The Ministry of Foreign Trade and Economic Cooperation Principles for Approval and Essentials for Examination to Contracts and Articles of Association of Enterprises with Foreign Investment October 5, 1993 To strengthen the control of approvals to enterprises with foreign investment, the following principles for approval and essentials 1. Basic principles for examining and approving contracts and articles of association: (1) To see to whether the contracts or articles of association concerned should comply with the laws and regulations of the People’s Republic (2) To see to whether the contracts or articles or association concerned meet the requirements for the contents of the feasibility study (3) To see to whether the contracts or articles of association concerned follow the principle of equality and mutual benefit. 2. Essentials for examining the contracts and articles of association: (1) Legitimacy of the contracts and articles of association, including whether time and place in which the contracts or articles of association (2) Whether there are any necessary contents missing in the contracts and articles of association concerned and whether the documents (3) Whether there are any articles in the contracts and articles of association involving matters concerning the government and/or restrictions (4) For projects on which the State restricts the use of foreign funds, projects that require the import of machinery and electronic equipment (5) Whether there is a clear definition on the scope of business and whether the wordings have been properly and strictly addressed; (6) The proportions of investment shared by various sides, the proportion of total investment to the registered capital, the form and (7) Whether the terms of technical transfer conform to the State’s Control Regulations for Technical Import Contracts and the provisions (8) Whether the purchase of equipment and raw and processed materials, the proportions of products to be sold domestically and abroad, (9) Whether the methods for balancing foreign exchange are feasible; (10) Wages and welfare for Chinese and foreign workers and staff members; (11) Make-up of the board of directors, the extent of its authority, the procedure for calling meetings of the board of directors, the (12) The settlement of disputes and the punishment for breach of contract; (13) How the assets would be disposed upon the termination, dissolutions and clearing of the enterprises with foreign investment; (14) Whether the contracts and articles of association and supplements concerned are in full standardization and meet the requirements 3. Contents that should be included in the document of approval for the contracts and articles of association. The document of approval for the contracts and articles of association should not be too simple and general in content but include (1) Names of the enterprises with foreign investment and all the partners; (2) The scopes of business and production scales; (3) Total investments, registered capitals, proportions of investment shared by all parties, and forms of investment, and the principles (4) Terms of operation; (5) Confirmations to the lists of equipment to be imported; (6) Other issues should be emphasized by approval organs. The above contents should be carefully and accurately addressed in the approval documents. 4. Others (1) Chinese is the standard language for the documents that need to be examined and approved by the examining and approval organs. All (2) Technical transfer agreements and contracts for entrusting operation and management or for contracting operation should be submitted (3) If there should be any problems of principle discovered in the contracts and articles of association of enterprises with foreign investment, |
The Ministry of Foreign Trade and Economic Cooperation
1993-10-05