Law of the PRC on Foreign-funded Enterprises

Article 27 The industry property rights and proprietary technology to be contributed as investment by the foreign investor must be owned by the foreign investor.

Such industrial property rights and proprietary technology must be appraised in accordance with the relevant international rules, and the value amount of them may not exceed 20% of the registered capital of the foreign-funded enterprise.

Detailed information must be prepared for the industrial property rights and proprietary technology appraised to be contributed as investment, including the copy of certificate of the title, validity of the title, and their technical performance, practical value, and the basis and standard on and according to which the value has been appraised, and it shall be submitted to the examining and approving authority together with the application for the establishment of the foreign-funded enterprise as an attachment to the application.

Article 28 Upon arrival at any port of China of the machinery and equipment contributed as investment, the foreign-funded enterprise shall apply for inspection to China's commodity inspection authority, which shall render an inspection report.

Where the machinery and equipment contributed as investment are inconsistent with those listed in the inventory submitted by the foreign investor to the examining and approving authority in type, quality or quantity, the examining and approving authority may demand corrections by the foreign investor within a prescribed time limit.

Article 29 After the industrial property rights and proprietary technology appraised have been put to use, the examining and approving authority shall have the power to inspect them, and demand corrections by the foreign investor, within a prescribed time limit, if they are inconsistence with the industrial property rights and proprietary technology prescribed in the information submitted by the foreign investor.

Article 30 The time limit for the foreign investor to make his investment contributions must be clearly indicated in both the application for the establishment of the foreign-funded enterprise and the enterprise's articles of association. The foreign investor may contribute the investment in installments, provided that the last installment shall be made within three years from the date of issue of the business license. The first installment may not be less than 15% of the total amount to be contributed by the foreign investor, and shall be made within 90 days from the date of issue of the business license of the foreign-funded enterprise.

If the foreign investor fails to make the first installment within the time limit prescribed in the preceding paragraph, the approval certificate for the foreign-funded enterprise shall become invalid automatically, and the foreign-funded enterprise shall go through the procedures for cancellation of registration and hand in the business license for cancellation with the administrative department for industry and commerce or, if the foreign-funded enterprise fails to go through the procedures for cancellation of registration and fails to hand in the business license for cancellation, the administrative department for industry and commerce shall revoke the business license and make an announcement to the public.

Article 31 The installments other than the first one shall be made by the foreign investor within each prescribed time limit.

If an installment has not been made 30 days after the time limit, the second paragraph of the Article 30 shall apply.

If the foreign investor has any reasonable ground for the extension of time for making an installment, he should get the approval by the examining and approving authority and the extension of time shall be submitted to the administrative department for industry and commerce for record.

Article 32 For each installment made by the foreign investor, the foreign-funded enterprise shall engage a Chinese certified public accountant to make verification and render a capital verification report, which shall be submitted to the examining and approving authority and the administrative department for industry and commerce for record.

Chapter V Use of Land and the Land Use Fee

Article 33 The local people's government at or above the county level at the place where the foreign-funded enterprise is to be established shall make arrangements for the land to be used by the foreign-funded enterprise after examination and verification in the light of the local conditions.

Article 34 The foreign-funded enterprise shall, within 30 days from the date of issue of its business license, go through the procedures for use of land with and obtain land certificate from the department of land administration of the people's government at or above the county level at the place where the foreign-funded enterprise is to be established, by presenting the approval certificate and business license.

Article 35 The land certificate shall be a legal certificate by which the foreign-funded enterprise may use a certain piece of land. In its operating period, no foreign-funded enterprise may assign its right to use land without authorization.

Article 36 For obtaining land certificate, the foreign-funded enterprise must pay land use fee to the department of land administration at the place where the enterprise is to be established.

Article 37 For using developed land, the foreign-funded enterprise must pay land development fee.

The land development fee mentioned in the preceding paragraph includes the expenses for requisition of the land, and expenses for demolition and resettlement allowances, as well as expenses for the construction of infrastructure needed by the foreign-funded enterprise. The land development fee may be calculated and collected by the land development enterprise once for all or in yearly installments.