Legal characteristics of Chinese-foreign cooperative enterprises

(1) Different from the constitution principle of a Sino-foreign joint venture, the investment, income distribution, risk and debt sharing of the Chinese and foreign partners in a Sino-foreign cooperative venture, and the distribution of the remaining property when the enterprise terminates, etc.

The enterprise is agreed by both parties in the cooperation contract. Generally, it is not directly related to the investment ratio of all parties, and the investment, income distribution and risk debt sharing of all partners in the cooperative enterprise are not calculated by equity. The rights and obligations enjoyed by partners have nothing to do with capital contribution.

(2) Different ways of capital contribution of Sino-foreign joint ventures. Where all parties to a Chinese-foreign contractual joint venture make contributions in kind or provide cooperation conditions such as site use rights and industrial property rights, they will generally not be discounted, and the proportion of contributions made by all parties will not be calculated. From the legal point of view, there is no legal requirement for the proportion of foreign investment in Chinese-foreign cooperative enterprises.

(3) Different from the distribution mode of Sino-foreign joint ventures. The income distribution of the parties to a Sino-foreign joint venture is based on their investment proportion in the after-tax profits of the enterprise. However, the income distribution of Chinese-foreign cooperative enterprises is diverse, and there are probably great differences in the choice of distribution methods between enterprises.

Some enterprises distribute income after tax, while others directly distribute products or business income before tax. Either distribution method shall be determined by both parties through consultation. Finally, it is realized in the contract text.

(4) Different ways of investment recovery for Sino-foreign joint ventures. A Chinese-foreign equity joint venture shall not reduce its registered capital without authorization during the joint venture, and all parties to the joint venture may recover the investment principal from the remaining property of the enterprise after paying off its debts.

Chinese-foreign cooperative enterprises are different. According to the law, if the Chinese and foreign parties agree in the cooperation contract that all the fixed assets of the contractual joint venture will be owned by the China partner at the expiration of the cooperation term, they may agree in the contractual joint venture contract that both the Chinese and foreign parties will recover the investment first during the cooperation term, but they shall still be liable for the debts of the contractual joint venture in accordance with the provisions of relevant laws and contracts.

You can recover your investment in advance by sharing more profits, products or extracting depreciation expenses of fixed assets.

(5) Having an internal organization different from that of a Sino-foreign joint venture. Sino-foreign joint ventures, as long as they take the form of limited liability organizations, must set up a board of directors in accordance with the law and stipulate the composition of the board of directors; The rules of procedure must conform to the law.

A Chinese-foreign contractual joint venture may establish a joint management organization without a board of directors according to law, and the members of the joint management organization decide on major issues of the enterprise. The joint management institution may decide to appoint or hire the general manager to be responsible for the daily operation and management of the contractual joint venture. The general manager is responsible to the joint management organization.

In addition, the Chinese-foreign contractual joint venture has been unanimously agreed by the joint management institution in accordance with the law; People other than Chinese and foreign partners can be hired to operate and manage, especially hotel catering, real estate and public transportation services.