Comments on: Closing Down Representative Offices in China

By: sajid Mahmood

sajid Mahmood — Fri, 09 Dec 2011 05:04:21 +0000

There are news/rumors, in 2012,no representaive offices going to renew or extend. Pls comments.

By: Editor

Editor — Tue, 24 Feb 2009 09:52:15 +0000

Dear Wayne,

You will need to de-register from the position of Chief Representative with registration authority. Until you do that, you will still remain the legally responsible Chief Representative. Termination of the employment contract with parent company alone is not strong enough to release you from the Chief Rep’s liabilities.

Regards,

By: Wayne

Wayne — Tue, 24 Feb 2009 05:16:44 +0000

I am the Chief Rep for a American Co. in China. I gave them the required 30 day notice and my last day is the end of the month. I want to know once I leave the company I am no longer legally responsible for the company and its business dealings in China? Correct? To my knowledge the company has not assigned a new Chief Rep. and my questions regarding this go unanswwered.

By: Andy Scott

Andy Scott — Tue, 02 Dec 2008 08:59:44 +0000

Also,

You should double check with the service agreement between the RO and FESCO. In practice, the requirement in the agreement might be higher than the legal regulations, i.e. the notice might be three months in advance rather than the one month required by the Labor Contract Law. If the requirement in the agreement is higher or stricter, then it should be followed accordingly.

Regards,

By: Andy Scott

Andy Scott — Tue, 02 Dec 2008 08:54:28 +0000

Dear June,

To answer your questions:

It is required to give prior notice or 1 month salary via Labor Dispatch Company (i.e. FESCO).

Regarding Article 44 or 40, let’s take FESCO for example. Theoretically speaking, considering FESCO is the direct employer and still legally exists, Article 40 should be followed and 30 days prior notice is required. In practice, staff professionals at Dezan Shira & Associates have double confirmed with officials at FESCO regarding the issue and they agreed with the above mentioned understanding.

Regards,

By: June

June — Mon, 01 Dec 2008 09:34:19 +0000

In case the Representative office decides to close down & dissolved all employees, does the RO has to advise 30 days in advance or pay 1 month notice in lieu? On this situation is under Labor Law article 44 (that mean no need to have 30 days notice or pay in lieu) or article 40?

By: Andy Scott

Andy Scott — Tue, 02 Sep 2008 07:13:40 +0000

Dear Van,

The Chief Rep is not required to stay in China during the liquidation process. However, his liability as a Chief Rep can only be released after the RO is completely de-registered in China. His individual income tax needs to be paid as usual till the cutoff day of the RO.

Regards,

By: Van

Van — Mon, 01 Sep 2008 06:48:57 +0000

My company is anxious to move me home. How critical is it to have the RO’s legal representative/chief representative in country during this closing down process? Is my company risking legal problems or dragging the closing of the RO down by sending me home too soon?

Thanks,

Van

By: Junior Park

Junior Park — Mon, 18 Aug 2008 10:19:31 +0000

In accordance with its instructions, I think it will be a big trouble if RO’s employees did not pay their IIT for several months and didn’t get any tax returns from the inland revenue, won’t it? If RO’s oringinal accounting vouchers were lost for certain reasons (about half year), is it be possible to do the tax audit?
How does RO remedy those mistakes if we still want to close down it rightly?

Thanks,

By: Andy Scott

Andy Scott — Wed, 13 Aug 2008 06:04:50 +0000

Dear David,

There is no such “barely breathing” option in China. If you want to keep a company, you will need continue the daily compliance (tax, accounting, audit), regardless of if there is any revenue/cost. If you want to withdraw the capital, closure and liquidation should be performed. When you come back to China later, you will need new capital for a separate new entity.

Regards,