893.5034 Registration/2–345: Telegram

The Acting Secretary of State to the Ambassador in China ( Hurley )

186. 1. With reference to the question of the registration of American firms under Chinese laws and regulations (ReEmbs 1494, November 16, 6 p.m.8 and 1959, December 6, 10 a.m.9) Department has received a memorandum10 from the National Foreign Trade Council raising certain points for further clarification and making specific suggestions in regard to the establishment of a simplified registration procedure.

2. The following is a summary of the Council’s memorandum:

(a)
Under Anglo-American theory of law corporations desiring to do business in and with China would be divided into two categories, namely corporations organized under the laws of China and foreign corporations organized under laws of a country other than China. The location of the head office would not be the determining factor as is apparently the case under Chinese regulations. Council understands from Dr. Wang’s memorandum11 that only Article 28 of Laws for Enforcement of Company Law and Articles 13, 14, 15, 42 and 43 of Regulations Governing Registration of Companies apply to branches in China of corporations whose head offices are located outside of China. To clarify situation Council suggests that Chinese laws be amended so that only the above-mentioned six articles shall apply to corporations organized under laws of country other than China regardless of where head office is located.
(b)
Council points out that in United States any corporation organized under the laws of China can make one registration in a state and thereby is entitled to open as many branch offices in that state as it may deem desirable. On the other hand, it would appear under Chinese laws and regulations that an American corporation desiring to carry on business in China would be required to register separately each one of its branches in a province, the registration in some cases being effected with the provincial authorities, in others with the municipal authorities. Council suggests that regulations be amended to provide that one registration effected in a province by a foreign corporation would permit such corporation to open and operate in that province as many branch offices as it might deem desirable; this would constitute substantially reciprocal treatment as between the [Page 1209] United States and China with respect to the number of registrations required in a state or province.
(c)
Under Anglo-American theory of law a corporation acquires qualifications of juristic person at time of incorporation. However, in view of provisions of Article 30 of Civil Code, Council inquires whether registration of an American corporation in China means that such corporation is in fact reincorporated under Chinese law or does it mean that American corporation merely acquires right to carry on business in China. A corollary question is whether each branch of an American corporation which registers in China becomes a separate juristic person.
(d)
Council also suggests use of simplified application form calling for such information as name of corporation, place and date of incorporation, nature of business, location of branches, name and address of branch manager, total amount of capital of corporation, amount of capital of branch (if separate capital for branch has been specified), remarks.
(e)
Council points out it does not believe that American consular officers would be willing to certify matters set forth in applications for registration as required by Article 43.

3. It is Department’s understanding that Judge Helmick has been discussing registration regulations with concerned Chinese officials. It is therefore suggested that the Council’s suggestions be made available to Judge Helmick in the belief that they may be of assistance and value to him in these discussions. Department would appreciate brief report by telegram concerning any recent developments of importance.

Grew
  1. Foreign Relations, 1944, vol. vi, p. 1005.
  2. Not printed.
  3. This memorandum, dated February 9, was an enclosure to a letter of the same date sent by the National Foreign Trade Council to Edwin F. Stanton, Deputy Director of the Office of Far Eastern Affairs (893.5034 Registration/2–1745); neither printed. The letter made it clear that drafts of the memorandum had been discussed with the Department; and it was probably on the basis of the last draft that telegram No. 186 was sent.
  4. Wang (Wong) Wen-hao was Chinese Minister for Economic Affairs; the memorandum in question, dated June 23, 1944, was sent to the Ambassador in China (Gauss), who transmitted a copy to the Department in his despatch No. 2752, July 8, 1944, Foreign Relations, 1944, vol. vi, p. 991.