Laws of the People's Republic of China

The People's Bank of China

Measures for the Administration of Representative Offices of Foreign Financial Institutions in China

the People's Bank of China

April 29, 1996 ContentsChapter I General Provisions

Chapter II Application and Establishment Procedures

Chapter III Supervision and Administration of the Representative Offices

Chapter IV Cancellation

Chapter V Penalty Provisions

Chapter VI Supplemental Provisions

Chapter I General Provisions

Article 1

These Measures has been formulated in accordance with the Regulations of the People's Republic of China on the Administration of Financial Institutions with Foreign Capitals so as to strengthen the control of resident representative offices of foreign financial institutions in China (hereinafter referred to as representative offices).

Article 2

The foreign financial institutions referred to in these Measures are the commercial banks, investment banks, merchant banks, securities companies, insurance companies, insurance brokerages, insurance proxy companies, insurance loss assessing companies, funds management companies, foreign exchange brokerages, credit card companies, financial leasing companies registered outside of the People's Republic of China. The representative offices referred to in these Measures are agencies set up by foreign financial institutions inside China authorized to engage in such non-productive activities as consultation, liaison and market researches.

Article 3

The representative offices must abide by the laws and regulations of the People's Republic of China and their lawful rights and interests shall be protected by the laws of the People's Republic of China.

Article 4

The People's Bank of China is the organ to be responsible for the examination and approval of the representative offices and for the supervision and administration of their businesses.

Chapter II Application and Establishment Procedures

Article 5

The following conditions should be met in applying for the establishment of representative offices:

1.

There are sound financial supervision and administration regimes in the applicants' countries or regions;

2.

The applicants should be financial institutions set up with the approval of the financial supervision and administration authorities of countries or regions where the applicants reside or members of the financial associations concerned;

3.

The applicants must conduct their business lawfully, have sound credibility, and were making profit in the previous three consecutive years before the applications.

Article 6

The following documents shall be presented in applying for the establishment of a representative office:

1.

an application letter addressed to the governor of the People's Bank of China, signed by the Chairman of the board of directors or general managers;

2.

business license (duplicate) or legal business-opening certificate (duplicate), approved and issued by responsible authorities of the country or region where the applicant resides;

3.

articles of association and roster of the board of directors or of the major partners of the company;

4.

annual reports of the previous three years before the application;

5.

approval documents produced by the financial supervision and administration authorities or a recommendation letter produced by the local trade association of the country or region where the applicant resides;

6.

other materials as required by the People's Bank of China.

The items listed in this article, except those stated in the fourth paragraph, if written in foreign languages, shall have Chinese versions attached, among which the business licenses or recommendations shall be notarized by the authorized public notaries of the countries where the applicants reside, or be recognized by the local Chinese embassies or consulates over there.

Article 7

In applying for establishing a representative office in a provincial capital, the application documents shall be presented to the local provincial branch office of the People's Bank of China. In applying for establishing a representative office in other cities, the application documents shall be presented to the cities' People's Bank of China branch offices. The application documents, after examining and verifying by the local People's Bank of China branch offices, shall be transferred to the head office of the People's Bank of China by those branch offices for examination and approval.

Article 8

After preliminary examination and approval of the application for establishing a representative office, an official application form will be issued to the applicant by the People's Bank of China. The applicant shall fill out and submit the official application form within two months since the receipt of the form, and present the following materials:

1.

identification papers and resume of the proposed head representative;

2.

the power of attorney signed by the chairman of the board of directors or general manager on the entrustment of the head representative;

All the materials listed in this article, if written in foreign languages, shall have Chinese versions attached. If the official application forms are not filled out and submitted within the specified period, the applications are seen as automatically abandoned;

An application is seen as rejected if an official application form is not received within 6 months since the submission of the application materials for establishing the representative office.

Article 9

Foreign financial institutions have already set up more than five (including five) representative offices inside China can apply for the establishment of general representative offices.

The application process for establishing general representative offices is the same as that for establishing representative offices.

Article 10

A representative office's name should be consisted of the following items in order: "name of the foreign financial institution", "name of the city where the office resides" and "representative office"; the lead person in charge is called "head representative" while other persons in charge are called "representatives" or "deputy representatives". The name of a general representative office shall be consisted of the following items, in order: "name of the foreign financial institution", "China General Representative office"; the lead person in charge of the general representative office is called "general representative", other persons in charge are called "representatives", "deputy representatives".

Article 11

Approval certificates for representative offices approved to be established are issued by the People's Bank of China, with the effective term for their being stationed set at six years. The representatives should, within 30 days since the date of approval, go to the State Administration for Industry and Commerce to register for business and to the local public security and taxation departments to register for residence and personal income on the strength of the approval certificates.

Chapter III Supervision and Administration of the Representative Offices

Article 12

The representative offices and its personnel should not sign with other legal persons and natural persons any agreements or contracts that can bring incomes for the representative offices or the institutions they represent, nor can they engage in any other business operations other than those approved.

