On Thursday, China published a regulation on the registration administration of resident representative offices for foreign companies.

The regulation will also apply to the representative offices set up on the Chinese mainland by companies from Macau, Hong Kong and Taiwan.

The regulation, to become effective in March 1, 2011, includes rules on the registration, establishment, information exchange, cancellation of registration and legal responsibilities of the representative offices of foreign companies.

According to the regulation, such representative offices are not allowed to conduct business in China, but they can perform market surveys, product or service displays and promotion, and liaise on behalf of their parent companies.

The foreign company must be in existence for at least two years before applying to establish a representative office.

Any representative offices that are found operating without valid registration or engaging in any profitable business operations may be subject to administrative fines of between RMB50,000 and RMB500,000.

The offices are required to submit an annual report to the registration authorities between March 1 and June 30. The report should include information about the parent companies, representative offices’ operations, and their balance sheets, which must be audited by auditing firms.