Article 16. Articles of association shall include the
following main items:
(1) The name of the joint venture and its legal address;
(2) The purpose, business scope and duration of the joint venture;
(3) The names, countries of registration and legal addresses of
parties to the joint venture, and the names, professions and
nationalities of the legal representatives thereof;
(4) The total amount of investment, registered capital of the joint
venture, each party's investment proportion, stipulations concerning
the assignment of investment, the ratio of profit distribution and
losses to be borne by parties to the joint venture;
(5) The composition of the board of directors, its responsibilities,
powers and rules of procedure, the term of office of the
directors, and the responsibilities of its chairman and vice-chairman;
(6) The setting up of management organizations, rules for handling
routine affairs, the responsibilities of the general manager,
deputy general manager and other high-ranking management
personnel, and the method of their appointment and dismissal;
(7) Principles governing finance, accounting and auditing;
(8) Dissolution and liquidation;
(9) Procedures for amendment of the articles of association.
Article 17. The agreement, contract and articles of association
shall come into force after being approved by the examination
and approval authority. The same applies in the event of amendments.
Article 18. The examination and approval authority and the
registration and administration office are responsible for
supervising and inspecting the execution of the joint venture contracts
and articles of association.
CHAPTER III FORM OF ORGANIZATION AND REGISTERED CAPITAL
Article 19. A joint venture is a limited liability company.
Each party to the joint venture is liable to the joint venture
within the limit of the capital subscribed by it.
Article 20. The total amount of investment (including loans) of a
joint venture refers to the sum of capital construction funds and the
circulating funds needed for the joint venture's production scale as
stipulated in the contract and the articles of association of the joint
venture.
Article 21. The registered capital shall generally be
presented in total amount of investment registered at the
registration and administration office for the establishment of the
joint venture. It should be the total amount of investment
subscribed by parties to the joint venture.
The registered capital shall generally be presented in Renminbi, or
may be in a foreign currency agreed upon by the parties to the joint
venture.
Article 22. A joint venture shall not reduce its registered
capital during the term of the joint venture.
Article 23. If one party to the joint venture intends to assign
all or part of his investment 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 required.
When one party assigns all or part of his investment to a third
party, the other party has pre-emptive right.
When one party assigns his investment subscribed to a third
party, the conditions given shall not be more favourable than those
given to the other party to the joint venture.
No assignment shall be made effective should there be any violation
of the above stipulations.
Article 24. Any increase, assignment or other disposal
of the registered capital of a joint venture shall be approved by a
meeting of the board of directors and submitted to the original
examination and approval authority for approval. Registration
procedures for changes shall be dealt with at the original registration
and administration office.
CHAPTER IV WAYS OF CONTRIBUTING INVESTMENT
Article 25. Each participant to a joint venture may contribute
cash or buildings, premises, equipment or other materials,
industrial property, know-how, right to the use of a site as
investment, the value of which shall be ascertained. If the
investment is in the form of buildings, premises, equipment or
other materials, industrial property or known-how, the prices shall
be ascertained through consultation by the parties to the joint
venture on the basis of fairness and reasonableness, or evaluated by
the third party agreed upon by parties to the joint venture.
Article 26. The foreign currency contributed by the foreign
participant shall be converted into Renminbi according to the
exchange rate announced by the State General Administration of
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