Article 13

The post of head representative should not be assumed concurrently by the responsible persons of the head administrative office or of the related departments of the general representative office and neither can the head representatives currently assume any posts in institutions inside China. There should always be a head representative stationed in a representative office to handle routine business. Whenever the head representative leaves China for more than one month, a person shall be designated to exercise his/her duties and such cases shall be reported to the local People's Bank of China branch office for the record.

Article 14

A representative office should submit an annual report on the previous year's work before the end of each February to a local People's Bank of China branch office and then the report concerned will be transferred to the People's Bank of China head office by the branch office. The annual work reports should be made in formats stipulated by the People's Bank of China and filled out in Chinese.

Article 15

The following major developments of the foreign financial institutions that have established representative offices in China should be reported to the local People's Bank of China branch offices by the representative offices concerned within one work cay after announced by the foreign financial institutions and be afterwards turned over to the People's Bank of China head office:

1.

Changes of the articles of association, registered capital or registered addresses concerned;

2.

institution reshuffling, division, merger or change of major leading persons;

3.

serious losses in operations.

Article 16

An application should be filed with the local People's Bank of China branch office by the representatives and then transferred to the People's Bank of China head office for approval in the circumstances of:

1.

change of the head representative in which case an application and the power of attorney, signed by the chairman of board of directors or general manager of the foreign financial institution concerned with the identifications paper and resume of the proposed head representative should be submitted;

2.

change of name in which case an application signed by the chairman of board of directors or general manager of the foreign financial institution concerned should be submitted;

3.

extension of the representative office's terms of operation in China in which case an application paper signed by the chairman of board of directors or general manager of the foreign financial institution concerned and a work report of the representative office on the work of the past three years signed by the head representative should be submitted two months before the expiration of valid term of the representative office. After examination and approval, another operation term of six years shall be given.

Article 17

Reports should be submitted to People's Bank of China branch offices for approval or for the record under the following circumstances:

1.

a change, an increase or a reduce of representatives, deputy representatives, personnel with foreign nationalities or from Hong Kong, Macao or Taiwan in which cases, applications signed by the responsible person of the foreign financial institution concerned, the identification papers and resume's of the persons to be commissioned should be submitted to the local People's Bank of China branch offices for approval and then transferred to the People's Bank of China head office for the record;

2.

change of address, in which case applications for address change signed by the head representatives should be submitted to the local People's Bank of China branch offices for approval and then transferred to the People's Bank of China head office for the record;

3.

employment of Chinese nationals as staff members, in which case roster, identification papers and resume's of the Chinese nationals to be hired should be submitted to the local People's Bank of China for the record.

Chapter IV Cancellation

Article 18

Upon abolishment of a representative office, an application signed by the chairman of the board of directors or general manager of the foreign financial institutions concerned should be submitted in advance to the People's Bank of China for approval and after the approval cancellation of registration should be filed by the representative office with the State Administration for Industry and Commerce with related formalities being gone through with responsible departments.

Article 19

When change of a representative office into a business branch or general representative office, the original representative office should be abolished automatically and an application should be filed with the State Administration for Industry and Commerce for cancellation of registration.

Article 20

After abolishment of a representative office, all pending affairs should be handled by the general representative office, if there is any, or by the foreign financial institution represented, if there is not a general representative office.

Chapter V Penalty Provisions

Article 21

Representative offices established without authorization in violation of these Measures will be nullified by the People's Bank of China and if the party concerned has admitted criminal offenses, criminal responsibilities shall be affixed in accordance with the law.

Article 22

When a head representative holds concurrent offices with other institutions without authorization in violation of Article 13 of these Measures or leaves China for over one month without a record, the People's Bank of China has the right to request the foreign financial institution represented to change the person concerned.

Article 23

If a representative office/general representative office fails to submit relative documents in time in violation of Articles 14 and 15, the People's Bank of China shall order it to make up for the reports and submit a written self-criticism within a specified period.

Article 24

Engagement in business activities in violation of Articles 2 and 12 of these Measures and change of related matters without approval in violation of Articles 16 and 17 of these Measures will be fined in accordance with the Regulations of the People's Republic of China on the Administration of Financial Institutions with Foreign Capital and other related regualtions of the People's Bank of China.

Article 25

Violations of Articles 2, 12, 13, 14, 15, 16 and 17, in addition to penalties by the People's Bank of China in accordance with these Measures and other related regulations of the People's Bank of China, a warning, circulation of criticism notice and even nullification of the representative office shall be meted out by the People's Bank of China in accordance with degrees of severity.

Article 26

Violations of both these Measures and the registration laws and regulations shall be punished jointly by the People's Bank of China and the State Administration for Industry and Commerce.

Chapter VI Supplemental Provisions

Article 27

These Measures is applicable to the establishment in the Chinese territory of representative offices by financial institutions from the Hong Kong, Macao and Taiwan regions and foreign-capital financial institutions registered in China.

Article 28

These Measures shall be interpreted by the People's Bank of China.

Article 29

These Measures enter into force as of the date of promulgation, Measures of the People's Bank of China on the Administration of Establishment of Resident Representative Offices Inside China by Financial Institutions with Foreign Investment, promulgated by the People's Bank of China on June 1, 1991, is nullified at the same time.