The “A” foreign company has registered in Shanghai outskirts. Because the transportation has been inconvenient, the company has rent a 300m²office in an office building in the city center to provide company administrations and business staff to use.

The “A” foreign company hasn’t had any problems during they used offices for many years, but recently the company has received requirements of local district government. The Branch Company has to be registered within in one month, besides it has been required to subsequently pay taxes by the name of branch.

Dongjin Remind:

Many companies have some misunderstanding, they think there is no need to register branches to rent another office within the same city of other registered address, and in the period of practical operation, there also have quite a few companies run businesses in other places as well as not set branches. They’re not found.

But according to ‘Regulations of the People’s Republic of China on the Registration and Administration of Enterprise Legal Persons’ and its implementing rules, branch institution of companies establish outside the residences that carry on activities should apply business licenses. If enterprises refuse to apply and register branches, the Administration for Market Regulation Department has rights to punish according to the below rules: where a business is established or engaged in business activities without approval and registration, it shall be ordered to terminate the business activities, confiscate the illegal gains and impose a fine of not more than 3 times amount of the illegal gains, but not more than 30,000yuan. And if there is no illegal gains, a fine of not more than 10,000yuan.

Dongjin remind relevant enterprises set branches in time and apply to manage business license, in case that facing punishments, even confiscate the illegal gains and impose more than 3 times amount of them. At the same time, it will leave a bad credit record for enterprises. Don’t take chances, because the small makes the big mistake.

If there is any question, you can consult with us at any time.

Mike Chang

Partner

mikechang@shanghaiinvest.com