Chapter I General Provisions
In accordance with "Law of the People's Republic of China On Joint Ventures using Chinese and Foreign Investment" and other relevant Chinese laws and regulations, the ____ Company of China and the ____ Company of____ (state) adhering to the principle of equality and mutual benefit and through friendly consultations, agree to jointly invest to set up a joint venture in ____ of People's Republic of China. The contract hereunder is worked out.
Chapter II Parties to the Joint Venture
Article 1 Parties to this contract are as follows: The ____ Company of China (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:
The ____ Company of (state) (hereinafter referred to as Party B), registered with ____. Its legal address is at ____.
Legal representative:
Name:
Position:
Nationality:
(Note: In case there are more than two investors, they will be called Party C, Party D... in proper order.)
Chapter III Establishment of the Joint Venture Company
Article 2 In accordance with the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment" and other relevant Chinese laws and regulations, both parties to the joint venture agree to set up ____ joint venture limited liability company (hereinafter referred to as the joint venture company).
Article 3 The name of the joint venture company is ____ Limited Liability Company. The legal address of the joint venture company is at ____ street ____(city) ____province.
Article 4 All activities of the joint venture shall be governed by the laws, decrees and relevant rules and regulations of the People's Republic of China.
Article 5 The organization form of the joint venture is a limited liability company, each party to joint venture company is liable to the debts of the joint venture within the limit of the capital subscribed by it. The profits, risks and losses of the joint venture shall be shared by the parties in proportion to their contributions of the registered capital.
Chapter IV The Purpose, Scope and Sale of Production and Business
Article 6 The purpose of the parties to the joint venture is in conformity with the wish of strengthening the economic cooperation and technical exchanges, to improve the product quality, develop new products, and gain competitive position in word market in quality and price by adopting advanced and appropriated technology and scientific management method, so as to raise economic results and ensure satisfactory economic benefits for each investor. (Note: This article shall be written according to the specific situations in the contract)
Article 7 The productive and business scope of the joint venture company is to produce ____ products; provide maintenance service after the stale of the products; study and developw new products. (Note: It shall be written in the contract according to the specific conditions.)
Article 8 The production scale of the joint venture company is as follows: 1. The production capacity after the joint venture 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.)
Chapte V Total Amount of Investment and the Registered Capital
Article 9 The total amount of investment of the joint venture company is RMB ____ (or a foreign currency agreed upon by both parties).
Article 10 Investment contributed by the parties in RMB(or a foreign curreney agreed upon by both parties)____, which will be registered capital of the joint venture company. Of which: Party A shall pay ____ Yuan. Accounts for ____%; Party B shall pay____ Yuan, accounts for ____%.
Article 11 Both Party A and Party B will contribute the following as their investment:
Party A: cash ____ Yuan. Machines and equipment ____Yuan. Premises ____Yuan. The right to the use of the site ____Yuan Industrial property or know-how ____Yuan Others ____ Yuan. ____ Yuan in all. Party B: cash ____ Yuan. Machines and equipment ____Yuan. Premises ____Yuan. The right to the use of the site ____Yuan Industrial property or know-how ____Yuan Others ____ Yuan. ____Yuan in all. (Note: When contributing capital goods or industrial property as invewtment, Party A and Party B shall conclude a separate contract as a component part of this main contract.)
Article 12 The registered capital of the joint venture company shall be paid in ___install-ments by Party A and Party B according to their respective properties of their investment. Each installment shall be as follows: (Note: it shall be written according to the concrete conditions).
Article 13 In case any party to the joint venture intends to assign all or part of his invest-ment subscribed to a third party. Consent shall be obtained from the other party to the joint venture, and approval from the examination and approval authority is to required. When one party to the joint venture assigns all or part of the invesment, the other party has preemptive right.
Chapter VI Responsibilities of Each Party to the Joint Venture
Article 14 Party A and Party B shall be respectively responsible for fulfilling the follow-ing matters:
Responsibilities of Party A:
(1) Handing of applications for approval, registration. Business license and other matters for the establishment of the joint venture company from the relevant competent departments in China;
(2) Applying for the right to the use of a site to the authority in charge of the land;
(3) Organizing the design and construction of the premises and other engineering facilities of the joint venture ;
(4) Providing cash, machinery and equipment and premises... in accordance with the stipulations Article 11;
(5) Assisting Party B for processing import customs declaration for the machinery and equipments contributed by Party B as investment and arranging the transportation within the Chinese territory;
(6) Assisting the joint venture company in purchasing or leasing equipments, materials, raw materials, articles for office use, means of transportation and communication facilities etc;
(7) Assisting the joint venture company in contracting and setting the infrastructure facilities such as water, electricity, transportation, etc.;
(8) Assisting the joint venture in recruiting Chinese management personnel, technical personnel, workers and other personnel needed;
(9) Assisting foreign workers and staff in applying for the entry visa, work license and processing their traveling matters;
(10) Responsible for handing other matters entrusted by the joint venture company.
