Measures on the Administration of Foreign-Funded Financial Institutions’ Representative Offices in China - 2002

(In accordance with the relevant provisions in the Regulation of the People’s Republic of China on the Administration of Foreign-Funded Financial Institutions, the People’s Bank of China has enacted the Measures on the Administration of Foreign-Funded Financial Institutions’ Representative Offices in China, which are hereby promulgated and shall come into force on July 18, 2002.)

President: Dai Xianglong
June 13, 2002

Measures on the Administration of Foreign-Funded Financial Institutions’ Representative Offices in China
(the Peoples Bank of ChinaJune 27, 2002)

Chapter I General Provisions

Article 1 These Measures are enacted in accordance with the relevant provisions in the Regulation of the People’s Republic of China on the Administration of Foreign-Funded Financial Institutions with a view to meeting the demands arising from the opening to the outside world and economic development and strengthening the administration of foreign-funded financial institutions’ representative offices in China.

Article 2 Foreign-funded financial institutions mentioned in these Measures shall include foreign financial institutions and foreign-funded financial institutions registered and established inside the territory of China.

A foreign financial institution shall refer to a financial institution registered outside the territory of the People’s Republic of China and ratified by the financial supervision authority or financial industry association of the country or region where it is located.

Foreign-funded financial institutions registered inside the territory of China shall include: foreign banks whose head offices are inside the territory of China; joint venture banks inside the territory of China established jointly between foreign financial institutions and Chinese companies or enterprises; foreign financial companies, currency brokerage companies and credit card companies whose head offices are inside the territory of China; joint venture financial companies, currency brokerage companies and credit card companies established jointly by foreign financial institutions and Chinese companies or enterprises inside the territory of China; and other foreign-funded financial institutions established upon the approval of the People’s Bank of China.

Foreign-funded financial institutions’ representative offices (hereinafter referred to as "representative offices") mentioned in these Measures shall include representative offices and general representative offices established inside the territory of China by foreign-funded financial institutions to engage in non-operation activities such as consultancies, contacts and market investigations, etc. The main responsible person of a representative office is called a chief representative, and the main responsible person of a general representative office is called a general representative.

Article 3 Representative offices must abide by the laws and regulations of the People’s Republic of China, and their lawful rights and interests are protected by the laws of the People’s Republic of China.

Chapter II Application and Establishment

Article 4 Where a foreign financial institution intends to establish a representative office, the applicant shall meet the following conditions:
(1) the country or region where the applicant is located has a complete financial supervision system;
(2) the applicant is a financial institution established upon the approval of the financial supervision authority of the country or region where it is located, or is a member of the financial industry association;
(3) the applicant is in good operative condition, and has no record of major violation of law or regulation;
(4) other prudential conditions stipulated by the People’s Bank of China.

Where a foreign-funded financial institution registered inside the territory of China intends to establish a representative office, the applicant shall meet the conditions in the above Items (3) and (4).

Article 5 When applying for establishing a representative office, the applicant shall obtain an application form from the branch of the People’s Bank of China at the locality where the office is to be established, and shall submit the filled-in application form together with the following documents to the said branch:
(1) an application letter to the president of the People’s Bank of China signed by the board chairman or the president (chief executive officer, general manager);
(2) the business license (duplicate) or the attestation on lawfully opening business (duplicate) checked and issued by the relevant competent authority of the country or region where the applicant is located;
(3) the company’s articles of association, the name list of members in the board of directors and of the largest ten shareholders or the name list of the main partners;
(4) annual financial statements for the latest 3 years before this application;
(5) a written opinion issued by the financial supervision authority of the country or region where the applicant is located on the establishment of such a representative office inside the territory of China, or a recommendation letter issued by the financial industry association of which the applicant is a member;
(6) the identity certificate, academic credentials and resume of the chief representative to be appointed, and the statements signed by the persons to be appointed on whether there is any delinquent record;
(7) a power of attorney signed by the board chairman or president (chief executive officer, general manager) or his authorized signatory on appointing the chief representative;
(8) other documents required by the People’s Bank of China.

The documents submitted by a foreign-funded financial institution registered inside the territory of China do not include those provided for by Item (5) of this Article.

Article 6 Except for the annual financial statements, any document required by these Measures to be submitted shall have a Chinese translation attached if it is written in a foreign language.

