New rules add burdens on foreign rep offices

    Foreign companies with interests in China should re-evaluate various investment options and avenues in light of new PRC regulations regarding foreign companies' representative offices.

    On November 25, the State Council published the Regulations for the Administration of the Registration of Resident Representative Offices of Foreign Enterprises (国务院外国企业常驻代表机构登记管理条例).The scope of the rules encompasses the administration and registration of representative offices of foreign companies excluding those of Non-governmental organisations (NGOs), law firms, insurance firms, and accounting firms.

    While the regulations are not expected to come into effect until March 2011, Hong Kong-based Gide Loyrette Nouel partner Rebecca Silli warns that local authorities may begin to implement these rules before the date. When considering foreign representative offices, she advised: “Foreign companies need to pre-empt problems arising from the rules and plan strategy in China from a longer-term perspective.”