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Rsearchlsearchs Online Osprey lx Loan b Flexiblemorgage e Osprey c Mortgage G Online o Fast a Fast s Flexible acsearchrF Flexiblemorgage esearchi Osprey lsearch mlm Flexible nsearchasearchi 2011 nRsearchlsearchsUnder the CJV rules and the CJV Law, a cooperative joint venture (CJV) can take the form of a company with limited liability (or a legal person) or a venture without the status of a legal person, which is akin to a partnership.
Where a CJV is without the status of a legal person, the following conditions must be met:
- the investment in the venture can be separately owned by each cooperative partner; accumulated profits or property of the joint venture belong to the parties;
- the responsibility of administering the joint venture lies with a joint administration and control committee whose members are elected by the parties; and
- the joint venture must keep unified books of account in addition to the independent accounting records kept by each partner.
The flexibility inherent in the contractual joint venture makes it particularly suited to certain types of investment. It tends to be utilized for the smaller businesses, where a corporate structure is inappropriate, and especially for joint ventures in which the chief contribution of the Chinese partner takes the form of the right to use land or resources.
Most joint ventures involving mining and quarrying or agriculture are contractual, as are those for the construction of apartments or hotels. Typically, for example, a hotel project will involve the Chinese party supplying the land, construction materials and labour, while the foreign party supplies capital, architectural designs and management expertise: profits will be shared for a number of years, frequently 10, at the end of which the hotel will pass to the Chinese party. This type of arrangement would be inappropriate for an equity joint venture, where each party contributes capital which belongs to the joint venture, and where profits are shared in proportion to capital contribution.
Offshore oil drilling also requires a special form of cooperative operation, specified in a standard contract formulated by the China National Offshore Oil Corporation, under which the foreign investor assumes exclusive responsibility for all risks relating to the exploration and, once oil is discovered, joint exploitation will be financed by the Chinese and foreign parties and the product shared according to the contract.
To establish a CJV, the following documents are required to be submitted by the Chinese partner to the Examination and Approval Department:
1. project proposal of the joint venture together with the documents for approval by the department in charge;
2. the feasibility study report prepared by all the parties involved;
3. authorized legal documents of the joint venture such as contract, agreement and articles of association;
4. business licence or registration certificate, capital guarantee certificate and all related valid documents of the parties;
5. a list of proposed personnel, such as chairman, deputy chairman, and members of the management committee of the joint venture;
6. any other documents requested.
In principle, the documents listed above shall be written in Chinese, except the documents in item 4. to be presented by the foreign party. Each of the documents required under items 2., 3. and 5. may be accompanied by a version of a foreign language agreed upon by all parties to the CJV.
The Examination and Approval Authority must make a decision on the application within 45 days after the submission of the documents. Where the Examination and Approval Authority is MOFTEC or another agency authorized by the State Council, all the approval certificates must be issued by the MOFTEC. If the Examination and Approval Authority is a local government, the approval certificates are issued by the local government, and are submitted to MOFTEC for information purposes within 30 days after the approval is obtained.
The CJV rules specify that approval of a CJV will not be granted if the proposed joint venture:
- would cause harm to
- would be a threat to
- would cause pollution to the environment;
- would be against the public interest, or violate Chinese laws or the state industrial policy.
The joint-venture contract must include the following items:
1. the names, place of registration, residence and personal data of the legal representative of the partners (if the person is a foreign national, the contract must also include his or her nationality and place of residence);
2. the name, site and scope of business of the joint venture;
3. the joint venture's total capital investment, registered capital, investment of each partner or term of operation, and conditions of cooperation;
4. investment of each partner and the conditions for transfer of the investment;
5. profit distribution, and sharing of risks and losses;
6. details about members of the board of directors and dismissal and recruitment of managers of the joint venture;
7. the major production equipment and technology and its source;
8. sale arrangements for the joint venture's products in
9. arrangements for the income and expenses in foreign exchange;
10. accounting and auditing standards or principles to be used;
11. methods for resolving disputes among the partners, and other obligations and responsibilities of each partner in case of breach of contract;
12. financial, accounting and auditing guidelines for the joint venture;
13. the procedures for revising the articles of association of the joint venture; and
14. duration, dissolution and liquidation of the cooperative joint venture.
The Cooperative Joint-Venture Law makes no mention of total investment and registered capital. The provisions of the Equity Joint-Venture Law and Regulations are usually applied by analogy.
Capital contributions by the parties in a cooperative joint venture may take any of the forms applicable to equity joint ventures under Arts. 8 and 9 of the Cooperative Joint-Venture Law. These include industrial property rights and know-how, buildings, plant and equipment, land-use rights and cash. (See
In addition, the parties to a cooperative joint venture may also contribute natural resource rights, labour and utilities, none of which is permitted under the Equity Joint-Venture Law.
There is no minimum requirement of foreign contribution to a cooperative joint venture without legal person status.
The treatment of capital contributions in a cooperative joint venture which is a contractual joint venture, and a joint-venture company with the status of a legal person, may differ considerably:
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