CHINA LAW DIGEST NEWSLETTER
Vol. 1, No.7 - July 11, 2002
TOPICS THIS ISSUE:
- Measures for the Administration of Representative Offices in China of Foreign Funded Financial Institutions
- Reply on the Issues of Whether Judicial Service Documents on Foreign Companies May Be Served on Representative Offices in China and the Applicability of Service by Leaving the Documents at the Location
- Reply on the Validity of Mortgage Contracts Entered By Creditors And State Owned Industrial Enterprises Concerning Machinery Equipment Assets
- Regulations on the Administration of Agencies Engaging Overseas Employment
Measures for the Administration of Representative Offices in China of Foreign Funded Financial Institutions
Issue Date: June 27, 2002
Issuing Authority: People's Bank of China
Effective Date: July 18, 2002
Summary:
Foreign Funded Financial Institutions refer to both foreign financial institutions and foreign funded financial institutions registered and established in China. Representative offices of foreign funded financial institutions include representative offices and head representative offices that carry on non-business activities such as consulting, liaison and market research in China. Representative offices and their staff are neither allowed to sign any agreements or contracts that may generate income to the representative offices or to the foreign funded financial institutions they represent, nor are they allowed to engage in any business activities.
The Measures specify the qualification requirements, approval procedures, the requirements that chief representatives and head representatives must meet, reporting requirements and other requirements. The approval for representative office is valid for six years. The approved representative office must move into the approved office space within six months otherwise the original approval will expire.
The Measures also impose severe punishment for opening representative office without approval from People's Bank of China. Illegal establishment of representative office includes hanging of name signs at the office place. People's Bank of China will clamp down such illegal representative offices and will not accept application from such foreign financial institutions for establishing representative offices or other business operation within five years. Criminal charges may be imposed under certain circumstances.
Reply on the Issues of Whether Judicial Service Documents on Foreign Companies May Be Served on Representative Offices in China and the Applicability of Service by Leaving the Documents at the Location
Issue Date: June 18, 2002
Issuing Authority: Supreme Court
Effective Date: June 22, 2002
Summary:
The Reply discusses the application of the Hague Service Convention to the service of legal documents on foreign companies that have representative offices in China. It concludes that if the party to be served has a representative office established in China, the people's courts may serve litigation documents on its representative office in China according to Article 247 of the Civil Procedure Law. It is not necessary to serve such documents abroad pursuant to the Hague Service Convention.
The Reply also clarifies that such litigation documents can be served by means of leaving the documents to be served at where the representative offices are located.
Reply on the Validity of Mortgage Contracts Entered By Creditors And State Owned Industrial Enterprises Concerning Machinery Equipment Assets
Issue Date: June 18, 2002
Issuing Authority: Supreme Court
Effective Date: July 22, 2002
Summary:
The Reply concludes that if the mortgage contracts entered into by creditors and state owned industrial enterprises are in relation to assets of machinery equipment and plant building, those mortgage contracts shall not be deemed as void simply due to lack of approval from the government body in charge, provided that there are no other legal means to invalidate the contracts.
The Reply applies to pending cases but will not apply to re-trial cases where the judgments and decisions have taken effect.
Regulations on the Administration of Agencies Engaging Overseas Employment
Issue Date: May 14, 2002
Issuing Authority: Ministry of Labor and Social Security
Effective Date: July 22, 2002
Summary:
"Overseas employment" refers to the situation whereby Chinese citizens enter employment contracts with overseas employers and provide services abroad. "Agencies engaging overseas employment" refers to agencies providing services to Chinese citizens for overseas employment or to employers abroad for recruiting Chinese citizens to work abroad.
Administration permits are required to conduct such agency services. Overseas institutions, individuals and representative offices of foreign companies cannot engage in such agency business.
Overseas employment agencies may conduct activities such as, providing consultation on working abroad, recommending candidates to employers abroad, providing training to the Chinese citizens before working abroad, assist Chinese citizens on the application of visa, passport and other necessary documents for working abroad.
Overseas employment agencies are required to provide a deposit of 500,000 renminbi to the competent labor and social security authority at the time of establishment. Such deposit will be used to compensate those who suffer damages because of misconducts of the agencies or pay for any fines or charges imposed on the overseas employment agencies.
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The China Law Digest News is intended to be used for news purposes only. It should not be taken as comprehensive legal advice, and Lehman, Lee & Xu will not be held responsible for any such reliance on its contents.
