(1888PressRelease)
April 21, 2007 - Law on Contractual Joint Venture:
The Law of the Democratic People’s Republic of Korea on Contractual Joint Venture contributes to expanding and developing economic cooperation and technical exchange between the DPRK and other countries.
Institutions, enterprises or entities of the DPRK (hereinafter called the investors of the DPRK) are allowed to operate contractual joint ventures with corporate bodies and individuals of foreign countries and overseas Korean compatriots (hereinafter called the foreign investors).
A contractual joint venture should, in principle, be operated in the sectors that produce export goods and hi-tech goods.
A contractual joint venture is encouraged to be set up in the sectors that introduce state-of-the-art technologies including hi-tech and produce internationally competitive goods and the sectors of scientific research and technological development, exploitation of underground natural resources and infrastructure construction.
A contractual joint-venture enterprise can retain ownership over the property contributed by the investors and increased through operation of the business and is independent in its management.
The property of a contractual joint-venture enterprise is neither nationalized nor confiscated, and legal rights and interests of the contractual joint-venture enterprise and the parties to the joint venture are protected by the law of the State.
The investor of the DPRK intending to establish a contractual joint venture should draft the joint venture contract and feasibility study report to consult with the relevant institutions and finalize with the foreign investor the joint venture contract, the memorandum of association and the feasibility study report.
The investor of the DPRK should send an application for the incorporation of a contractual joint venture to the relevant bodies for approval.
Consultations should be held:
1. With the State planning institution over data on the total amount of investment, investment in kind, production and disposition of products, requirement and availability of labor, funds, materials, fuel, power, water, gas and steam, and data on phased profitability,
2. With the central financial institution over the data on the total amount of investment, amounts and contents of contribution by each party and its supply, repayment of shares of contribution and distribution of profit,
3. With the central science institution over the data on technical analysis of investment in kind and technology and technology transfer, and
4. With other relevant institutions over the data concerned.
Upon the approval of the incorporation of the contractual joint-venture enterprise, the parties should have an official seal carved and register the enterprise in the name indicated in the letter of approval and open an account in the relevant bank, pursuant to the relevant laws and regulations.
A contractual joint venture may form and operate a non-permanent joint consultative board.
The board will be composed of the chairman, one vice-chairman, and such number of other members as is determined by the parties to the joint venture through consultation.
The board should include the parties to the joint venture and the head of the enterprise.
Either of the parties to the joint venture is not allowed to hold the offices of the chairman and vice-chairman at the same time.
Shares of contribution to the contractual joint venture may be determined by the parties to the joint venture through consultation, provided that the foreign investor should contribute more than 30% of registered capital.
Parties to the joint venture may contribute cash, property in kind, industrial property right, technical know-how, copyright and so on.
Any property in kind to be contributed by the foreign investor must be the one which is duly owned by him and which is essential and indispensable to the operation of the contractual joint venture and is not available in the territory of the DPRK or, though available, is in short supply.
Technology and copyright should not be contributed unless they meet the following requirements:
1. Production of new varieties of products or export goods, or improvement of performance of the existing production equipment and machinery, product quality and productivity,
2. Sizeable economy of raw and other materials, labor, fuel and power, and efficient utilization of natural resources of the DPRK, and
3. Labor safety and environmental protection.
Property in kind, technology and copyright should be priced by the parties to the joint venture through consultation on the basis of the international market price concerned.
A party to the contractual joint venture may transfer or transmit part or whole of his share of contribution to a third party.
When his share of contribution is to be sold, the other party to the joint venture has a prior lien on the said part of share on terms no less favorable than those offered to others.
Registered capital may be increased, but not be decreased.
Import or export price of materials necessary for production of a contractual joint-venture enterprise, its products and technology should be determined by the parties to the joint venture through consultation on the basis of the then international market price.
A contractual joint-venture enterprise may scrap, transfer or mortgage the registered fixed assets.
In case a contractual joint-venture enterprise agrees to repay share of contribution made by the foreign party, it is obliged to do so according to the provisions of the contract.
Duration of a contractual joint venture should be pursuant to the provisions contained in the letter of approval of its incorporation.
When a party to a contractual joint venture is aggrieved in connection with the joint venture, he may lodge a complaint.
