall provide each other with bank guarantees for performance of the contract within __________days after the contract comes into force. Chapter 18 Force Majeure
Article 46 Should either of the parties to the contract be prevented from executing the contract by force majeure, such as earthquake, typhoon, flood, fire, war or other unforeseen events, and their occurrence and consequences are unpreventable and unavoidable, the prevented party shall notify the other party by telegram without any delay, and within 15 days thereafter provide detailed information of the events and a valid document for evidence issued by the relevant public notary organization explaining the reason of its inability to execute or delay the execution of all or part of the contract. Both parties shall, through consultations, decide whether to terminate the contract or to exempt part of the obligations for implementation of the contract or whether to delay the execution of the contract according to the effects of the events on the performance of the contract. Chapter 19 Applicable Law
Article 47 The formation, validity, interpretation, execution and settlement of disputes in respect of, this contract shall be governed by the relevant laws of the People’s Republic of China. Chapter 20 Settlement of Disputes
Article 48 Any disputes arising from the execution of, or in connection with, the contract shall be settled through friendly consultations between both parties. In case no settlement can be reached through consultations, the disputes shall be submitted to the Foreign Economic and Trade Arbitration Commission of the China Council for the Promotion of International Trade for arbitration in accordance with its rules of procedure. The arbitral award is final and binding upon both parties.
Article 49 During the arbitration, the contract shall be observed and enforced by both parties except for the matters in dispute. Chapter 21 Language
Article 50 The contract shal be written in Chinese and in ____________. Both language versions are equally authentic. In the event of any discrepancy between the two aforementioned versions, the Chinese version shall prevail. Chapter 22 Effectiveness of the Contract and Miscellaneous
Article 51 The appendices drawn up in accordance with the principles of this contract are integral parts of this contract, including: the project agreement, the technology transfer agreement, the sales agreement etc.
Article 52 The contract and its appendices shall come into force commencing from the date of approval of the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China (or its entrusted examination and approval authority).
Article 53 Should notices in connection with any party’s rights and obligations be sent by either Party A or Party B by telegram or telex, etc., the Written letter notices shall be also required afterwards. The legal addresses of Party A and Party B listed in this contract shall be the posting addresses.
Article 54 The contract is signed in __________, China by the authorized representatives of both parties on _____, 19_______.
For Party A (Signature)
For Party B (Signature)