Among the documents submitted, the "power of attorney", the "business license (duplicate)" or "attestation on opening business (duplicate)" must be notarized by a notarial office ratified by the country or region where the applicant is located, or authenticated by the Chinese embassy or consulate accredited to that country.

Article 7 The branch of the People’s Bank of China shall, after preliminarily examining the application documents submitted by a foreign-funded financial institution, submit them to the head office of the People’s Bank of China for examination and approval.

Article 8 The Chinese name of a representative office shall be composed of the following parts, which, in turn, are: the name of the foreign-funded financial institution, the name of the city where the office is to be located and the words "representative office".

Article 9 A foreign financial institution that has established 5 or more branches inside the territory of China may apply for establishing a general representative office.

The procedures of application for the establishment of a general representative office and the administration thereof are identical with those of a representative office.

The Chinese name of a general representative office shall be composed of the following parts, which, in turn, are: the name of the foreign financial institution, and the words "general representative office in China".

Article 10 The qualification for the general representative of a general representative office and for the chief representative of a representative office to hold the position shall be subject to a system of approval.

The head office of the People’s Bank of China shall be responsible for approving or canceling the qualification for the general representatives of general representative offices and the chief representatives of representative offices to hold their positions.

Article 11 Whoever intends to hold the position of general representative in a general representative office or the position of chief representative in a representative office shall meet the following conditions:
(1) to hold the position of a general representative in a general representative office, one should usually have 5 years or more of work experiences in finance or in the relevant economic affairs, and have 3 years or more of experiences in holding the position of business department manager or similar positions or above;
(2) to hold the position of a chief representative in a representative office, one should usually have 3 years or more of work experiences in finance or in the relevant economic affairs;
(3) he should have the academic qualification of regular course education or above in a higher education institution; anyone who fails to meet this condition shall have an additional 6 years of work experiences in finance or in the relevant economic affairs to hold the position of a general representative in a general representative office, and shall have an additional 3 years of work experiences in finance or in the relevant economic affairs to hold the position of a chief representative in a representative office.

Article 12 A foreign-funded financial institution that applies for changing the general representative or the chief representative of its representative office shall submit the following documents to the branch bank of the People’s Bank of China at the locality of the representative office:
(1) the application letter to the president of the People’s Bank of China, which is signed by the authorized signatory of the foreign-funded financial institution;
(2) the power of attorney signed by the authorized signatory of the foreign-funded financial institution;
(3) resumes of the persons to be appointed;
(4) duplicates of identity certificates and academic credentials of the persons to be appointed;
(5) the statements signed by the persons to be appointed on whether there is any delinquent record;
(6) other documents required by the People’s Bank of China.

Article 13 The branch bank of the People’s Bank of China shall, after preliminarily examining the application documents for changing the general representative or the chief representative of a representative office, which are submitted by a foreign-funded financial institution, submit them to the head office of the People’s Bank of China for approval.

Article 14 A representative office established upon approval shall be issued the approval certificate by the head office of the People’s Bank of China, and the validity period for the office shall be 6 years.

A representative office shall, after obtaining the approval certificate, go through the registration in the administrative department for industry and commerce in accordance with the relevant provisions. Where a representative office has failed to go through the registration within the specified time limit, it must submit an application letter signed by the board chairman or president (chief executive officer, general manager) of the foreign-funded financial institution it represents to the People’s Bank of China for re-obtaining the approval certificate.

A representative office must, within 6 months as of the day it receives the approval of the People’s Bank of China, move into fixed office sites, otherwise the original approval for establishment shall be automatically invalidated.

Chapter III Supervision and Administration

Article 15 Neither the representative office nor its employees shall conclude with any entity or natural person an agreement or contract which might bring income to the representative office or the foreign-funded financial institution it represents, or engage in any form of operative activities.

Article 16 When a representative office is established, terminated, modified or its period is extended, it shall, within 15 days after the industrial and commercial registration is made, make an announcement in a newspaper designated by the head office of the People’s Bank of China, and shall report to the branch bank of the People’s Bank of China at its locality.

Article 17 A representative office must have its independent office sites, office facilities and full-time employees.

Article 18 The period for the position held by the general representative or the chief representative of a representative office shall usually be 2 years or more, during this period the general representative or chief representative shall not concurrently hold the managing position in any other operative organization.

