Foreign Investment Enterprise Law of the People’s Republic of China

中华人民共和国 外资企业法

The “Law of the People’s Republic of China on Foreign-funded Enterprises” was formulated to expand foreign economic cooperation and technological exchanges, promote the development of China’s national economy, allow foreign enterprises and other economic organizations or individuals to establish foreign-funded enterprises in China, and protect the legal rights and interests of foreign-funded enterprises.

 Revised and adopted by the Eighteenth Meeting of the Standing Committee of the Ninth National People’s Congress of the People’s Republic of China on October 31, 2000, based on the 22nd Meeting of the Standing Committee of the Twelfth National People’s Congress on September 3, 2016 The second amendment to the “Decision on Amending the “Law of the People’s Republic of China on Foreign-Funded Enterprises” and other four laws” was revised for the second time on the date of promulgation.

On March 15, 2019, the Second Session of the Thirteenth National People’s Congress passed the “Foreign Investment Law of the People’s Republic of China”, which will come into force on January 1, 2020. The “Law of the People’s Republic of China on Foreign-funded Enterprises” shall be repealed at the same time.

Chinese name: 中华人民共和国外资企业法
Formulation agency: Standing Committee of the National People’s Congress
Last revision time: September 3, 2016
Implementation time: October 31, 2000
References: 
1. Detailed Rules for the Implementation of the Law of the People’s Republic of China on Foreign-funded Enterprises. Company registration network [reference date 2012-11-16]
2. (The two sessions are authorized to issue) Foreign Investment Law of the People’s Republic of China. Xinhuanet cited date 2019-03-21

DISCLAIMER: THIS ENGLISH TRANSLATION OF THE LAW IS NOT AN OFFICIAL TRANSLATION. THIS TRANSLATION IS FOR INFORMATION PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR THE LAW WHICH SHALL PREVAIL. THE ONLY OFFICIAL VERSION OF THE LAW IS THE CHINESE VERSION WHICH HAS BEEN APPROVED BY THE COMPETENT BODY OF THE ISSUER AND PREPARED AND PUBLISHED ACCORDING TO CHINESE LAW AND REGULATIONS.

Revise history

(Adopted at the Fourth Session of the Sixth National People’s Congress on April 12, 1986 》” The first amendment was based on the “Decision on Amending Four Laws including the “Foreign Investment Enterprise Law of the People’s Republic of China” at the 22nd Meeting of the Standing Committee of the Twelfth National People’s Congress on September 3, 2016. Amendments)

Legal provisions

(2016 revised)

Article I. 

In order to expand foreign economic cooperation and technological exchanges, and promote the development of China’s national economy, the People’s Republic of China allows foreign enterprises and other economic organizations or individuals (hereinafter referred to as foreign investors) to establish foreign-funded enterprises in China and protect the Legal rights.

Article 2

The term “foreign-funded enterprises” as used in this law refers to enterprises established in China in accordance with relevant Chinese laws, with all capital invested by foreign investors, excluding foreign enterprises and branches of other economic organizations in China.

Article 3

The establishment of foreign-funded enterprises must be conducive to the development of China’s national economy. The State encourages the establishment of foreign-funded enterprises that export products or are technologically advanced.

The industries in which the state prohibits or restricts the establishment of foreign-funded enterprises shall be stipulated by the State Council.

Article 4

The investment, profits and other legitimate rights and interests of foreign investors in China shall be protected by Chinese law.

Foreign-funded enterprises must abide by Chinese laws and regulations, and must not harm China’s social and public interests.

Article 5

The state does not implement nationalization and expropriation of foreign-funded enterprises; under special circumstances, according to the needs of social public interest, foreign-funded enterprises may be expropriated in accordance with legal procedures and corresponding compensations will be given.

Article 6

The application for the establishment of a foreign-funded enterprise shall be examined and approved by the foreign economic and trade department of the State Council or an agency authorized by the State Council. The examination and approval authority shall decide whether to approve or disapprove within 90 days from the date of receipt of the application.

