893.5034 Registration/2: Telegram

The Consul General at Shanghai (Cunningham) to the Secretary of State

The following has been sent to the Legation:

July 3, 5 p.m. Referring to my June 26, 5 p.m. The court at its hearing on the 28th did not modify its former ruling. The additional statement however was made that Japanese extraterritoriality [Page 547] had lapsed and therefore extraterritoriality powers are under the impression that no attempt will be made immediately to force, through the courts, firms enjoying extraterritoriality to register with the Ministry of Industry, Commerce and Labor. Confirming this impression, secretary of Dr. Kung informed a member of my staff that all foreign firms must register in the same manner that they are said to do in Japan and other foreign countries.

Two British cases have been heard since the Mitsui Bussan Kaisha ruling and the defense did not raise the point that was raised in the Japanese case. Two American cases were set for hearing yesterday but were settled outside the court, consequently no ruling was possible.

This office has received a large number of inquiries as to whether the demand of the Chinese authorities for American companies to register has the approval of the United States Government. Many have sought advice since all firms are being flooded with printed notices from Chinese attorneys to effect the registration on payment of attorney’s fee of 100 taels. The secretary here stated that the Ministry’s regulations for the registration of corporations were issued on December 10, 1928.60 Supplemental regulations are about to be issued by the Ministry of Industry, Commerce and Labor and the press states that they will include:

  • “1. In establishing branches, registration must first be applied for by the persons stipulated in article 22 of the provisional rules or by the manager of the branch in case the head office of the company is not located in China.
  • 2. In the latter case, if the manager in question is not a citizen of the Republic of China, then bond proving the nationality of the applicant issued by the Consul at the locality concerned shall be required.
  • 3. Application for registration of branches shall first be filed with the local registration office which will forward them to the general registration office for the issue of certificates. When registration is made, the company in question should report the fact to all district registration offices at the localities in which the head office or the branch are located for record.
  • 4. The application form shall have the following particulars:
    The name of the company;
    The locality of the head office;
    Kind of business engaged in;
    Total capital of the head office and the capital of the branches, if separate capital is provided for each;
    Date of registration of the head office and the number of the certificate;
    Locality of the branch in question; and
    The name, age, place and address of the manager.
  • 5. In case the head office is located in a foreign country, then the place of registration and the organ of registration should be stated.
  • 6. The registration fee for each branch will be $10 plus $1 stamp duty. In case the head office is not in China, then the registration fee will be charged in accordance with the provisions of article 11 of the provisional rules; while for branches with independent capital, the fee will be charged in proportion to the capital an amount [sic].
  • 7. In case of liquidation of the head office, the agency of the branch, the dismissal or appointment of the managers or anything which affects the registration should all be reported to the registration office concerned for record.
  • 8. The district registration offices shall remit the registration fees collected, after deducting 30 percent for administrative expenses, to the general registration office.”

Enquirers are being informed pending instructions from the Legation that the question of registration is being referred to the American [Page 548] Legation for appropriate instructions, that there is no American law which requires American firms to register in China, that it is not believed that because of failure to register with the Ministry of Industry, Commerce and Labor, that firms can be denied the right to bring actions against Chinese in any case. My reason for the last is based largely on article 24 of our treaty of June 16 [18], 1858.61

I am firmly convinced that the prime object in requiring registration of all firms is to show an unfriendly attitude towards foreign firms since I am reliably informed that very little if any effort is being made to secure the registration of Chinese firms. Inquiry has failed to reveal a single case where a Chinese plaintiff’s case has been dismissed because of the failure to register with the Chinese authorities.

Repeated to the Department.

Copy handed to Minister.

  1. Not printed.
  2. Malloy, Treaties, 1776–1909, vol. i, p. 211.