SHANGHAI LOCAL LAWS

Regulations of Shanghai Municipality Concerning The Control of Resident Representative Offices of Foreign Enterprises
(Effective Date：1986.09.01)

Article 1. In accordance with the Interim Regulations of the People's Republic of China Concerning the Control of Resident Representative Offices of Foreign Enterprises and in the light of the actual situation in Shanghai, the regulations are formulated with a view to facilitating the development of international economic and trade contacts and technical exchange and controlling the resident representative offices in Shanghai of foreign companies, enterprises and other economic organizations (hereafter referred to as foreign enterprises).

Article 2. Resident representative offices of foreign enterprises (hereafter referred to as resident representative offices) shall be understood as those engaged in business-contact, service and non-direct-profit-making operations. But, for those provided for by inter-government agreements, they shall be treated in accordance with those agreements.

Article 3. Any foreign enterprise desiring to establish its resident office in Shanghai should entrust a Shanghai enterprise or company that deals with foreign business to submit an application to the Shanghai Foreign Economic Relations and Trade Commission in accordance with the nature of their business.

Article 4. A foreign enterprise, when applying for permission to establish a resident representative office in Shanghai, should submit the following documents and reference materials: (1) An application form signed by the chairman of the board of directors or the general manager of that enterprise. The application should contain such details as the name of the resident representative office to be set up, the names of chief representative and other representative(s), the scope of business, duration and the location of the office; (2) The legal document authorizing the operation of that enterprise issued by the authorities of the country or the region in which that enterprise operates; (3) Credit worthiness documentation provided by the banking institution(s) which has business contacts with that enterprise, (4) The credentials and brief biographies of the members of the resident representative office appointed by the chairman of the board of directors or the general manager of that enterprise. A banking, insurance or stock exchange institution which desires to establish a resident representative office should, apart from submitting the documents and reference materials as specified in the article, submit at the same time an annual report on the assets and liabilities and losses and profits of the head office of that enterprise, its constitution and the composition of its board of directors.

Article 5. When granted approval to establish a resident representative office, a foreign enterprise should, within 30 days of the date of approval, go to the Shanghai Administration Bureau for Industry and Commerce on the strength of the approval document and go through the registration procedure. The original approval document would however, automatically cease to be effective in case of failure to register within the prescribed deadline and should be returned to the Shanghai Administration Bureau for Industry and Commerce within 10 days. The registration certificate for the resident representative office is valid for a period of one year, which must be extended 30 days prior to termination of the registration certificate. No foreign resident representative office is allowed to start business activities and to put up its sign before approval is granted and the registration procedure completed.

Article 6. The members of a resident representative office and their families should abide by the Law of the People's Republic of China Concerning the Control of Foreigners Entering and Leaving China and the other related regulations and apply to the Shanghai Public Security Bureau for the required short-or long-term resident permits.

Article 7. When engaged in business activities, the representatives and employees of a resident representative office should have with them their respective representative certificate or working certificate issued by the Shanghai Administration Bureau for Industry and Commerce. When leaving China, upon expiration of the period or because of some other reasons (excluding leaving China temporarily on business), the resident representative should go through the procedure with the Shanghai Administration Bureau for Industry and Commerce for cancelling the registration and return their representative certificates.

Article 8. A resident representative office should, on the strength of the registration certificate and in accordance with the relevant stipulations of foreign exchange control of China, open an account in the Bank of China or in any bank which the Administration of Exchange control may designate.

Article 9. A resident representative office and its members should, in accordance with the stipulations of Chinese tax laws, go through the tax registration procedure with the Shanghai Tax Bureau and pay taxes in accordance with the relevant regulations. Article 10. When a resident representative office and its members import or export office articles, articles for daily use and means of transport for their own use, they should go through the procedure in accordance with the relevant stipulations of the Chinese Customs. Article 11. All resident representative offices should apply to the related telecommunications departments of Shanghai for setting up such commercial communications equipment as may be necessary for their business operations. They are not allowed to set up any radio station in Shanghai.

Article 12. A resident representative office should entrust service companies for foreigners designated by the Shanghai Foreign Economic Relations and Trade Commission on such matters as renting a house.

Article 13. When hiring Chinese personnel, the resident representative offices should do so through the Shanghai Foreign Service Company and an employment contract must be signed by the two parties concerned. The resident representative offices are not allowed to recruit workers and staff in China on their own.

Article 14. The resident representative offices and their members should abide by Chinese laws, decrees and relevant regulations. Shanghai Municipal People's Government undertakes to protect in accordance with the law, the legitimate rights and interests of resident representative offices and their members and to facilitate their normal business activities.

Article 15. The business activities of resident representative office must be subject to supervision and inspection by the Shanghai Administration Bureau for Industry and Commerce and other related organs. The resident representative offices should submit an annual report of its business operations every year to the Shanghai Foreign Economic Relations and Trade Commission and the Shanghai Administration Bureau for Industry and Commerce.

Article 16. If a resident representative office and its members violate these regulations or engage in unlawful activities, the Shanghai Administration Bureau for Industry and Commerce has the right to inspect and deal with them in accordance with the law. The penalties may take the forms of warning, fine, confiscation of illicit income, and cancellation of representative qualification and the registration certificate according to the seriousness of the case.

Article 17. An approved term of residence for the resident representative office can not exceed 3 years. The said office shall, upon expiration of the period, entrust a Shanghai enterprise or company that deals with foreign business to submit an application for extension to the Shanghai Foreign Economic Relations and Trade Commission within 3 months before expiry if it wishes to extend its residence. After receipt of the approval, it shall go through the registration for extension with the Shanghai Administration Bureau for Industry and Commerce. When a resident representative office applies for its extension, it shall submit the documents and reference materials specified in article 4 of these regulations. An extended term of residence for the resident representative office can not exceed 3 years.

Article 18. A resident representative office should notify in writing, 30 days in advance of the date of expiration of the approved term or the termination of its operation, the Shanghai Foreign Economic Relations and Trade Commission when the duration of its operation expires or if it decides to end its business activities before the due date. They must clear up their debts, pay their taxes and wind up other related matters before going through the formalities with the Shanghai Administration Bureau for Industry and Commerce for cancelling the registration and turn in the certificate. The foreign enterprise shall continue to be held responsible for any unsettled matters of its resident representative office in Shanghai.

Article 19. A resident representative office, when desiring to change its name, its chief representative or representatives, its scope of business, its duration and site, should entrust a Shanghai's enterprise or company that deals with foreign business to submit an application to the Shanghai Foreign Economic Relations and Trade Commission and, after securing approval, go to the Shanghai Administration Bureau for Industry and Commerce on the strength of the approval document and go through the procedure for effecting a change in registration. If a resident representative office moves to a new location or any changes are made regarding its members and their families, it should go through the necessary procedure for such changes with the Shanghai Bureau for Public Security.

Article 20. Enterprises run by overseas Chinese or by compatriots from Hongkong and Macao, when applying for setting up a resident representative office, shall go through registration procedures with reference to the present regulations.

Article 21. The Shanghai Foreign Economic Relations and Trade Commission is responsible for the interpretation of the present regulations.

Article 22. The present regulations go into effect on September 1, 1986.

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