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Shandong Quanxin Stainless Steel Co. Joint Venture Contract

Joint Venture JV Agreement

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Title: Shandong Quanxin Stainless Steel Co. Joint Venture Contract
Date: 8/17/2005

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Shandong Quanxin Stainless Steel Co.

Joint Venture Contract

 

Chapter 1: General Provisions

 

    “In accordance with the Laws of the People’s Republic of China on Joint Ventures Using Chinese and Foreign Investment (the “Joint Venture Law”) and other relevant Chinese laws and regulations, Shandong Jinpeng Copper Co., Ltd., and Hong Kong Hanbang Investment (hereinafter referred to as the “Parties”), in accordance with the principles of equality and mutual benefit, and through friendly consultations, agree to jointly invest to set up a Chinese Foreign Joint Venture (the “Joint Venture”) in National Hi-Tech Industrial Development Zone of Zibo, Shandong Province of the People’s Republic of China.

 

Chapter 2: Parties of the Joint Venture

 

Article 1

 

     Parties to this Joint Venture Agreement (“Contract”) are as follows:

 

Shandong Jinpeng Copper Co., Ltd., (hereinafter referred to as Party A), registered in Shandong province, China, and its legal address is at Zouping, Shandong Province, China.

 

    Legal representative:

Name:

Zhang Ke

                  

Position:

Chairman

                  

Nationality:

Chinese

 

Hong Kong Hanbang Investment, (hereinafter referred to as Party B), registered in Hong Kong, and its legal address is at Suite #1007-8, Hungshen Buiding, #77 Chonghong Road, Hong Kong.

 

    Legal representative:

Name:

Steven Chen

                  

Nationality:

Hong Kong, China

 

Chapter 3: Establishment of the Joint Venture

 

Article 2

 

In accordance with the Joint Venture Law and other relevant Chinese laws and regulations, both parties agree to set up one Chinese Foreign Joint Venture limited liability company, the Joint Venture.

 

Article 3

 

    The name of the Joint Venture is Shandong Quanxin Stainless Steel Co., Ltd.  

 

Article 4

 

The registered address of the Joint Venture is East End of Zhongrun Ave., National Hi-Tech Industrial Development Zone.

 

Article 5

 

All activities of the Joint Venture shall be governed by the laws, decrees and pertinent rules and regulations of the People's Republic of China.

 

Article 6

 

The organizational form of the Joint Venture is a limited liability company. Each party to the Joint Venture is liable to the Joint Venture within the limit of the capital subscribed by it.  The profits, risks and losses of the Joint Venture shall be shared by the parties in proportion to their contributions to the registered capital.

 

Chapter 4: The Purpose, Scope and Scale of Production and Business

 

Article 7

 

The goals of the Parties to the Joint Venture are to continue to improve the product quality, expand production, develop new products, and gain a greater position in world markets by adopting advanced and appropriate technology, scientific management methods, and international marketing efforts.  The goal is to make additional profit by marketing and selling products domestically and internationally.

 

Article 8

 

The business scope of the Joint Venture is to produce stainless steel tubes/strips, stainless steel sheets/plates and other stainless steel products.

 

Article 9

 

The production capacity of the Joint Venture is expected to reach 60,000 tons of stainless steel products per year after the Joint Venture received the investments from the Parties.

 

 

 

Chapter 5: Total Amount of Investment and the Registered Capital

 

Article 10

 

    The total amount of investment of the Joint Venture is $US 29,600,000.

 

Article 11

 

The registered capital of the Joint Venture shall be $US 26,600,000, of which:

 

Party A has $US 13,300,000, accounting for 50%;

 

Party B has $US 13,300,000, accounting for 50%.

 

The discrepancy between the Total Investment Amount and the Registered Capital is to be made by Joint Venture obtaining a loan from the third party.

 

Article 12

 

Party A will fulfill its investment in the Joint Venture by contributing cash in sum into JV bank account within 6-month of the issuance of business license.

 

Party B will also fulfill its investment in the Joint Venture by contributing cash in sum into JV bank account within 6-month of the issuance of business license.

 

Article 13

 

If a Party receives an acceptable offer for all or a part of its interest in the Joint Venture from a third party, the receiving party is required to obtain the approval of the other party and then submit to the registration authority for its approval.  Furthermore, the other party has the preemptive rights to purchase the whole or partial shares.

 

 

Chapter 6: Responsibilities of Each Party to the Joint Venture

 

Article 14

 

Party A and Party B shall be respectively responsible for the following matters:

 

Party A:

 

1.

Handling of applications for approval, registration, business license and other matters concerning the establishment of the Joint Venture from relevant departments in China;

2.

Processing the application for the right to the use of a site to the authority in charge of the land;

3.

Providing its cash contribution as required under Articles 10, 11 & 12;

4.

Assisting foreign workers and staff in applying for entry visas, work licenses and handling their travel procedures;

5.

Responsible for handling other matters as requested by the Joint Venture.

 

Party B:

 

1.

Providing its cash contribution as required under Articles 10, 11 & 12;

2.

Assisting the Joint Venture in recruiting Chinese management personnel, technical personnel, workers and other personnel as needed;

3.

Assisting the Joint Venture in expanding international markets and in all foreign affairs;

4.

Responsible for handling other matters as requested by the Joint Venture.

 

Chapter 7: Sales

 

Article 15

 

The products of the Joint Venture shall sell in both domestic and international market, in which the international market will account for 30% of the total sales.     

 

Article 16

 

The product logo of the Joint Venture shall be approved by the Board of Directors.

 

The date of registration of the Joint Venture shall be the date of the establishment of the Board of Directors of the Joint Venture.

 

Chapter 8: The Board of Directors

 

Article 17

 

The Board of Directors is comprised of five directors, of which three shall be appointed by Party A, and two by Party B.  The chairman of the board shall be appointed by Party A, and its vice-chairman by Party B.  The term of office for the directors, chairman and vice-chairman is four years, and their term of office may be renewed if re-appointed by the relevant party.

 

Article 18

 

The highest authority of the Joint Venture shall be its Board of Directors.  A 2/3 majority call shall decide all issues concerning the Joint Venture.  Unanimous approval shall be required for the following major issues;

 

1.

Amendment of the Articles of Association;

2.

Dissolution of the Joint Venture;

3.

Adjustment of the registered capital of the Joint Venture; and

4.

Merger of the Joint Venture with another organization.

 

At least one director from each party shall attend the directors’ meeting.

 

Article 19

 

The Chairman of the Board is the legal representative of the Joint Venture.  Should the chairman be unable to exercise his responsibil


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