Reporting obligations of the PRC representative office of foreign securities organisations to the CSRC regarding its head office

More and more foreign securities organisations have established or are planning to establish representative offices (ROs) in China to facilitate the development of local businesses. The Administrative Measures on Representative Offices of Foreign Securities Organizations Stationed in China (Administrative Measures) issued by the China Securities Regulatory Commission (CSRC) in 1999 have set forth the major regulatory requirements for ROs of foreign securities organisations. An RO must notify the CSRC and its local branch within one working day of the occurrence of any of the following events:

1. amending the Articles of Association, changing the registered capital or registered address of the head office;
2. a restructuring or combination involving the head office or change of senior management;
3. significant business losses of the head office; and
4. regulatory sanctions imposed on the head office.

If the RO fails to report the event to the CSRC in time, the CSRC may order the RO to rectify the failing within a time limit and may impose sanctions, such as a warning, penalty or even deregistration of the RO depending on the seriousness of the failure.

However, the Administrative Measures or other regulations do not establish any specific requirements or procedures for the notification process. According to inquiries with the CSRC, it has not yet established any implementing regulations or general guidelines in this regard. As different local branches of the CSRC may have different views with respect to the documentary requirements of the reporting process, the RO should liaise with its supervising official at the local CSRC branch immediately upon the occurrence of such an event. It is advisable for the RO to communicate with its supervising official in a timely manner to seek case-by-case instructions on how to prepare and submit the notification.