The general representative or chief representative shall reside in the representative office to preside over the daily work. If he needs to depart from his position for 1 month or more, he shall designate a special person to exercise his duties on behalf of him, and report to the branch bank of the People’s Bank of China at his locality. If he needs to depart from his position for 3 months or more and has no particular reasons, his position shall be taken place by another person upon the approval of the head office of the People’s Bank of China.

Article 19 A representative office shall, before the end of February of each year, submit the work report of the last year to the branch bank of the People’s Bank of China at its locality, and the branch bank shall then submit it to the head office of the People’s Bank of China.

The work report of a representative office shall be filled out in Chinese in accordance with the format specified by the People’s Bank of China.

Article 20 A representative office shall, within 6 months after the end of the fiscal year of the foreign-funded financial institution it represents, provide the branch bank of the People’s Bank of China at its locality with the annual financial statements of the foreign-funded financial institution.

Article 21 Where a foreign financial institution that has established a representative office is under any of the following circumstances, the representative office shall report to the branch bank of the People’s Bank of China at its locality in time, and then the branch shall report to the head office of the People’s Bank of China:
(1) the articles of association, registered capital or registration address of the institution is modified;
(2) the institution is restructured, the share rights are modified or the main responsible person is changed;
(3) the institution suffers from serious losses in the operation;
(4) a major case occurs;
(5) the supervision authority of the country or region where the foreign financial institution is located imposes major supervision measures on it;
(6) other events which are of major impact to the operation of the foreign financial institution.

Article 22 Where a new foreign-funded financial institution is to be established due to merger, division or other restructuring causes and therefore the name of its representative office inside the territory of China is to be changed, the institution shall apply to the head office of the People’s Bank of China in advance, and shall submit the following documents:
(1) the application letter signed by the board chairman or president (chief executive officer, general manager) of the new institution;
(2) the approval letter of the financial supervision authority of the country or region where the new institution is located on approving the institutional restructuring;
(3) the financial statements on the merger of the new institution;
(4) the new institution’s articles of association, the name list of members in the board of directors and of the largest ten shareholders or the name list of the main partners;
(5) the business license (duplicate) or attestation on lawfully opening business (duplicate) checked and issued by the relevant competent authority of the country or region where the new institution is located;
(6) the resume, academic credentials and identity certificate of the chief representative or the general representative of the new institution’s representative office inside the territory of China, and the statements signed by the representative on whether there is any delinquent record
(7) a power of attorney signed by the new institution’s board chairman or president (chief executive officer, general manager) or his authorized signatory on appointing the chief representative or the general representative of the representative office inside the territory of China;
(8) other documents required by the People’s Bank of China.

A foreign-funded financial institution shall meanwhile submit the above said documents (duplicates) to the branch bank of the People’s Bank of China at the locality of its representative office.

Article 23 Where a foreign-funded financial institution changes the name of its representative office inside the territory of China due to other reasons, it must submit to the head office of the People’s Bank of China an application letter signed by its board chairman or president (chief executive officer, general manager), and shall meanwhile submit the duplicate of the application letter to the branch bank of the People’s Bank of China at the locality of the representative office.

Article 24 A foreign-funded financial institution shall, after obtaining the approval letter of the People’s Bank of China on approving its changing of the name of the representative office inside the territory of China, go through the modification registration formalities in the administrative department for industry and commerce in accordance with the relevant provisions.

Article 25 Where a representative office is to be under any of the following circumstances, it shall report to the branch bank of the People’s Bank of China at its locality for approval:
(1) Extension of the period of the representative office. The office shall, 2 months before the expiry of its validity period, submit an application letter signed by an authorized signatory of the foreign-funded financial institution and the work reports of the latest 3 years, which are signed by the chief representative or general representative of the representative office, to the branch bank or business management department of the People’s Bank of China at its locality for examination and approval. The time limit of each extension of the period of the representative office shall be 6 years.
(2) Change of address. The office shall submit an application letter for change of address, which is signed by its chief representative or general representative, to the branch bank or business management department of the People’s Bank of China at its locality for examination and approval, which shall report to the head office of the People’s Bank of China. The representative office must move to the new address within 3 months after being approved.

Chapter IV Termination of Representative Offices

Article 26 Whoever applies for closing a representative office shall submit to the branch bank of the People’s Bank of China at its locality an application letter to the president of the People’s Bank of China, which is signed by the board chairman or president (chief executive officer, general manager) of the foreign-funded financial institution. The said branch shall, after preliminary examination, then submit the letter to the head office of the People’s Bank of China for examination and approval. The applicant shall, after being approved, apply to the administrative department for industry and commerce for canceling the registration, and shall go through the relevant formalities in the relevant government departments.

