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Laws on Industrial Enterprises Owned by the Whole People

source: npc.gov.cn

(Adopted at the First Session of the Seventh National People's Congress and promulgated by Order No.3 of the President of the People's Republic of China on April 13, 1988, and effective as of August 1, 1988)

Chapter I

General Provisions

Article 1 This Law is formulated in accordance with the Constitution of the People's Republic of China with a view to ensuring the consolidation and development of the economic sector under ownership by the whole people, defining the rights and obligations of industrial enterprises owned by the whole people, safeguarding their lawful rights and interests, enhancing their vitality and promoting socialist modernization.

Article 2 An industrial enterprise owned by the whole people (hereinafter referred to as the enterprise ) shall be a socialist commodity production and operation unit which shall, in accordance with law, make its own managerial decisions, take full responsibility for its profits and losses and practise independent accounting.

The property of the enterprise shall be owned by the whole people, and shall be operated and managed by the enterprise with the authorization of the State in line with the principle of the separation of ownership and managerial authority. The enterprise shall enjoy the rights to possess, utilize and dispose of, according to law, the property which the State has authorized it to operate and manage.

The enterprise shall obtain the status of a legal person in accordance with law and bear civil liability with the property which the State has authorized it to operate and manage.

The enterprise may, in accordance with the decision of the competent department of the government, adopt contract, leasing or other forms of the system of managerial responsibility.

Article 3 The fundamental task of the enterprise shall be the development of commodity production, creation of wealth, increase of savings and satisfaction of society's growing material and cultural requirements by acting in line with State plans and market demands.

Article4 While achieving socialist material growth, the enterprise must persistently promote socialist cultural and ideological progress and build up a contingent of well-educated and self-disciplined staff and workers with high ideals and moral integrity.

Article 5 The enterprise must observe the laws and regulations and keep to the socialist orientation.

Article 6 The enterprise must effectively utilize the property which the State has authorized it to operate and manage and realize the multiplication of its assets; the enterprise must, according to law, pay taxes and fees and hand in profits.

Article 7 The enterprise shall implement the system whereby the factory director (manager) assumes overall responsibility for the work of the enterprise.

The factory director shall exercise functions and powers according to law, which shall be protected by law.

Article 8 The grassroots organization of the Chinese Communist Party in the enterprise shall guarantee and supervise the implementation of the guiding principles and policies of the Party and the State in the enterprise.

Article 9 The State shall ensure that the staff and workers enjoy the status of the masters, and the lawful rights and interests of the staff and workers shall be protected by law.

Article 10 The enterprise shall, through the staff and workers' congress and other forms, practise democratic management.

Article 11 The trade union in the enterprise shall represent and safeguard the interests of the staff and workers and conduct its work independently according to law. The trade union in the enterprise shall organize the staff and workers for participation in democratic management and democratic supervision.

The enterprise shall bring into full play the role of the young staff and workers, the women staff and workers and scientific and technical personnel.

Article 12 The enterprise must strengthen and improve its operation and management, implement the economic responsibility system, promote scientific and technological progress, practise economy, combat waste, improve economic results and further its own transformation and development.

Article 13 The enterprise shall implement the principle of distribution according to work. It may also adopt other forms of distribution within the scope prescribed by law. Article 14 The property which the State has authorized the enterprise to operate and manage shall be protected by law and shall not be infringed upon.

Article 15 The lawful rights and interests of the enterprise shall be protected by law and shall not be infringed upon.

Chapter II

The Establishment, Modification and Termination of the Enterprise

Article 16 The establishment of the enterprise must conform to the law and the relevant provisions of the State Council, and the application for the establishment must be submitted to the government or the competent department of the government for examination and approval. The enterprise shall obtain the status of a legal person after it is approved by, registers itself with and receives a business license from the administrative authorities for industry and commerce.

The enterprise shall carry out its productive and operational activities within the approved and registered scope of operation.

Article 17 An enterprise must meet the following qualifications for its establishment:

1) Its products are needed by society;

2) It has access to the required energy sources, raw and processed materials, and communication and transportation facilities;

3) It possesses a name of its own and premises for production and operation;

4) It possesses funds in conformity with State provisions;

5) It possesses its own organizational structure;

6) It has a definite scope of operation; and

7) Other qualifications as provided by the laws and regulations;

Article 18 The merger of enterprises or the division of an enterprise shall be subject to approval by the government or the competent department of the government in accordance with the provisions of the laws and administrative rules and regulations.
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