Responsibilities of Party B:
(1) Providing cash, machinery and equipment, industrial property... in accordance with the stipulations in Article 11, and responsible for shipping capital goods such as machineries and equipment, etc. contributed as investment to Chinese port;
(2) Handing the matters entrusted by the joint venture company, such as selecting and purchasing machinery and equipments outside China. Etc;
(3) Providing needed technical personnel for installing, testing and trial production of the equipment, as well as the technical personnel for production and inspecting;
(4) Training the technical personnel and workers of the joint venture company;
(5) In case the Party B is the licensor, he shall be responsible for the stable production of qualified products of the joint venture company in the light of design capacity within the stipulated period;
(6) Responsible for other matters entrusted by the joint venture company. (Note: It shall be written according to the specific situation.)
(7)
Chapter VII Transfer of Technology
Article 15 Party A and Party B agree that a technology transfer agreement shall be signed between the joint venture company and party B (or a third party) so as to obtain advanced production technology needed for realizing the production and operation purpose and the production scale stipulated in Chapter 4 in the contract, including products designing, technology of manufacturing, means of testing, materials prescription, standard of quality and the training of personnel etc. (Note: It shall be written in the contract according to the concrete conditions.)
Article 16 Party B offers the following guarantees of the transfer of technology: (Note: This article applies only to the joint venture's contract when Party B is responsible for transferring technology to the joint venture company.)
(1) Party B guarantees that the overall technology such as the designing, technology of manufacturing, technological process, tests and inspection of products (Note: The name of the products shall be written) provided to the joint venture company must be integrated, precise and reliable. It is to meet the requirement of the joint venture's seperation purpose, and to guarantee the achievement of production quality and production capacity stipulated in the contract;
(2) Party B guarantees that the technology stipulated in this contract and the technology transfer agreement shall be fully transferred to the joint venture company, and pledges that the provided technology should be truly advanced amount the same type of technology of Party B, the model, specification and quality of the equipment are excellent and it is to meet the requirement of technological operation and practical usage;
(3) Party B shall work out detailed list of the provided technology and technological service at various stages as stipulated in the technology transfer agreement to be a appendix to the contract, and guarantee its performance;
(4) The drawings, technological requirements and other detailed date are component part of the transferred technology, which shall be guaranteed to be offered on time.
(5) Within the validity period of the technology transfer agreement, Party B shall provide the joint venture company within the improvement of the technology and the improved information and technological materials in time, and shall not charge separate fees;
(6) Party B shall guarantee that the technological personnel and the workers in the joint venture company can master all the technology transferred within the period stipulated in the technology transfer agreement.
Article 17 In case Party B fails to provide equipment and technology in accordance with the stipulations in this contract and in the technology transfer agreement or in case any deceiving or concealing actions are found, Party B shall be responsible for compensating the direct losses to the joint venture company.
Article 18 The technology transfer fee shall be paid in royalties. The royalty rate shall be ____% of the net sales value of the products turned out. The term for royalty payment is the same as the term for technology transfer agreement stipulated in Article 19 of this contract.
Article 19 The term for the technology transfer agreement signed by joint venture company and Party B is ____years. After the expiration of the technology transfer agreement, the joint venture company shall have the right to use, research and develop the imported technology continuously. (Note: The term for a technology transfer agreement is generally no longer that 10 years, and it shall be approved by the Ministry of Foreign Economic Relations and Trade or other examination and approval authorities entrusted by the Ministry for Foreign Economic Relations and Trade.)
Chapter VIII Selling for Products
Article 20 The products of joint venture company will be sold both on Chinese market and on overseas market, the export part accounts for ____%, and ____%for domestic market. (Note: An annual percentage and amount for outside and inside selling will be written out according to practical situations, in normal conditions, the amount for export shall at least meet the needs of foreign exchange expenses of the joint venture company.)
Article 21 Products may be sold on overseas market through the following channel: The joint venture company may directly sell its products on the international market, which accounts for ____% The joint venture company may sign sales contract with Chinese foreign trade companies, entrusting them to be the sales agencies or exclusive sales agencies, which accounts for ____%. The joint venture company may entrust Party B to sell its products, which accounts for ____%.
Article 22 The joint 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 joint venture company directly.
Article 23 In order to provide maintenance service to the products sold both in China or abroad, the joint venture company may set up sales branches for mainternance service both in China or abroad subject to the approval of the relative Chinese department.
Article 24 The trade mark of the joint venture's product is ____.
Chapter IX The Board of Directors
Article 25 The date of registration of the joint venture company shall be regarded as the date of the establishment of the board of directors of the joint venture company.
