Laws of the People's Republic of China

The State Administration for Industry and Commerce

Reply of the Department of Enterprise Registration of the State Administration for Industry and Commerce on the Request for Instructions on Whether a Chinese Enterprise May Retain its Capacity as an Independent Business Entity in Case of Full Investment in an Enterprise with Foreign Investment

QiWaiZi [1987] No.60

October 21, 1987

Wuhan Administration for Industry and Commerce:

We have studied your Request for Instructions on your Administration on Whether a Chinese Enterprise May Retain its Capacity as an Independent Business Entity in Case of Full Investment in an Enterprise with Foreign Investment (GongShangWaiZi[1987] No.67) and now reply as follows:

In view of the fact that a Chinese enterprise making full investment in a Chinese-foreign equity joint venture still needs to execute contracts and statutes, share profits and bear risks as an independent business entity, therefore it should retain its corporate capacity as an independent business entity and be examined and punished for any lawbreaking misconduct.

In future, the name of the newly-established Chinese-foreign equity joint venture should be distinguishable (avoid identical, similar or confusing names) from that of the Chinese enterprise with full investment in the former.

As in the case of Wuhan Jianghan Hotel Co., ltd. under your administration, since the name of the newly-established joint venture is identical with that of its Chinese investor, we agree to the principle your administration proposed for handling this case in. The case should be properly settled after arbitration.