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Law Issues of the Establishment of Resident Offices of Foreign Enterprises
The Regulations on Administration of Registration of Resident Offices of Foreign Enterprises (hereinafter referred to as Regulations on Administration of Registration), which was adopted at the 132nd executive meeting of the State Council on November 10, 2010, and entered into effect as of March 1, 2011. When the new regulations entered into effect, the Measures for the Administration of Resident Offices of Foreign Enterprises (hereinafter referred to as Measures for Administration of Registration in 1983) issued in 1983 was simultaneously annulled. The major difference between the two is that the new regulations accurately defines resident offices of foreign enterprises are non-profit agencies and can not engage in any profit-making operations, except as otherwise provided by international treaty signed by China. However, in accordance with the Measures for Administration of Registration in 1983, resident offices of foreign enterprises shall be understood as those engaging in non-direct-profit-making operations. In other words, in accordance with the Measures for Administration of Registration in 1983, resident offices of foreign enterprises can engage in profit-making operations indirectly. Besides, compared with the Measures for Administration of Registration in 1983, Regulations on Administration of Registration has clear regulations on registration, registration of establishment, registration of alteration, registration of annulment, legal liability, etc..
In accordance with the Regulations on Administration of Registration, the following contents about registration deserve to be paid attention: 1. Registration of a representative office includes the title of the representative office, name of chief representative, business scope, residency site, residency period, and title and domicile of foreign enterprise. 2. A foreign enterprise should designate one chief representative, who shall sign the registration application documents of its representative office on behalf of the foreign enterprise within the scope authorized by the foreign enterprise in writing. 3. A representative office shall not conduct profit-making activities, in case international treaties and agreements signed or joined by China have made separate provisions. 4. A representative office may engage in the activities related to the business of foreign enterprises as follows：market surveys, displays and campaigns related to the products or services of foreign enterprise；And liaison activities connected with sales of the product of foreign enterprise, service providing, domestic procurement and investment.
On registration of establishment, it is important to note that a foreign enterprise should submit to the registration authority what kinds of documents and materials, applying for the establishment of a representative office: 1. application for registration of establishment of representative office; 2. domicile certification of the foreign enterprise and business license valid for more than 2 years; 3. articles of associations or organization agreement of the foreign enterprise; 4. commission documents issued by the foreign enterprise to chief representative and representative; 5. identification papers and resumes of chief representative and representative; 6. certificate of capital credit issued by financial institution having business ties with the foreign enterprise; and 7. the certification for the lawful right to use the residency site of the representative office. Our firm acts for foreign clients to make registration of establishment to Beijing Municipal Trade and Industry Bureau, the one-time notice of Beijing Municipal Trade and Industry Bureau has more detailed stipulations on the submitted documents and materials, when a foreign enterprise applying for the establishment of a representative office in Beijing. According to the notice, following 10 documents are needed: 1. registration form of the establishment of resident offices of foreign (district) enterprises (contains general information of representative office, certification of the residency site, registration form of the chief representative, record form of representatives, and so on); 2. the original of the valid Approval Certificate (within 30 days from the date of issuance) issued by departments related to State Council or Beijing Municipal Bureau of Commerce; in accordance with the international treaties and agreements signed or joined by China provide that a representative office engaging in profit-making activities, corresponding documents shall be also submitted. 3. a copy of certificate of legal operation valid for more than 2 years issued by the registration organ in the country (district) of origin of the foreign enterprise, which shall be notarized by the notary office and be authenticated by Chinese Embassy and Consulate in the country of the parent company; 4. the original of the application signed by authorized signatory of a foreign enterprise (include: the title of the permanent representative office, residency site, chief representative and name of representative, business scope, residency period); 5. articles of associations or organization agreement of the foreign enterprise (this document shall be notarized by the notary office in the country or area of origin of the foreign enterprise and be authenticated by Chinese Embassy and Consulate in that country); 6. authorization or certificates issued by a foreign enterprise for authorized signatory (this document shall be notarized by the notary office in the country or area of origin of the foreign enterprise and be authenticated by Chinese Embassy and Consulate in that country); 7. origin of the authorization letter of chief representative and representative signed by authorized signatory of a foreign enterprise and resumes of chief representative and representative (herewith three photos of every representative), which shall be notarized by the notary office in the country or area of origin of the foreign enterprise and be authenticated by Chinese Embassy and Consulate in that country; 8. letter of (proxy) appointment; 9. registration form of secretaries of an enterprise (liaison persons); 10. banking and insurance shall also submit the assets of branch organ, annals of profits and losses, articles of associations and name list of board, excluding above documents and certificates.
Attention should be paid to the provision of the time limit on registration of alteration and registration of annulment.
As for legal liability, close attention should be paid to Article 35 of Regulations on Administration of Registration: in case a foreign enterprise establishes the representative office at random or conducts business activities of a representative office without registration, the registration authority shall order it to suspend activities and impose a penalty of RMB 50, 00 to RMB200, 000. In case a representative office conducts profit-making activities in violation of the regulations, the registration authority shall order it to make corrections, confiscate illegal income and the tools, equipment, raw materials and products (commodities) specially for profit-making activities and impose a penalty of RMB50,000 to RMB500,000; in serious circumstances, the registration certificate shall be suspended or revoked.
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