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The PRC Government Promulgated New Regulations on the Further Administration of Foreign Enterprises'Resident Representative Offices

In order to deal with the issues of current irregular registrations and illegal operations of some of the foreign enterprise resident representative offices, on 4 January 2010, the State Administration for Industry and Commerce (SAIC) and the Ministry of Public Security of the People’s Republic of China jointly issued the Notice on Further Administration of Registration of Foreign Enterprises’ Resident Representative Offices to clarify the supervision and administration in five areas as set out below:

To tighten the qualification requirements for the establishment of representative offices: the company applying for the establishment of a representative office is required to be incorporated and in existence outside China for two years or more, and the incorporation documents and the credibility letter from a bank shall be notarized by the PRC embassy in the country where the company is incorporated;

To standardize the terms of registration certificates: valid registration certificates with terms for more than one year shall be updated upon application for the change of registrations or renewal;

To limit the number of representatives of a representative office: the total number of representatives shall not exceed four. In the case that the number of representatives of a representative office already exceed four, it is in principle, only allowed the surplus representative(s) to be transferred out but not transferred to the representative office;

To conduct an on-site inspection in the newly established representative office within three months after the date the office obtains the registration certificate. A severe penalty shall be imposed should irregular registration or illegal operation be found during the inspection;

To establish an inter-departmental coordination mechanism by the authorities responsible for industry and commerce and public security to jointly supervise and administer the foreign enterprise representative offices.

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