Doing Business in China
774
UNSW Law Journal
Volume 30(3)
THE COMPANY LAW AND FOREIGN INVESTMENT ENTERPRISES IN THE PRC - PARALLEL SYSTEMS OF CHINESE-FOREIGN REGULATION
VIVIEl\!NE BATW
I
INTRODUCTION
When the Chinese-foreign Equity Joint Venture Law! ('EN Law') was flfst passed in 1979, it was one of a select group of laws which constituted the first step in the re-creation of a Chinese legal system. The EN Law and the laws relating to foreign investment enterprises which followed it and made possible the establishment of cooperative joint ventures 2 and wholly foreign owned enterprises 3 refcHed to the concept of limited liability companies. However, until the passage of the General Principles of Civil Law in 19864 and the Company Law in 1994,s there was no general legal framework in China dealing with corporations. Foreign investors were governed by a separate, relatively welldeveloped and well-documented legal regime relating specifically to foreign investment entities. They made their own assessment of the risks of investing and operating in China based on this regime and their assessment of the reliability of Chinese regulators and their Chinese partners, The issues with the poorly~ developed Chinese court and dispute settlement system meant that the lack of a
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2
3
4 5
Senior Lecturer and Dife(;(Or of the Centre for Asian and Pacific Law at the University of Sydney. Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, adopted by the Second Session of the Fifth National People's Congress on I July 1979; amended at the Third Session of the Seventh National People's Congress on 4 April 1990 and 31 the Fourth Session of the Ninth National People's CongTesS on 15 March 2001 Law of the People's Republic of China on Chinese·foreign Contractual Joint Ventures, adopted at the First Session nfthe Seventh Nalional People's Congress on 13 April 1988; amended at the Eighteenth Meeting of the Standing Committee of the Ninth National
UNSW Law Journal
Volume 30(3)
THE COMPANY LAW AND FOREIGN INVESTMENT ENTERPRISES IN THE PRC - PARALLEL SYSTEMS OF CHINESE-FOREIGN REGULATION
VIVIEl\!NE BATW
I
INTRODUCTION
When the Chinese-foreign Equity Joint Venture Law! ('EN Law') was flfst passed in 1979, it was one of a select group of laws which constituted the first step in the re-creation of a Chinese legal system. The EN Law and the laws relating to foreign investment enterprises which followed it and made possible the establishment of cooperative joint ventures 2 and wholly foreign owned enterprises 3 refcHed to the concept of limited liability companies. However, until the passage of the General Principles of Civil Law in 19864 and the Company Law in 1994,s there was no general legal framework in China dealing with corporations. Foreign investors were governed by a separate, relatively welldeveloped and well-documented legal regime relating specifically to foreign investment entities. They made their own assessment of the risks of investing and operating in China based on this regime and their assessment of the reliability of Chinese regulators and their Chinese partners, The issues with the poorly~ developed Chinese court and dispute settlement system meant that the lack of a
•
2
3
4 5
Senior Lecturer and Dife(;(Or of the Centre for Asian and Pacific Law at the University of Sydney. Law of the People's Republic of China on Chinese-foreign Equity Joint Ventures, adopted by the Second Session of the Fifth National People's Congress on I July 1979; amended at the Third Session of the Seventh National People's Congress on 4 April 1990 and 31 the Fourth Session of the Ninth National People's CongTesS on 15 March 2001 Law of the People's Republic of China on Chinese·foreign Contractual Joint Ventures, adopted at the First Session nfthe Seventh Nalional People's Congress on 13 April 1988; amended at the Eighteenth Meeting of the Standing Committee of the Ninth National