China Publishes New Rules for Foreign Investment

China on Nov. 25 published a regulation on the registration administration of resident representative offices for foreign companies.

The regulation, to become effective in March 1, 2011, includes rules on the registration, establishment, information change, cancellation of registration and legal responsibilities of the representative offices of foreign companies.

According to the regulation, such representative offices are not allowed to conduct business in China, but they can perform market surveys, product or service display and promotion and liaise on behalf of their parent companies.

A foreign company needs to apply to China's State Administration for Industry and Commerce or its local branches in order to register a representative office or change an office's name or address.

The foreign company must be in existence for at least two years before applying to establish a representative office.

Any representative offices that are found operating without valid registration or engaging in any profitable business operations may be subject to administrative fines of between 50,000 yuan (7,507 U.S. dollars) and 500,000 yuan.

Additionally, foreign companies are required to appoint one chief representative for their offices and can appoint one to three other representatives according to business needs.

The offices are required to submit an annual report to the registration authorities between March 1 and June 30. The report should include information about the parent companies, representative offices' operations, and their balance sheets, which must be audited by auditing firms.

The regulation will also apply to the representative offices set up on the Chinese mainland by companies from Hong Kong, Macao and Taiwan.

Full text of the regulation is available on the Chinese government's website (www.gov.cn).

On Nov. 25, China also announced a regulation on the administration of fuel gas in urban areas. The regulation, which can also be viewed on the government website, will become effective in March next year.