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 Whether Administrative Penalties are Applicable to Enterprises with Foreign Investment

GongShangQiZi [1999] No.47

March 1, 1999

Fujian Administration for Industry and Commerce:

We have studied your Request for Urgent Instructions on Whether Administrative Penalties are Applicable to Enterprises with Foreign Investment (MinGongShangWaiQiZi [1999] No.44) and now reply as follows:

I.

Article 75 of the Regulations of the People's Republic of China on Company Registration Administration stipulates that "This article is applicable for the registration of foreign-invested companies of limited liability. Laws and administrative regulations on enterprises with foreign investment are applicable if they contain provisions otherwise on the registration of these businesses". In accordance with this principle, Article 5 of the Regulations of the People's Republic of China for Controlling the Registration of Enterprises as Legal Persons (hereinafter referred to as the Regulations) enacted by the State Council in 1988, namely "Chinese-foreign Equity Joint ventures, Chinese-foreign contractual joint ventures and foreign-capital enterprises should register with the State Administration for Industry and Commerce or local administrations for industry and commerce authorized by the former." is applicable for registration administration of enterprises with foreign investment. Your administration is authorized by the State Administration for Industry and Commerce to examine and approve the registration of enterprises with foreign investment and is therefore authorized to conduct registration administration of enterprises with foreign investment under your administration.

II.

As for the sealing of the business license of enterprises with foreign investment, the Regulations has explicitly stipulated that the State Administration for Industry and Commerce or local administrations for industry and commerce authorized by the former are competent authorities to examine and approve the registration of enterprises with foreign investment. The document of the business license is issued and sealed exclusively by the State Administration for Industry and Commerce, however, the registration number of the license is issued by the authorized local administration, which is held responsible for its administrative conduct. To maintain the stability of the reform and opening-up policy, little alteration is required for the business license of enterprises with foreign investment. It has been a nationwide standing practice for years and no dispute on the document has ever arisen.

III.

In accordance with the Regulations and Article 8 of the Provisional Regulations on Administrative Penalty Procedures by Administrations for Industry and Commerce enacted by the State Administration for Industry and Commerce, namely, "Administrative penalties on enterprises with foreign investment and permanent representative offices of foreign enterprises for violation of business registration administration provisions should be imposed by the State Administration for Industry and Commerce or local administrations for industry and commerce authorized by the former", your administration is authorized to impose administrative penalties on enterprises with foreign investment for violation of registration administration provisions under your administration and should report to the State Administration for Industry and Commerce for file-keeping purpose.