CHINA: Regulatory provisions for expanding Distribution Business Scope of Foreign Invested Non-commercial Enterprises.

Silvia BORTOLOTTI | CHINA | 2005-09-27


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The Notice refers to Order [2004] No. 8 of the Chinese Ministry of Commerce, issued on April 16, 2004 and effective since June 1, 2004 (‘Measures for the Administration on Foreign Investment in Commercial Fields’), which requires foreign investors to carry on agency and distribution activities through foreign-funded enterprises established in China.

Particularly, according to Order [2004] No. 8, foreign-funded enterprises shall comply with specific conditions (e.g. having good credit and no history in violation of Chinese laws) and obtain a Certificate of Approval by the administrative department of industry and commerce, in order to carry on their activities. Subsequently, they shall go through the registration formalities, by submitting a list of documents specifically indicated (e.g. articles of association, bank credit certificates of all investors).

The Notice [2005] No. 9 require that foreign invested non-commercial enterprise expanding distribution business scope, shall revise their articles of association, by specifying the distribution activity they want to carry on (including wholesale, retail and commission agency) and shall apply for a new Certification of Approval of foreign invested enterprise.

The Notice does not apply to franchise business activities, which are governed by the Measures for the Administration on Commercial Franchise Business, promulgated by the Ministry of Commerce and in force since February 1, 2005.

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