Law of the People's Republic of China on Sole Proprietorship Enterprises

Law of the People's Republic of China on Sole Proprietorship Enterprises

Order of Chairman [1999] No.20

August 30,1999

Chapter I General Provisions

Article 1 With a view to regulate the activities of sole proprietorship enterprises, to protect the lawful rights and interests of sole proprietors and creditors of sole proprietorship enterprises, to safeguard the social and economic order, and to promote the development of socialist market economy, this Law is formulated in accordance with the Constitution.

Article 2 For purposes of this Law, a sole proprietorship enterprise means a business entity established within China with its capital contributed by one individual and its assets owned personally by the sole proprietor, who assumes unlimited liability to the extent of his personal assets.

Article 3 A sole proprietorship enterprise's main place of business shall be its domicile.

Article 4 In conducting business activities, a sole proprietorship enterprise shall abide by law and administrative regulations, as well as the principle of good faith and may not harm the public interests.
A sole proprietorship enterprise shall fulfill its obligation to pay tax in accordance with the law.

Article 5 The state shall protect the property and other lawful rights and interests of a sole proprietorship enterprise in accordance with the law.

Article 6 A sole proprietorship enterprise shall hire workers in accordance with the law. The lawful rights and interests of its workers are protected by law.
The workers of the sole proprietorship enterprise shall establish a labor union in accordance with the law, and the labor union shall conduct its activities in accordance with the law.

Article 7 A member of the Chinese Communist Party in a sole proprietorship enterprise shall conduct his activities in accordance with the Charter of the Chinese Communist Party.

Chapter II. Establishment of Sole Proprietorship Enterprise

Article 8 For the establishment of a sole proprietorship enterprise, the following conditions shall be met:
1. The sole proprietor is a natural person;
2. There is a lawful enterprise name;
3. There is capital contribution declared by the sole proprietor;
4. There is a permanent place and the necessary conditions for production and operation;
5. There are necessary personnel.

Article 9 In establishing a sole proprietorship enterprise, the sole proprietor or the agent appointed thereby shall submit such documents as an application for the establishment of a sole proprietorship enterprise, proof of identity of the sole proprietor, proof of use of the place for production and operation, etc. to the registration authority of the place where the sole proprietorship enterprise will be located. Where an agent is appointed to apply for the establishment of the sole proprietorship enterprise, the power of attorney issued by the sole proprietor and the legal identity of the agent shall be presented.
A sole proprietorship enterprise may not engage in any business prohibited by law or administrative regulations; where the sole proprietorship enterprise intends to engage in any business which requires approval by the relevant authority, the approval document issued by the relevant authority shall be presented at the time of applying for establishment registration.

Article 10 The application form for the establishment of a sole proprietorship enterprise shall set forth the following:
1. name and domicile of the enterprise;
2. name and residence of the sole proprietor;
3.
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