Law on Contractual Joint Ventures of the Democratic People's Republic of Korea (as amended by Decree No. 484 of February 26, 1999, of the Presidium of the Supreme People's Assembly), Democratic People's Republic of Korea

THE LAW OF THE DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA ON CONTRACTUAL JOINT VENTURES

Adopted at the Standing Committee of the Supreme People's Assembly on October 5, 1992 and Approved at the Fourth Session of the Ninth Supreme People 's Assembly on December 11, 1992

Article 1. The DPRK Law on Contractual Joint Venture is intended to contribute to the expansion of economic cooperation and technical exchange between the DPRK and the rest of the world.

Article 2. Contractual joint venture consists of business activities in which investors from the DPRK and from a foreign country invest jointly, with production and management being assumed by the host partner, and the portion of the investment made by the foreign partner is redeemed or the portion of the profit to which the foreign partner is entitled is allotted in accordance with the provisions of the joint venture contract.

Article 3. Contractual joint ventures shall be established primarily in sectors producing exportable goods, using advanced technology, and also in tourism and the service sectors.

Article 4. The State encourages foreign investors to bring in modern equipment and advanced technology, and to invest in sectors producing internationally competitive goods.

Article 5. Korean nationals living outside the territory of the DPRK may also take part in contractual joint venture, as stipulated under this law.

Article 6. Establishments, enterprises, and institutes which wish to conduct a contractual joint venture are required to consult with their governing bodies, agree the joint venture contract, with the foreign investor, and submit an application for the venture to the external economic organ of the Administration Council. The application should be accompanied by all other relevant documents, including the deed of contract and a feasibility study report.

Article 7. The external economic organ of the Administration Council shall approve or reject the application within 50 days of the day of its submission.

Article 8. A contractual joint venture should be registered within 30 days of its approval at the administrative and economic committee of the province (or city under direct jurisdiction) where the venture is to be situated. The day of registration shall be the date of the establishment of the joint venture.

Article 9. A contractual joint venture shall not engage in pursuits other than those specified at the time of its approval. If the partners wish to engage in other pursuits, they should obtain approval from the external economic organ of the Administration Council.

Article 10. If one partner in the joint venture wishes to concede the whole or part of its rights and duties to a third party, it should obtain the approval of the external economic organ of the Administration Council after reaching agreement with the other partner.

Article 11. It is permissible for a joint venture to employ, in accordance with the contract, technicians from the foreign investor or, upon agreement with the external economic organ of the Administration Council, technicians from a third country.

Article 12. A joint venture enterprise is allowed to import materials for use in production and management and to export goods it produces .

Article 13. The redemption of the portion of the investment or the distribution of profit to the foreign investor shall be realized primarily in goods produced by the joint venture enterprise, but also in other ways on which the two partners agree.

Article 14. If it is provided for in the joint venture contract, goods produced and revenues earned by the joint venture enterprise may be used first for the redemption of invested capital or the distribution of profit.

Article 15. Any legal profit and other income earned by the foreign investor may be remitted abroad, subject to the laws and regulations of the DPRK on foreign currency control.

Article 16. The partners in a joint venture shall be allowed to set up a non-permanent body for joint consultation. The body shall examine important matters concerning the operation of the venture, such as the introduction of new technology, the improvement of quality and reinvestment.

Article 17. A joint venture enterprise shall settle its accounts on a monthly, quarterly, and yearly basis. Every joint venture enterprise shall be required by law to submit a statement of accounts to the relevant department and to undergo supervision by financial and banking institutes.

Article 18. When the profit is distributed under the contract, a contractual joint venture enterprise shall be required to pay tax as stipulated in the laws of the DPRK.

Article 19. In cases where either of the joint venture partners fails to fulfill its duties as stipulated in the contract, making it impossible to operate the joint venture enterprise, the enterprise may be wound up with the approval of the external economic organ of the Administration Council. Any resultant losses shall be sustained by the partner that failed in its duties.

Article 20. A joint venture shall end when the period of contract expires. When the contract term expires or the unit is wound up before the expiration of the contract, the enterprise must, subject to the law, settle its debts and credit accounts and go through the relevant formalities for canceling its registration. In cases where they wish to continue to run the joint venture even after the expiry of the period of contract the partners shall be required to obtain the approval of the external economic organ of the Administration Council 6 months before the expiration of the term of the contract.

Article 21. Any disagreements concerning the joint venture shall be settled through mutual consultation. Disputes shall be examined and settled by a court of law or an arbitration agency of the DPRK, in accordance with the relevant procedures.