Administration of Representative Establishments in China of Foreign-funded Financial Institutions Measures

The term "foreign financial institution" means a financial institution registered outside the People's Republic of China and recognized by the financial regulatory authority or trade association of the country or region where it is located.

Foreign-funded financial institutions registered and established in China include: banks with foreign capital the head offices of which are in China; equity joint venture banks established in China by foreign financial institutions and Chinese companies or enterprises; finance companies, currency brokerages and credit card companies with foreign capital the head offices of which are in China; equity joint venture finance companies, currency brokerages and credit card companies established in China by foreign financial institutions and Chinese companies or enterprises; and other foreign-funded financial institutions established with the approval of the People's Bank of China.

For the purposes of these Measures, the term "representative establishments of foreign-funded financial institutions" (Representative Establishments) includes representative offices and general representative offices established in China by foreign-funded financial institutions and engaged in non-business activities such as consultancy, liaison and market research, etc. The main person in charge of a representative office shall be titled chief representative and the main person in charge of a general representative office shall be titled general representative.

Article 3: Representative Establishments must abide by the laws and regulations of the People's Republic of China. Their lawful rights and interests shall be protected by the laws of the People's Republic of China.

PART TWO: APPLICATION AND ESTABLISHMENT

Article 4: When a foreign-funded financial institution establishes a representative office, the applicant shall meet the following conditions:

(1) there is a sound financial regulatory system in the country or region in which the applicant is located;

(2) the applicant is a financial institution established upon the approval of the financial regulatory authority of, or a member of the financial trade association of, the country or region in which the applicant is located;

(3) the applicant's business position is good and it has no record of major violations of laws or regulations; and

(4) other prudential conditions specified by the People's Bank of China.

When a foreign-funded financial institution registered in China establishes a representative office, the applicant shall meet the conditions specified in Items (3) and (4) above.

Article 5: When applying to establish a representative office, the applicant shall obtain an application form from, and submit the completed form accompanied by the materials set forth below to, the office of the People's Bank of China of the proposed place of establishment:

(1) an application addressed to the governor of the People's Bank of China and signed by the chairman of the board or president (chief executive officer, general manager) of the applicant;

(2) (a photocopy of) the business licence or (a photocopy of) the certificate of lawful commencement of business issued by the relevant authority-in-charge in the country or region in which the applicant is located;

(3) the articles of association of the company, a list of names of the members of the board of directors and the 10 largest shareholders or the main partners;

(4) annual reports for the three years prior to the application;

(5) a written opinion issued by the financial regulatory authority of the country or region in which the applicant is located, on the establishment of a representative office in China by the applicant, or a letter of recommendation from the trade association of the trade to which the applicant belongs;

(6) proof of the identity, academic attainments and the résumé of the proposed chief representative, and a statement of no record of improper conduct signed by the person proposed for the position;

(7) a power of attorney appointing the chief representative, signed by the chairman of the board, president (chief executive officer, general manager) or his authorized signatory; and

(8) other materials requested by the People's Bank of China.

A foreign-funded financial institution registered in China need not include the materials specified in Item (5) of this article with the materials it provides.

Article 6: All foreign language materials, other than annual reports, which these Measures require to be submitted shall be accompanied by Chinese translations thereof.

Of these, the "power of attorney" and "(photocopy of the) business licence" or "(photocopy of the) certificate of lawful commencement of business" must be notarized by a notarial organization recognized by the country or region in which the applicant is located, or authenticated by the Chinese embassy or a Chinese consulate in such country.

Article 7: Once the office of the People's Bank of China has preliminarily examined the application materials submitted by the foreign-funded financial institution, it shall submit the same to the head office of the People's Bank of China for examination and approval.

Article 8: The name of a representative office shall be composed of the following elements: name of the foreign-funded financial institution followed by the name of the city where it is located followed by the words "Representative Office".

Article 9: Foreign financial institutions that have established five or more offices/branches in China may apply to establish a general representative office.

The application Measures for establishment of a general representative office are the same as those for establishment of a representative office, and both types of office will be administered in the same way.

The name of a general representative office shall be composed of the following elements: name of the foreign financial institution followed by the words "General Representative Office in China".

