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will come into force on 1 March 2011 and the former regulations on the same subject promulgated in 1983 will be repealed on the same day.
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