REGISTRATION OF SINO-FOREIGN COOPERATIVE JOINT VENTURES
Introduction to Cooperative Joint Ventures
In a Sino-Foreign Cooperative Venture (also known as Contractual Joint Venture, CJVs), the parties involved may operate
as separate legal entities and bear liabilities independently
rather than as a single entity. A Cooperative Joint venture may
also be registered as a limited liability entity resembling
an Equity Joint Venture in operation, structure, and status
as a Chinese legal entity.
There is no minimum foreign contribution required to initiate
a cooperative venture, allowing a foreign company to take
part in an enterprise where they preferred to remain a minor
shareholder. The contributions made by the investors are not
required to be expressed in a monetary value and can include
excluded in the equity joint venture process can be contributed
such as labor, resources, and services. Profits in a cooperative
venture are divided according to the terms of the cooperative
venture contract rather than by investment share, allowing
a more flexible schedule for return on investment in cases
where one investor provides cash while the other party's investment
is primarily in kind.
Greater flexibility in the structuring of a cooperative venture
is also permissible including the structure of the organization,
management, and assets. There is no term for unlimited terms
in cooperative ventures, but also no provisions for the term
of the duration. The term of the cooperative venture contract
may be renewed subject to the consent of the parties involved
and approval from the examination and approval authorities.
The foreign investor is permitted to withdraw their registered
capital or a portion thereof from the cooperative venture
during the duration of the cooperative venture contract.
Because of the unique privileges and added features offered
to the foreign party in a cooperative venture, trade unions
must be allowed to represent the employees in employment matters
to protect the interests of the employees.
See also: Law of the People's Republic of China on
Chinese-Foreign Contractual Joint Ventures
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