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PRC State Council Promulgated New Regulations on Foreign Enterpises’ Resident Representative Offices in China
11 January 2011
On 19 November 2010, the State
Council of the People’s Republic of China promulgated the “Regulations on
Registration and Administration of Foreign Enterprises’ Resident Representative
Offices in China” (the “Regulations”). The promulgation of the Regulations is a
further step by the Chinese government to tighten the administration and control
over foreign enterprises’ resident representative offices (“ROs”) since the
issuance of the Circular on Further Strengthening Administration of Foreign
Enterprises' Resident Representative Offices (the “Circular”) by the State
Administration of Industry and Commerce (SAIC) in January 2010. The Circular
imposed some new requirements with respect to the registration and operation of
ROs, including, among others, two year continued existence of the head office
before application for setting up a RO and number of registered representatives
of a RO not exceeding four.
The Regulations include not only
those requirements laid down by the Circular but also some other new
requirements with respect to the registration and operation of ROs:
1. Annual audit and
report requirement;
2. Requirement on
establishment of accounting books to record the allocation of funds, income and
expenses of a RO;
3. Prohibition on
certain types of person to act as chief representative or representative of a
RO;
4. Specifying in
details the powers of the SAIC officers in investigation of irregularities of a
RO;
5. Requirement on
application for change or filing with SAIC where there is any change of a RO's
registration items, including the name, chief representative, business scope,
registered address and business term of the RO or where the authorized
representative, form of incorporation, capital or business scope of a
representative office's head office is changed.
The Regulations will come into force on 1 March 2011 and the former regulations on the same subject promulgated in 1983 will be repealed on the same day.