Article 10: The qualifications of the general representatives of general representative offices and the chief representatives of representative offices to serve in such positions shall be subject to the verification and approval system.

The head office of the People's Bank of China is responsible for verifying and approving or revoking the qualifications of the general representatives of general representative offices and the chief representatives of representative offices to serve in such positions.

Article 11: Persons holding the positions of general representative of a general representative office or chief representative of a representative office shall meet the following conditions:

(1) persons holding the position of general representative of a general representative office shall, in general, have five or more years of work experience in finance or a related economic field and three or more years experience as a business department manager or in an equivalent or higher position;

(2) persons holding the position of chief representative of a representative office shall, in general, have three or more years of work experience in finance or a related economic field; and

(3) holding an undergraduate degree or higher academic qualification. In the absence of such qualification, the number of years engaged in finance or a related economic field required of a person holding the position of general representative of a general representative office shall increase by six years and that of a person holding the position of chief representative of a representative office by three years.

Article 12: When applying to replace the general representative or chief representative of a Representative Establishment, the foreign-funded financial institution shall submit the following materials to the office of the People's Bank of China of the place where the Representative Establishment is located:

(1) an application addressed to the governor of the People's Bank of China and signed by the authorized signatory of the foreign-funded financial institution;

(2) a power of attorney signed by the authorized signatory of the foreign-funded financial institution;

(3) the résumé of the person proposed for the position;

(4) photocopies of the proof of the identity and academic attainments of the person proposed for the position;

(5) a statement of no record of improper conduct signed by the person proposed for the position; and

(6) other materials requested by the People's Bank of China.

Article 13: Once the office of the People's Bank of China has preliminarily examined the application materials for replacement of the general representative or chief representative of a Representative Establishment submitted by a foreign-funded financial institution, it shall submit the same to the head office of the People's Bank of China for examination and approval.

Article 14: The head office of the People's Bank of China will issue an approval certificate granting a term of residence of six years to Representative Establishments established upon approval.

Representative Establishments shall register with the administration for industry and commerce in accordance with the relevant provisions after obtaining their approval certificates. If a Representative Establishment fails to register within the specified period of time, a letter of reapplication signed by the chairman of the board or president (chief executive officer, general manager) of the foreign-funded financial institution that it represents must be submitted to the People's Bank of China and Measures for the approval certificate carried out anew.

A Representative Establishment must move into its fixed office premises within six months after the date of obtaining its approval certificate from the People's Bank of China. If it fails to do so within the six months, its original approval of establishment will automatically become null and void.

PART THREE: SUPERVISION AND CONTROL

Article 15: No Representative Establishment or member of its working personnel may enter into any agreement or contract with any work unit or natural person that may cause revenue to be generated for the Representative Establishment or the foreign-funded financial institution that it represents, or engage in any manner of business activity.

Article 16: When a Representative Establishment is established, terminated or changed, or its term is renewed, an announcement to that effect shall be placed in newspapers designated by the head office of the People's Bank of China and a report made to the office of the People's Bank of China of the place where the Representative Establishment is located within 15 days after the completion of business registration.

Article 17: A Representative Establishment must have independent office premises, office facilities and full-time working personnel.

Article 18: General representatives and chief representatives of Representative Establishments shall in general serve terms of not less than two years and may not concurrently hold management positions in business-type organizations while in office.

A general representative or chief representative of a Representative Establishment shall normally be present to preside over the routine work of a Representative Establishment and if he is to be absent from his duties for a continuous period of one month or more, he shall designate someone to carry out his duties on his behalf and report the same to the office of the People's Bank of China of the place where the Representative Establishment is located. If he is to be absent from his duties for a continuous period of three months or more for no special reason, he must be replaced and his proposed successor shall be reported to the People's Bank of China for examination and approval.

Article 19: By the end of February each year, a Representative Establishment shall submit reports on the preceding year's work to the office of the People's Bank of China of the place where it is located, which shall forward the same to the head office of the People's Bank of China.

Work reports of Representative Establishments shall be written in Chinese in the form specified by the People's Bank of China.

Article 20: A Representative Establishment shall submit to the office of the People's Bank of China of the place where it is located the annual report of the foreign-funded financial institution it represents within six months after the end of such institution's fiscal year.