Article 26 The board of directors are 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-chairman is four years, their term of office may be renewed if continuously appointed by the relevant party.
Article 27 The board of directors is the hightest authority of the joint venture company. It shall decide and major issues concerning the joint venture company. Unanimous approval shall be required before any decisions are made concerning major issues. (Note: in conformity with the main contents listed in Article 36 of the Regulations for the Implementation of the Joint Venture Law). As for other matters, approval by majority or a simple majority shall be required. (Note: It shall be explicitly stipulated in the contract.)
Article 28 The clairman of the board is the legal representative of the joint venture company. Should the chairman be unable to exercise his responsibilities for some reasons, he shall authorized temporarily the vice-chairman or any other director to act on his behalf.
Article 29 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.
Chapter X Business Management Office
Article 30 The joint venture company shall establish a management office which shall be responsible for its daily management. The management office shall have a general manager, recommended by party ____; ___deputy general managers. ____recommended by party A; and _______ by party B. The general manager and deputy general managers shall be invited by the board of directors whose terms of office is ____years.
Article 31 The responsibility of the general manager is to carry out various decisions of the board meeting and organize and conduct the daily management of the joint venture company. The deputy general managers shall assist the general manager in his work. Several department managers may be appointed by the management office, they shall be responsible for the works in various department of the company respectively, handle the matters handed over by the general manager and deputy general managers and shall be responsible to them.
Article 32 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 XI Purchase of Equipment
Article 33 In its purchase of required raw materials, fuel, parts, means of transportation and articles for office use, etc, the joint venture company shall give first priority to purchase in China where conditions are the same.
Article 34 In case the joint venture company entrusts Party B to purchase equipment on overseas market, persons appointed by Party A shall be invited to take part in the purchasing.
Chapter XII Preparation and Construction
Article 35 During the period of preparation and construction, a preparation and construction office shall be set up under the board of directors. The preparation and construction office shall consist of ____persons, among which ____persons will be from Party A, ____persons from Party B. The preparation and construction office shall have one manager recommended by Party ____ and one deputy manager by Party ____. The manager and deputy manager shall be appointed by the board of directors.
Article 36 The preparation and construction office is responsible for the following concrete work; examining the designs of the project, signing project construction contract, organizing the purchasing and inspecting of relative equipment, materials, etc. working out the general schedule of project construction, compiling the expenditure plans, controlling project financial payments and final accounts of the project, drawing up managerial methods and keeping and piling documents, drawings, files and materials. ect, during the construction period of the project.
Article 37 A technical group with several technical personnel appointed by Party A and Party B shall be organized. The group, under the leadership of the preparation and construction office, is in charge of the examination, supervision, inspection, testing, checking and accepting, and performance checking for the project design, the quality of project, the equipment and materials and the imported technology.
Article 38 After approved upon by both parties, the establishment, remuneration and the expenses of the staff of the preparation and construction office shall be covered in the project budget.
Article 39 After having completed the project and finishing the turning over procedures, the preparation and construction office shall be dissolved upon the approval of the board of directors.
Chapter XIII Labor management
Article 40 Labor contract covering the recruitment, employment, dismissal and resignation, wages, labor insurance, welfare, rewards, penalty and other matters concerning the staff and workers of the joint venture company shall be drawn up between the joint venture company and the Trade Union of the joint venture company collectively or individually in accordance with the "Regulations of the People's Republic of China on Labor management in Joint Ventures Using Chinese and Foreign Investment and its Implementation Rules." The labor contracts shall, after being signed, be filed with the local labor management department for the record.
Article 41 The appointment of high-ranking administrative personnel recommended by both parties, their salaries, social insurance, welfare and the standard of traveling expenses, etc. shall be decided by the meeting of the board of directors.
Chapter XIV Taxes, Finance and Andit
Article 42 Joint Venture company shall pay various taxes in accordance with the stipulations of Chinese laws and other relative regulations.
Article 43 Staff members and workers of the joint venture company shall pay individual income tax according to the "Individual Income Tax Law of the People's Republic of China."
Article 44 Allocations for reserve funds, expansion funds of the joint venture company and welfare funds and bonuses for staff and workers shall be set aside in accordance with the simulations of the "Law of the People's Republic of China on Joint Ventures Using Chinese and Foreign Investment". The annual proportion of allocation shall be decided by the board of directors according to the business situations of the joint venture company.
Article 45 The fiscal year of the joint venture company shall be from January 1 to December 31. All vouchers, receipts, statistic statements and reports, account books shall be written in Chinese. (Note: A foreign language can be used concurrently with mutual consent.)
Article 46 Financial checking and examination of the joint 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 is necessary to employ a foreign auditor registered in other country to undertake annual financial checking and examination, Party A shall give its consent. All the expenses thereof shall be borne by Party B. In case Party B considers it is necessary to employ a foreign auditor registered in other 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 47 In the first three months of each fiscal year, the general manager shall prepare previous year's balance sheet, profit and loss statement and proposal regarding the distribution of profits, and submit them to the board of directors for examination and approval.