Article 27 After a representative office is approved by the People’s Bank of China to upgrade itself as an operative branch or general representative office, the original representative office shall be automatically closed, and it shall apply to the administrative department for industry and commerce for canceling the registration.

Article 28 After a representative office is closed or cancelled by the People’s Bank of China in accordance with the law, its general representative office, if any, shall be responsible for the remaining matters; after a general representative office, or a representative office with no general representative office is closed or cancelled by the People’s Bank of China in accordance with the law, the foreign-funded financial institution it represents shall be responsible for the remaining matters.

Chapter V Penalty Provisions

Article 29 Where, without the approval of the People’s Bank of China, an entity or natural person violates these Measures by establishing a foreign-funded financial institution’s representative office in China or by hanging up a plaque with a name provided for in Article 9 of these Measures at a fixed office site, it shall be banned by the People’s Bank of China in accordance with the law; if a crime is constituted, the offender shall be investigated for criminal liabilities in accordance with the law.

Article 30 Where a foreign-funded financial institution establishes a representative office without being approved by the People’s Bank of China, the People’s Bank of China shall not accept any application filed by this institution for establishing a representative office or other operative office inside the territory of China within 5 years as of the date when the representative office is banned.

Article 31 Where a representative office has failed to submit the reports or documents provided for in Articles 19, 20 and 21 of these Measures to the branch bank of the People’s Bank of China at its locality within the specified time limit, it shall be imposed upon a warning by the branch; where the office has failed to provide the reports or documents during 2 consecutive years, the branch of the People’s Bank of China at its locality shall report to the head office of the People’s Bank of China to cancel the representative office.

Article 32 Where a representative office or any of its employees violates Article 15 of these Measures by engaging in financial business activities, it/he shall be penalized by the People’s Bank of China in accordance with the relevant provisions in the Measures for Penalizing Illegal Financial Acts; where a representative office or any of its employees engages in any operative activity other than its financial business, it/he shall be imposed upon a warning by the People’s Bank of China, or, if the case is serious, the representative office shall be cancelled.

Article 33 Where a representative office has failed to submit an application for the extension of the period 2 months before the expiry of its validity period, it shall submit an apology letter issued by the foreign-funded financial institution it represents to the branch of People’s Bank of China at its locality, explaining the reason.

The branch (business management department) of the People’s Bank of China at the representative office’s locality shall, on the basis of the specific situation, make a decision on whether to approve the extension.

Article 34 If any of the following circumstances occurs, the People’s Bank of China may, according to the seriousness and consequences, suspend the qualification for the chief representative or general representative of the representative office to hold the position for a period and even cancel his qualification for life:
(1) a representative office or any of its employees engages in financial business activities or other operative activities;
(2) the representative office provides documents containing false information or concealing important facts, and the case is serious;
(3) a representative office violates Article 20 or 21 of these Measures by not submitting annual reports or not reporting the major events of the foreign-funded financial institution it represents to the People’s Bank of China;
(4) the chief representative or general representative is investigated for criminal liabilities in accordance with the law;
(5) a representative office refuses, disturbs, impedes or seriously hinders the lawful supervision of the People’s Bank of China;
(6) the People’s Bank of China finds that a general representative or chief representative was, prior to his holding the position, in violation of the law or regulation or under any other circumstance not proper for him to hold the position of a senior manager.

Article 35 A representative office that provides documents containing false information or concealing important facts shall be imposed upon a warning by the People’s Bank of China.

Article 36 Where any representative office violates any other provisions in these Measures, it shall be imposed upon a warning by the People’s Bank of China, or the foreign-funded financial institution it represents shall be suggested by the People’s Bank of China to change the chief representative or general representative.

Chapter VI Supplementary Provisions

Article 37 The establishment of representative offices by financial institutions from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Region as well as by the wholly-owned banks, joint venture banks, wholly-owned financial companies and joint venture financial companies established in the mainland of China by the said financial institutions, shall refer to these Measures.

Article 38 These Measures shall come into force on July 18, 2002. The Measures on the Administration of Foreign Financial Institutions’ Representative Offices in China promulgated by the People’s Bank of China on April 29, 1996 shall be abrogated simultaneously.

Article 39 The power to interpret these Measures shall remain with the People’s Bank of China.

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