893.5034 Registration/7–844

The Ambassador in China (Gauss) to the Secretary of State

No. 2752

Sir: With reference to the Department’s instruction, No. 638 [628], of May 3d, 1944, enclosing copy of a letter and memorandum from The National Foreign Trade Council, Inc.,16 in regard to the registration of American firms under Chinese laws and regulations, I have the honor to report that the memorandum of the Council was brought informally to the attention of the Minister of Economic Affairs by the Embassy under date of May 30th, and I am now in receipt of the Minister’s reply, with attached memorandum, dated June 23d. Careful translations of the Minister’s reply and memorandum have been made at the Embassy and are enclosed herewith.17 At the same time, I send a copy of the Chinese text of the Minister’s letter and memorandum. The memorandum will doubtless clear a number of the questions raised by the Foreign Trade Council memorandum; but it is likely that the registration requirements will not be found generally acceptable to all American companies.

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I expect to have a personal interview with Dr. Wong Wen-hao, the Minister of Economic Affairs, in regard to this matter within the next few days, and will report further to the Department on the subject immediately thereafter. In order, however, that the information given by the Ministry in reply to the National Foreign Trade Council memorandum may be available as promptly as possible in Washington, I hasten to send the copies of the Minister’s letter and memorandum by the first available means.

Respectfully yours,

C. E. Gauss
[Enclosure—Translation]

The Chinese Minister of Economic Affairs (Wong) to the American Ambassador (Gauss)

My Dear Mr. Ambassador: I have the honor to acknowledge the receipt of Your Excellency’s letter of May 30,19 enclosing a memorandum covering questions raised by the National Foreign Trade Council in connection with the Regulations Governing the Registration of Companies.

With regard to the registration of companies, the procedure provided for in the existing Chinese laws and regulations is very simple and practical. Chinese businessmen have encountered no difficulties in the observance of such laws and regulations and foreign merchants who have established companies or branches in China have experienced no inconvenience in applying for registration under such laws and regulations. In view of the absence of any difficulties in the application of the laws and regulations governing the registration of companies, the Chinese Government does not at the present contemplate revising the same. Appropriate consideration will, however, be given to any suggestions which may be proffered by either Chinese or foreign businessmen for the improvement of the procedure of registration at such a time in the future when revisions are contemplated.

The registration of companies is for the purpose of determining the qualifications of a juristic person and of protecting his legitimate interests. In order to acquire legal protection, it is advisable that those who establish companies or branches within China, no matter whether they be Chinese or foreign businessmen, should comply with the procedure of registration. The registration of foreign firms may be divided into the following two categories:

1. If the head office of a company (that is the domicile of the juristic person) is located within China, irrespective of the nationality of [Page 993]its organizers, its organization, its rights and obligations vis-à-vis others, as well as the procedures of establishment and regiChiang Kai-shesktration, it shall be governed by the existing Chinese laws and regulations relating to companies in the same manner as those organized by Chinese businessmen.

2. As the head office of a company, which is located outside of China but which establishes branches within China and registers those branches under its own name, derives its qualifications as a juristic person from the law of its domicile, the internal organization of such company as well as its rights and obligations with respect to others shall naturally be governed by the law of the place where the head office is located. Its branches which are established in China and the officers in charge of such branches must, however, register with the Chinese Government, and the business of such branches shall be governed by Chinese law.

The procedure for the registration of such branches is exceptionally simple and is clearly provided for in Article 28 of the Law for the Enforcement of the Company Law and Articles 13, 14, 15, 42 and 43 of the Regulations Governing the Registration of Companies. With the exception of the general provisions, none of the other articles of the Company Law, the Law for the Enforcement of the Company Law or the Regulations Governing the Registration of Companies is applicable to branches of the nature mentioned above.

Registers of shareholders, mentioned in Your Excellency’s letter under reference, need not be submitted in the case of such branches.

With regard to companies whose head offices are established in foreign countries and who wish to register the said head offices with the Chinese Government, there is as yet no precedent for such procedures; moreover, such registrations do not fall within the scope of the provisions for registration.

The principal laws and regulations promulgated by the Chinese Government relating to the registration of companies are the Company Law, the Law for the Enforcement of the Company Law and the Regulations Governing the Registration of Companies. The Company Law is a substantive law while the Law for the Enforcement of the Company Law is a procedural law. All those who establish companies in Chinese territory, both Chinese and foreign businessmen alike, shall uniformly abide by the Regulations Governing the Registration of Companies as an accessory regulation. The provisions which concretely and directly apply to branches of foreign firms are the five articles cited above.

With regard to the questions raised by the National Foreign Trade Council in connection with the regulations, the Council’s lack of understanding of the scope of the application of the regulations has caused many misinterpretations. I have the honor to enclose, for Your Excellency’s information and for transmission, a memorandum20 explaining the various questions raised by the Council.

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I may add that, while Your Excellency’s inquiry was made in a personal form, since the matter concerns the interpretation of laws I have replied in the Chinese language with the request that Your Excellency take note in the premises.

Wong Wen-hao
  1. None printed.
  2. Memorandum not printed.
  3. No copy found in Department files.
  4. Not printed.