Chapter XV Duration of the Joint Venture
Article 48 The duration of the joint venture company is ____years. The establishment of the joint venture company shall start from the date on which the business license of the joint 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 Economic Relations and Trade (or the examination and approval authority entrusted by it) six months prior to the expire date of the joint venture.
Chapter XVI The Disposal of Assets After the Expiration of the Duration
Article 49 Upon the expiration of the duration or termination before the date of expiration of the joint venture, liquidation shall be carried out according to the relevant law. The liquidated assets shall be distributed in accordance with the proportion of investment contributed by Party A and Party B.
Chapter XVII Insurance
Article 50 Insurance policies of the joint venture company on various kinds of risks shall be underwritten with the People's Insurance Company of China. Types, the value and duration of insurance shall be decided by the board of directors in accordance with the stipulations of the People's Insurance Company of China.
Chapter XVIII The Amendment, Alteration and Termination of the Contract
Article 51 The amendment of the contract or other appendices shall come into force only after the written agreement signed by Party A and Party B and approved by the original examination and approval authority.
Article 52 In case of inability to prefer the contract or to continue operation due to heavy losses in successive years, force majeure, or not being able, the duration of the joint venture and the contract shall be terminated before the time of expiration after unanimously agreed upon by the board of directors and approved by the original examination and approval authority.
Article 53 Should the joint venture company be unable to continue its operations or achieve the business purpose stipulated in the contract due to the fact that one of the contracting parties fails to fulfill the obligations prescribed by the contract and articles of association, or seriously violate the stipulations of the contract and articles of association, the party shall be deemed as unilaterally terminates the contract. The other party shall have the right to terminate the contract in accordance with the provisions of the contract after approved by the original examination and approval authority as well as to claim damages. In case Party A and Party B of the joint venture company agree to continue the operation, the party who fails to fulfill the obligations shall be liable to the economic losses thus caused to the joint venture company.
Chapter XIX Liabilities for Breach of Contract
Article 54 Should either Party A or Party B fails to pay on schedule the contributions in accordance with the provisions defined in Chapter 5 of this contract, the breaching party shall pay to the other party ____% of the contribution starting from the first month after exceeding the time limit. Should the breaching party fails to pay after 3 months, an accumulative total of ____% of contribution shall be paid to the other party. In addition, the other party shall have the right to terminate the contract and to claim damages to the breaching party in accordance with the stipulations in Article 53 of the contract.
Article 55 Should all or part of the contract and its appendices be unable to the fulfilled owing to the fault of one party, the breaching party shall bear the responsibilities thus caused. Should it be the fault of both parties, they shall bear their respective responsibilities according to actual situations.
Article 56 In order to guarantee the performance of the contract and its appendices, both Party A and Party B shall provide each other the bank guarantees for the performance of the contract.
Chapter XX Force Majeure
Article 57 Should either of the parties to the contract by prevented from executing the contract by force majeure, such as earthquake, typhoon, flood, fire and war and other unforeseen events, and their happening and consequences are unpreventable and unavoidable, the prevented party shall notify the other party by cable without any delay, and within 15 days thereafter provide the detailed information of the events and a valid document for evidence issued by the relevant public notary organization for explaining the reason of its inability to execute or delay the execution of all or part of the contract. Both parties shall, through consolations, decide whether to terminate the contract or to exempt the part of 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 XXI Applicable Law
Article 58 The formation of this contract, its validity, interpretation, execution and settlement of disputes shall be governed by the laws of the People's Republic of China.
Chapter XXII Settlement of Disputes
Article 59 Any dispute arising from or in connection with this contract shall be submitted to China International Economic and Trade Arbitration Commission, South China Sub-Commission for arbitration which shall be conducted in accordance with the Commission's arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
Article 60 During the arbitration, the contract shall be executed continually by both parties except for matters in disputes.
Chapter XXIII Language
Article 61 The contract shall be written in Chinese version and in ____version. Both languages are equally authentic. In the event of any discrepancy between the two aforementioned versions, the Chinese version shall prevail.
Chapter XXIV Effectiveness of the Contract and Others
Article 62 The appendices drawn up in accordance with various principles of this contract are integral part of this contract, including: the project agreement, the technology transfer agreement, the sales agreement......
Article 63 The contract and its appendices shall come into force beginning from the date of approval by the Ministry of Foreign Economic Relations and Trade of the People's Republic of China (or its entrusted examination and approval authority).
Article 64 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 addressee's addresses.
Article 65 The contract is signed at ____, China by the authorized representative of both parties on ____, 20____.
For Party A ： For Party B：
(Signature) (Signature)
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