Meaning
Property law provisions in the People’s Republic of China establish structural frameworks for managing shared ownership over real estate or factory machinery held by multiple entities. Under article 297 of the PRC Civil Code, co-ownership divides into tenancy in common and joint ownership based on statutory criteria or prior agreement. The legal classification determines how co-owners exercise voting rights or allocate maintenance costs.
Foreign joint ventures frequently rely on these statutory divisions when structuring shared manufacturing facilities and heavy industrial assets.
Shared Ownership
Tenancy in common grants each owner a distinct percentage share in the underlying property, whereas joint ownership creates an undivided interest without defined legal fractions. Under article 297, parties default to tenancy in common when commercial contracts do not explicitly specify a joint ownership structure. Co-owners holding more than two-thirds of total shares maintain statutory authority to mortgage or sell the shared asset unless written agreements dictate otherwise.
Overseas corporate partners holding minority equity positions in domestic manufacturing facilities must contractually restrict majority action to prevent unauthorized asset transfers.
Partition Protocol
Co-owners maintain statutory rights to request asset division when business operations terminate or contractual conditions are triggered. Courts evaluate whether physical partition damages operational utility or whether fair market value compensation must replace asset division under article 297 governance.
Creditor Remedy
Creditors holding execution claims against a single co-owner can attach only that specific debtor’s share in the common property. Involuntary judicial enforcement under article 297 requires fair market valuation and grants non-debtor co-owners statutory rights of first refusal.
