Representative Offices of Foreign Companies May not be Involved in For-profit Activities

China’s Legislative Affairs Office of the State Council recently modified the registration and administration rules governing resident representative offices, defining such representative offices as non-profit offices that do not have legal person status and may not engage in for-profit activities.

On September 1, the Legislative Affairs Office released the Regulations on the Registration and Administration of Resident Representative Offices of Foreign Enterprises (Draft for Comment).According to the draft, if the international treaties and conventions that China has concluded or acceded to stipulate that foreign enterprises may establish representative offices involved in for-profit activities, such stipulations shall prevail. The public input process is scheduled to conclude on September 25.

In addition, the draft sets out the annual reporting system for such representative offices, requiring them to submit their annual reports to the registration authorities between March 1 and June 30 each year. Representative offices may freely choose where they are located and for how long they will operate, and their chief representatives or representatives may conclude contracts on behalf of the foreign enterprise subject to obtaining its written authorization.