21.03.11 20:12 Age: 9 yrs
New Regulations for Representative Offices of Foreign Enterprises
In 2010 the China authorities promulgated important rules that changed or will change major aspects of representative offices (ROs) of non-China-based entities. On 4 January 2010 the State Administration for Industry & Commerce (SAIC) and the Ministry of Public Security (MPS) jointly promulgated the Circular on Strengthening Administration of Registration of Residential Representative Offices of Foreign Enterprises (the Circular), which went into effect on the same date. On 19 November 2010 the State Council promulgated the Regulations on Administration of Registration of Resident Representative Offices of Foreign Enterprises (the New Regulations). The New Regulations will become effective as of 1 March 2011 and replace the Measures for the Administration of Registration of Resident Representative Offices of Foreign Enterprises (the Measures) that were approved by the State Council on 5 March 1983 and promulgated by the SAIC on 15 March 1983. The New Regulations incorporated some new requirements provided under the Circular.
The New Regulations emphasize that an RO may not engage in any profit-making activities and explicitly restrict an RO to engaging only in the following activities in connection with the business of the foreign enterprises:
l Market investigation, display and promotional activities in connection with the products or services of the foreign enterprises; and
l Liaison activities in connection with selling products, providing services, domestic procurement and domestic investment.
As to qualifications of the chief representative, according to the New Regulations, the following persons may not serve as either a chief representative or other representative of an RO:
l Anyone who has been sentenced to a criminal penalty due to committing crimes that were detrimental to the national security or pubic welfare of the PRC; or
l The chief representative or other representative of an RO that has been deregistered, whose registration certificate has been withdrawn or that was ordered to close by relevant authorities due to any illegal activities that were detrimental to the national security or the public welfare of the PRC during the past five years.
Lehman, Lee & Xu can provide expert legal representation and counsel throughout the investment process. Beyond contract drafting, the firm can also perform due diligence on Chinese firms and projects, provide corporate and tax counsel on the structure and operation of an investment, from mere CERs purchase deal, to direct engagement in the project development with a Chinese partner, or to technologies sales/licensing and equity injections in project companies.
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