New Compliance and Disclosure Requirements for China subsidiaries

HONG KONG - As part of China’s corporate registration reform, the State Administration for Industry and Commerce has issued a number of regulations mapping out new corporate disclosure and reporting requirements. In a Client Alert, lawyers Baker & McKenzie say the system is still evolving and the implementation of the changes may vary between cities, but many Chinese cities have indicated that they will implement the annual reporting system after October 1.

Baker & McKenzie’s client alert highlights some of the proposed changes to advise clients of possible disclosure and changing compliance requirements.

Under the new set of AIC regulations, failure to disclose the required information on a timely basis, or providing false or inaccurate information, or not being reachable at the registered address could have potentially serious implications, B&M warns.
It says a Foreign Invested Enterprise (FIE) or its branch can be put on the AIC’s Blacklist of “Abnormal Management” Enterprises along with other punitive measures, depending on the seriousness of the matter.

 
The company can be disqualified from local government tenders relating to project engineering, government procurement and land grants, and may also be disqualified from applying for local government incentives, although, the law firm says, it will take time for local AICs and their counterparts in other government departments to formulate their approach. www.bakermckenzie.com (ATI).