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- would be a threat to China's national safety;

- 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 China and overseas;

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.

Capital

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

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 6.4.3.)

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:

- In a true contractual joint venture such contributions are not treated as part of the "equity" or "registered capital", as they would be in an equity joint venture. Rather, they are viewed as separate contributions made by the parties to the project or undertaking. As a result, the parties to such ventures are able to avoid the problem involved in valuation of the contributions in kind.

- By contrast, capital contributions to a cooperative venture in the form of a legal person are treated in very much the same way as capital contributions to equity joint ventures.

Where the contractual joint venture has a legal person status, the joint venture's registered capital should not decrease during the term of operation, unless the decrease is warranted by alterations in the scope of the business. However, any decrease in registered capital due to changes in the scope of the business and investment must be approved by the authorities.

Where partners do not provide capital within the time frame as agreed, the relevant government department can require them to do so, and in the event of failure to do so, the joint venture's business licence may be revoked. The partner who fails to meet the agreed conditions or capital requirements is responsible to the other parties that have already provided the required investment as stated in the contract.

The CJV rules specify that the foreign partner(s) in a CJV with legal person status must contribute 25% or more of the joint venture's registered capital. This requirement does not apply to a CJV that does not have a legal person status. The capital requirement of a foreign partner in such a joint venture is determined by the MOFTEC.

After the contribution of capital by the partners and the issue of an examination report by registered Chinese accountants, the joint venture must issue a capital contribution certificate to all the partners. The certificate must contain the following information:

- the name of the joint venture;

- the date of the formation of the CJV;

- the names of each of the joint partners;

- the contents of the conditions for cooperation and each partner's capital contribution;

- the date and method of capital contribution of each partner; and

- the serial number and the date of the capital contribution certificate.