Laws of the People's Republic of China

The State Administration for Industry and Commerce

Reply of the State Administration for Industry and Commerce on the Issue Concerning the Operational Activities of Internal Departments of Enterprises

GongShangQiZi [2001] No.368

December 19, 2001

Hebei Administration for Industry and Commerce:

We have studied your Request for Instructions on How to Apply Paragraph 2 of Article 2 of Related Issues of China Oil and Natural Gas Corporation and the State Administration for Industry and Commerce on Applications for Registration as Oil Enterprises (JiGongShang [2001] No.125) and now reply as follows:

In accordance with Paragraph 2 of Article 2 of the Circular of China Oil and Natural Gas Corporation and the State Administration for Industry and Commerce Concerning Related Issues on Applications for Registration as Oil Enterprises (ZhongYouQiZi [1991] No.206), internal construction and manufacturing units and assisting manufacturing units affiliated to enterprises that need no registration for independent business operation are only restricted to those that "provide mere products and labor services internally and have no external business operations whatsoever". Units that "own partial external business operations" should "register for business operation in compliance with the regulations." The term "enterprise" here refers to any organization established in line with the law with the legal capacity for independent business operation. "Internal" refers to within the business entity. Such "internal" units as manufacturing and construction units and assisting manufacturing units affiliated to the business entity that are established outside the residence of the business entity, provide products and services to parties that do not belong to the internal range of the business entity and engage in external business operation should apply for the required registration in line with the provisions. Otherwise, they shall be investigated in accordance with the Regulations for Controlling the Registration of Enterprises as Legal Persons and its implementing rules.