On August 29, 2008 the State Council’s Legislative Affairs Office released a notice soliciting public opinion on the Administrative Regulation on the Registration of Resident Representative Offices of Foreign Enterprises (“Draft Rules”). The Draft Rules propose a number of revisions including the following:
First, Article 2 of the Draft Rules defines a resident representative office of a foreign enterprise as a non-profit generating organization without legal person status, established under regulations within China and undertaking activities ancillary to the business of the foreign enterprise.
A representative office may undertake non-revenue generating business activities such as market research, analysis and surveys; liaison activities; marketing and promotional activities, and other similar activities that are beneficial to the foreign enterprise, but do not amount revenue generating activities. Certain business activities must receive prior approval from the authorities according to relevant laws and regulations under Article 10.
Second, once an application for establishment of a representative office is filed, the registration authority must render a decision within 10 days. Subsequently, if there is any change in the status of the representative office, an application to update official records must be filed within 30 days.
Other clarifications include:
- A foreign enterprise must apply for renewal of registration with the registration authority within 60 days of the expiration date.
- If there is any change to the authorized signatory of the foreign enterprise, or the form of enterprise liability, capital or business scope as detailed in its memorandum and articles of association or its organization agreement, as well as to the representative office, the foreign enterprise is required to file with the registration authority within 30 days from the date of that amendment.
- Representative offices are required to submit an annual report to the registration authority between March 1 and June 30 detailing their activities and other information related to the business of the representative office and the foreign enterprise during the preceding year.
- The chief representative and the representative have the right to execute contracts under certain conditions with the written authorization of the foreign enterprise.
In addition, the Draft Rules clearly outline the functions and duties of the registration authority in investigating illegal acts and imposing legal liabilities for them.
Public opinions on the draft may be submitted before September 25, 2008 online at http://www.chinalaw.gov.cn or by mail to P.O. Box 1750, Beijing, People’s Republic of China 100017, or by e-mail to email@example.com.