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Wholly Foreign-Owned Enterprise Law
(Adopted at the Fourth Session of the Sixth National People's Congress on 12 April 1986, and amended in accordance with the Decision of the 18th Session of the Standing Committee of the Ninth National People's Congress on Revising the Wholly Foreign-Owned Enterprise Law of the People's Republic of China adopted on 31 October 2000)

 Article 1    In order to increase foreign economic cooperation and technology exchange and promote the development of China's national economy, the People's Republic of China permits foreign enterprises and other economic organizations or individuals (hereinafter, "Foreign Investors") to establish wholly foreign-owned enterprises (hereinafter, "WFOEs") in China and protects the lawful rights and interests of WFOEs.

 Article 2    For the purposes of this Law, a WFOE refers to an enterprise established in China under the relevant laws of China with its capital fully invested by Foreign Investors, excluding the branches of foreign enterprises and other economic organizations in China.

 Article 3    The establishment of WFOEs must benefit the development of China's national economy. The State encourages the establishment of export-oriented or technologically advanced WFOEs.
Industries in which the State prohibits or restricts the establishment of WFOEs shall be specified by the State Council.

 Article 4    Foreign Investors' investments, profits gained, and other lawful rights and interests in China shall be protected by Chinese laws.
WFOEs must comply with the laws and regulations of China, and shall not harm the social public interest of China.

 Article 5    The State does not nationalize and expropriate any WFOE, provided that the State may, under special circumstances and as required by the social public interest, expropriate a WFOE in accordance with the statutory procedures and shall compensate thereto accordingly.

 Article 6    The application for the establishment of WFOEs shall be subject to the examination and approval of the State Council's department in charge of foreign economic relations and trade or an authority authorized by the State Council. Within 90 days of the date of receipt of an application, the examination and approval authority shall decide whether or not to grant the approval.

 Article 7    After application for the establishment of a WFOE is approved, the Foreign Investors shall, within 30 days of the date of receipt of the approval certificate, apply registration to and collect the business license from, the administrative authority for industry and commerce. The date of issuance of the business license of the WFOE shall be the date of the establishment of the enterprise.

 Article 8    A WFOE that complies with the provisions of the laws of China regarding the legal person qualifications shall be qualified to be a Chinese legal person in accordance with the law.

 Article 9    A WFOE shall make investment within the territory of China and the time limit approved by the relevant examination and approval authority. Failure to make the investment shall render the business license thereof revoked by the relevant administrative authority for industry and commerce.
The relevant administrative authority for industry and commerce shall carry out inspection and supervision over the investment status of WFOEs.

 Article 10    The division, merger, and change of other major matters of WFOEs shall be reported to the relevant examination and approval authority for approval, and shall be subject to going through the formalities for change of registration with the relevant administrative authority for industry and commerce.

 Article 11    WFOEs carry out operation and management activities according to the approved articles of association, without being subject to any interference.

 Article 12    A WFOE that employs any Chinese employee shall conclude a contract in accordance with the law, and shall specify therein the matters such as employment, dismissal, remuneration, welfare, labor protection, and labor insurance.

 Article 13    The staff members of a WFOE establish a labor union organization in accordance with the law to carry out labor union activities and safeguard the employees' lawful rights and interests.
A WFOE shall provide, to the labor union of its own, the necessary conditions for carrying out activities.

 Article 14    A WFOE must set up accounting books inside China, adopt an independent accounting system, submit the account statements in accordance with the relevant provisions, and be subject to the supervision of the financial and taxation authorities.
Where a WFOE refuses to set up accounting books inside China, the relevant financial and taxation authorities may impose a fine thereon, and the relevant administrative authority for industry and commerce may order it to cease business operation or revoke its business license.

 Article 15    The supplies such as raw materials and fuel as required by a WFOE within the approved business scope may be purchased on the domestic or international market based on the principles of fairness and reasonableness.

 Article 16    All insurances of a WFOE shall be covered by insurance companies within China.

 Article 17    Pursuant to the taxation-related provisions of the State, WFOEs shall pay taxes and may be entitled to the preferential treatment of tax reduction or exemption.
Where a WFOE makes any reinvestment in China with its profit after payment of  income taxes, it may apply for a refund of the part of income taxes corresponding to the part of profit used for reinvestment.

 Article 18    Matters concerning the foreign exchange of a WFOE shall be handled in accordance with the provisions of the State regarding foreign exchange administration.
A WFOE shall open an account with the Bank of China or a bank designated by the State administrative department in charge of foreign exchange.

 Article 19    Foreign Investors may remit abroad lawful profits obtained from a WFOE, other legitimate incomes and funds after liquidation.
Foreign employees of a WFOE may, upon payment of individual income tax under the law, remit their salary-earnings and other legitimate incomes abroad.

 Article 20    The duration of operation of a WFOE shall be proposed and reported by the Foreign Investor thereto and approved by the relevant examination and approval authority. Where the duration of operation of a WFOE needs to be extended, the application shall be filed with the relevant examination and approval authority at least 180 days in advance before the duration expires. Such authority shall, within 30 days of receiving the application, decide whether to grant the approval or not.

 Article 21    In the event of termination of a WFOE, an announcement shall be made in a timely manner, and the liquidation shall be conducted according to the statutory procedures.
Before completion of the liquidation, Foreign Investors shall not dispose of any property of the enterprise unless for the purpose of carrying out the liquidation.

 Article 22    In the event of termination of a WFOE, the deregistration formalities shall be gone through with the administrative authority for industry and commerce, and the business license shall be handed in to the authority for cancellation.

 Article 23    The State Council's department in charge of foreign economic relations and trade shall formulate the detailed implementing rules in accordance with this Law, and those rules shall take effect after being submitted to and approved by the State Council.

 Article 24    This Law shall take effect as of the promulgation date.
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