Article 21: If a foreign financial institution that has established a Representative Establishment experiences any of the major events set forth below, its Representative Establishment shall report the same to the office of the People's Republic of China where the Representative Establishment is located in a timely manner, whereupon such office shall forward the same to the head office of the People's Bank of China:

(1) change in the articles of association, registered capital or registered address;

(2) reorganization, change in equity or change of any of its main persons in charge;

(3) sustaining of major business losses;

(4) occurrence of a material event;

(5) implementation of a major regulatory measure against the foreign-funded financial institution by the regulatory authority of the country or region where it is located; or

(6) other events that have a material effect on the operation of the foreign-funded financial institution.

Article 22: If the name of a Representative Establishment in China changes due to the establishment of a new institution through the merger, division, or other form of restructuring of the foreign-funded financial institution it represents, an application shall be submitted in advance to the head office of the People's Bank of China, together with the following materials:

(1) an application signed by the chairman of the board or president (chief executive officer, general manager) of the new institution;

(2) a letter of approval of the reorganization issued by the financial regulatory authority of the country or region where the new institution is located;

(3) the consolidated financial statements of the new institution;

(4) the articles of association of the new institution, a list of names of the members of the board of directors and the 10 largest shareholders or the main partners;

(5) (a photocopy of) the business licence or (a photocopy of) the certificate of lawful commencement of business issued by the relevant authority-in-charge of the country or region in which the new institution is located;

(6) the résumé, proof of the academic attainments, proof of the identity and a statement of no record of improper conduct of the chief representative or general representative of the Representative Establishment in China of the new institution;

(7) the power of attorney of the chief representative or general representative of the Representative Establishment in China, signed by the chairman of the board, president (chief executive officer, general manager) of the new institution or his authorized signatory; and

(8) other materials requested by the People's Bank of China.

The foreign-funded financial institution shall also submit (photocopies) of the foregoing materials to the office of the People's Bank of China of the place where the Representative Establishment is located.

Article 23: If a foreign-funded financial institution changes the name of its Representative Establishment in China for any other reason, it must submit to the head office of the People's Bank of China an application signed by the chairman of the board or president (chief executive officer, general manager) of the foreign-funded financial institution and additionally submit a copy of the application to the office of the People's Bank of China of the place where the Representative Establishment is located.

Article 24: Once a foreign-funded financial institution receives the approval of the People's Bank of China of the change of the name of its Representative Establishment in China, it shall carry out the Measures for amending its registration with the administration for industry and commerce in accordance with relevant provisions.

Article 25: A Representative Establishment shall file a submission with the branch of the People's Bank of China of the place where it is located for approval, if:

(1) it wishes to extend its term, in which case it shall submit the following documents to the branch or business management department of the People's Bank of China of the place where it is located for examination and approval two months prior to the expiration of its term of residence: an application signed by the authorized signatory of the foreign financial institution, and its work reports for the most recent three years signed by its chief representative or general representative. The term of a representative office shall be extended by six years per time; or

(2) it wishes to change its address, in which case it shall submit an application to relocate signed by its chief representative or general representative for examination and approval by the branch or business management department of the People's Bank of China where it is located, which shall report the same to the head office of the People's Bank of China. The Representative Establishment must relocate to its new address within three months after receiving approval.

PART FOUR: TERMINATION OF A REPRESENTATIVE ESTABLISHMENT

Article 26: When applying to close a Representative Establishment, an application addressed to the governor of the People's Bank of China signed by the chairman of the board or president (chief executive officer, general manager) of the foreign financial institution shall be submitted to the office of the People's Bank of China of the place where the Representative Establishment is located. After the office of the People's Bank of China of the place where the Representative Establishment is located has preliminarily examined the application, it shall forward the same to the head office of the People's Bank of China for examination and approval. Upon approval, application for de-registration shall be made to the administration for industry and commerce and relevant Measures shall be carried out with the relevant departments.

Article 27: After a representative office is upgraded to a business (sub-)branch or a general representative office with the approval of the People's Bank of China, the original representative office shall automatically close and application for de-registration shall be made to the administration for industry and commerce.

