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	CIRCULAR OF THE GENERAL OFFICE OF THE MINISTRY OF COMMERCE ON FORWARDING THE REPLY OF THE OFFICE OF LEGISLATIVE AFFAIRS OF THE STATE COUNCIL ON THE SPECIFIC APPLICATION OF CAPITAL CONTRIBUTION AND LIQUIDATION OF INVESTORS OF FOREIGN-FUNDED ENTERPRISES

	(No.32 [2005] of the Ministry of Commerce, March 18, 2005)


SUBJECT : FOREIGN-FUNDED ENTERPRISES; INVESTORS' CAPITAL CONTRIBUTION AND LIQUIDATION
ISSUING DEPARTMENT : MINISTRY OF COMMERCE OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 03/18/2005
IMPLEMENT DATE : 03/18/2005
LENGTH : 607 words
TEXT :

Some Provisions on the Capital Contribution by the Parties to a Sino-Foreign Joint Equity Enterprise (approved by the State Council on December 30, 1987, hereinafter referred to as the Some Provisions on Capital Contribution), the Supplementary Provisions Regarding Some Provisions on the Capital Contribution by the Parties to a Sino-Foreign Joint Equity Enterprise (approved by the State Council on September 2, 1997, Order No. 2 of the Ministry of Foreign Trade and Economic Cooperation and the State Administration of Industry and Commerce) and the Procedures of Liquidation of Foreign-funded Enterprises (approved by the State Council on June 15, 1996, Order No. 2 [1996] of the Ministry of Foreign Trade and Economic Cooperation), these three administrative documents have played an important role in regulating the work regarding the use of foreign capital and promoting foreign-funded enterprises in China to develop in a healthy manner. However, in the practice of the Ministry of Commerce and the local administrative departments of commerce at all levels, there still exist some troublesome problems concerning the implementation of the aforesaid provisions. For example, where the parties to a foreign-funded enterprise have disagreement in the payment or settlement of the capital contribution, how shall the examination and approval organ apply the relevant provisions of Article 7 of the Provisions on the Capital Contribution in practice; how shall it apply Article 7 of the Procedures of Liquidation of Foreign¨Cfunded Enterprises so as to avoid any deduction or loss of assets of the enterprise in the procedure of liquidation due to its termination of its daily business operations. The Ministry of Commerce have summed up such problems and written a letter to the Office of Legislative Affairs of the State Council to solicit the interpretation thereof. Recently, the Office of Legislative Affairs of the State Council has replied to this Ministry and further clarified the aforesaid problems.

The reply is of great importance to guiding the local administrative departments of commerce at all levels to correctly implement the relevant administrative regulations and to strictly practice administration according to law. With a view to facilitating local administrative departments of commerce to accurately understand and grasp the spirit of the reply, we hereby forward the Solicitation Letter of the Ministry of Commerce on Interpreting the Specific Application of Relevant Provisions of Some Administrative Regulations on the Capital Contribution by the Parties to Sino-foreign Equity Joint Enterprises and the Liquidation of Foreign-funded Enterprises (Order No. 27 [2005] of the Ministry of Commerce, see attachment II) and the Reply to the Solicitation Letter of the Ministry of Commerce on Interpreting the Specific Application of Relevant Provisions of Some Administrative Regulations on the Capital Contribution by the Parties to Sino-foreign Equity Joint Enterprises and the Liquidation of Foreign-funded Enterprises (Order No. 10 [2005] of the Office of Legislative Affairs of the State Council, see attachment I) to you. The local administrative departments of commerce shall earnestly study the aforesaid documents so as to incessantly elevate the administrative capability thereof. Where there occurs any problem in the implementation process, please report it to this Ministry in a timely manner.

Attachments:
1. Reply of the Office of Legislative Affairs of the State Council to the Solicitation Letter of the Ministry of Commerce on Interpreting the Specific Application of Relevant Provisions of Some Administrative Regulations on the Capital Contribution by the Parties to Sino-foreign Equity Joint Enterprises and the Liquidation of Foreign-funded Enterprises (omitted)
2. Solicitation Letter of the Ministry of Commerce on Interpreting the Specific Application of Relevant Provisions of Some Administrative Regulations on the Capital Contribution by the Parties to Sino-foreign Equity Joint Enterprises and the Liquidation of Foreign-funded Enterprises (omitted)