Article 7

After the application for the establishment of a foreign-funded enterprise is approved, the foreign investor shall, within 30 days from the date of receiving the approval certificate, apply to the administrative department for industry and commerce for registration and obtain a business license. The date of issuance of the business license of a foreign-funded enterprise shall be the date of establishment of the enterprise.

Article 8

A foreign-funded enterprise that meets the requirements of Chinese law on the requirements of a legal person shall obtain the status of a Chinese legal person in accordance with the law.

Article 9

A foreign-funded enterprise shall invest in China within the time limit approved by the examination and approval authority; if it fails to invest within the time limit, the industry and commerce administration authority has the right to revoke its business license.

The administration for industry and commerce shall inspect and supervise the investment situation of foreign-funded enterprises.

Article 10

If a foreign-funded enterprise separates, merges, or changes other important matters, it shall report to the examination and approval authority for approval, and go through the formalities for the change registration with the administrative authority for industry and commerce.

Article 11

Foreign-funded enterprises shall conduct business management activities in accordance with the approved articles of association without interference.

Article 12

Foreign-funded enterprises hiring Chinese employees shall sign a contract in accordance with the law, and stipulate the employment, dismissal, remuneration, welfare, labor protection, labor insurance and other matters in the contract.

Article 13

Workers of foreign-funded enterprises shall establish trade union organizations in accordance with the law to carry out trade union activities and safeguard the legitimate rights and interests of employees.

A foreign-funded enterprise shall provide necessary conditions for the activities of the trade union of the enterprise.

Article 14

Foreign-funded enterprises must set up accounting books in China, conduct independent accounting, submit accounting statements in accordance with regulations, and accept the supervision of financial and taxation authorities.

If a foreign-capital enterprise refuses to set up accounting books in China, the financial and taxation authority may impose a fine, and the industry and commerce administration authority may order it to cease operations or revoke its business license.

Article 15

The raw materials, fuels and other materials required by the foreign-funded enterprise within the approved business scope may be purchased on the domestic market or on the international market in accordance with the principles of fairness and reasonableness.

Article 16

The various insurances of foreign-funded enterprises shall be insured by insurance companies in China.

Article 17

Foreign-funded enterprises pay taxes in accordance with relevant state tax regulations and can enjoy preferential treatment of tax reduction and exemption.

If a foreign-funded enterprise reinvests its profits after paying income tax in China, it may apply for a refund of part of the income tax paid for the reinvested part in accordance with national regulations.

Article 18

Foreign exchange matters of foreign-funded enterprises shall be handled in accordance with the state’s foreign exchange management regulations.

A foreign-funded enterprise shall open an account with the Bank of China or a bank designated by the state foreign exchange administration authority.

Article 19

The legal profits, other legal income and liquidation funds obtained by foreign investors from foreign-funded enterprises can be remitted abroad.

Wages and other legitimate income of foreign employees of foreign-funded enterprises may be remitted abroad after personal income tax has been paid in accordance with the law.

Article 20

The operating period of a foreign-funded enterprise shall be declared by the foreign investor and approved by the examination and approval authority. If an extension is required at the expiration of the time limit, an application shall be submitted to the examination and approval authority 180 days before the expiration of the time limit. The examination and approval authority shall decide whether to approve or disapprove within 30 days from the date of receipt of the application.

Article 21

When a foreign-funded enterprise terminates, it shall make a timely announcement and conduct liquidation in accordance with legal procedures.

Before the liquidation is completed, foreign investors shall not dispose of the property of the enterprise except for the purpose of executing the liquidation.

Article 22

When a foreign-funded enterprise terminates, it shall go through the procedures for cancellation of registration with the administrative department for industry and commerce and hand in its business license for cancellation.

Article 23

If the establishment of a foreign-funded enterprise does not involve the implementation of special access management measures as prescribed by the state, the filing management shall be applied to the examination and approval matters specified in Article 6, Article 10, and Article 20 of this Law. The special access management measures prescribed by the State shall be promulgated or approved by the State Council.

Article 24

The competent department of foreign economic relations and trade of the State Council shall formulate implementation rules in accordance with this Law, which shall be implemented after being approved by the State Council.

Article 25

This law shall come into force on the date of promulgation.

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