Article 28: Any unfinished business of a representative office that has closed, or been closed down by the People's Bank of China in accordance with the law, shall become the responsibility of the general representative office, if established. Any unfinished business of a general representative office or of a representative office (if no general representative office has been established) that has closed, or been closed down by the People's Bank of China in accordance with the law, shall be handled by the foreign financial institution that it represented.

PART FIVE: PENAL PROVISIONS

Article 29: If a work unit or a natural person violates these Measures by establishing a Representative Establishment in China of a foreign-funded financial institution without the approval of the People's Bank of China, including displaying on fixed office premises a sign bearing a name as specified in Article 9 hereof, the People's Bank of China will close down such establishment in accordance with the law. If a criminal offence is constituted, criminal liability shall be pursued according to law.

Article 30: If a foreign-funded financial institution establishes a Representative Establishment without the approval of the People's Bank of China, the People's Bank of China will not accept any applications from such foreign-funded financial institution for the establishment in China of a Representative Office or a business-type institution for five years after the date of closure of the Representative Establishment.

Article 31: If a Representative Establishment fails to submit the reports or materials specified in Articles 19, 20 and 21 to the office of the People's Bank of China of the place where it is located within the specified time limit, it will be given a warning by the office of the People's Bank of China of the place where it is located. If it fails to submit the reports or materials for two years in succession, the office of the People's Bank of China of the place where it is located shall report to the head office of the People's Bank of China to have it closed down.

Article 32: If a Representative Establishment or a member of its working personnel violates Article 15 hereof by engaging in finance business activities, it/he will be punished by the People's Bank of China in accordance with the relevant provisions of the Penalties for Illegal Financial Acts Measures. If it/he engaged in business-type activities other than finance business activities, it/he will be given a warning by the People's Bank of China. If the circumstances are serious, the Representative Establishment will be closed down.

Article 33: If a Representative Establishment fails to submit an application for the renewal of its term two months before the expiration of its term of residence, it shall submit to the office of the People's Bank of China of the place where it is located a letter of apology from the foreign-funded financial institution that it represents explaining the reason why it failed to submit the application for the renewal of its term within the prescribed time limit.

The branch (business management department) of the People's Bank of China of the place where the Representative Establishment is located shall render its decision on whether to approve the renewal on the basis of the specific circumstances.

Article 34: In any of the circumstances set forth below, the qualifications of the chief representative or general representative of a Representative Establishment to serve in such position may be revoked by the People's Bank of China for a fixed period of time or for life, depending on the seriousness of the circumstances and on the consequences:

(1) the Representative Establishment or a member of its working personnel engages in financial business or other business-type activities;

(2) the Representative Establishment submits false information or materials that conceal material facts, and the circumstances are serious;

(3) the Representative Establishment violates Article 20 or 21 hereof by failing to submit to the People's Bank of China on time its annual report or a report on a material matter that occurred to the foreign-funded financial institution that it represents;

(4) the criminal liability of the chief representative or general representative is pursued in accordance with the law;

(5) the Representative Establishment refuses, interferes in, obstructs or seriously affects legal oversight by the People's Bank of China; or

(6) the People's Bank of China discovers that a serving general representative or chief representative had committed a violation of laws or regulations or had otherwise been unfit to hold a senior management position before he assumed his post.

Article 35: If a Representative Establishment submits false information or materials that conceal material facts, it will be given a warning by the People's Bank of China.

Article 36: If a Representative Establishment violates another provision hereof, the People's Bank of China will give it a warning or propose to the foreign-funded financial institution that it represents that its chief representative or general representative be replaced.

PART SIX: SUPPLEMENTARY PROVISIONS

Article 37: These Measures shall apply mutatis mutandis to the establishment of Representative Establishments by financial institutions from the Hong Kong and Macao Special Administrative Regions and Taiwan and their wholly-owned banks, equity joint venture banks, wholly-owned finance companies and equity joint venture finance companies established in mainland China.

Article 38: These Measures shall be implemented as of July 18 2002. The Administration of Representative Offices in China of Foreign Financial Institutions Measures promulgated by the People's Bank of China on April 29 1996 shall simultaneously be repealed.

Article 39: The People's Bank of China shall be in charge of interpreting these Measures.