Notification of establishment of foreign-invested accounting firm

By labourxi • September 23rd, 2010

Notification of establishment of foreign-invested accounting firm

Only cooperation form of registration is allowed, JV and wfoe forms are not allowed.

I. Investors’ qualification

  1. requirements for foreign collaborators’ qualification
    1)    advanced professional technology and good reputation,
    2)    with annual income not less than 20 million USD,
    3)    with audit professionals not less than 200 people.
  2. Requirements for Chinese partners’ qualification
    1)    good professional level and service prestige,
    2)    independent legal entity,
    3)    related qualification to engage in securities business,
    4)    with annual income not less than 10 million rmb,
    5)    with audit professionals not less than 100 people. 

II. The examination and approval procedures

  1. Chinese partners shall submit application to shanghai bureau of usurers, the application will be forward to Chinese institute of certified public accountants after preliminary examination and consent. The China institute of certified public accountants will submit the application to ministry of finance after the examination for approval.
  2. Chinese collaborators shall submit the application papers to Commerce Committee of Shanghai after received approval from ministry of finance. After preliminary examination report the application papers will be forward to MOFCOM to issue approval if agreed.
  3. The applicant shall perform registration at administration of industry and commerce and obtain business license within 1 month after the approval received. 

III. Filing documents

  1. the Chinese collaborators shall submit the following documents to Shanghai bureau of usurers:
    1)    application letter,
    2)    the feasibility study report and approval certificate issued by ministry of finance, cooperation  agreements, business cooperation contract, articles of association,
    3)    resumes and supporting documents of members of the board of directors to be established,
    4)    resumes and supporting documents of the proposed senior management personnel,
    5)    resumes, relevant certificate’s copy and list Chinese CPA intend to work in the form,
    6)    lease agreement and property certificate of the office space,
    7)    copies of the business licenses of all parties,
    8)    proofs of capital deposit of each party.
  2. The Chinese collaborators shall submit the relevant documents below to Commerce Committee of Shanghai after received approval from ministry of finance:
    1)    application letter of the establishment of a Chinese-foreign cooperative accounting firms,
    2)    feasibility study report and the approval documents issued by ministry of finance,
    3)    cooperation contract, articles of association signed by all the parties,
    4)    list of  the chairman, deputy chairman, director candidates and appointment letters,
    5)    lease agreement and property certificate of the office space,
    6)    copies of the business licenses of all parties,
    7)    proofs of capital deposit of each party,
    8)    other required documents.

IV. Principles of examinations and approvals

  1. The project can introduce advanced management experience and technical equipment and the general international accounting standards in auditing industry.
  2. Chinese staff can enjoy related training in accounting, finance, auditing, tax consulting, project management and evaluation of assets.
  3. business scope include: provide services to domestic and foreign enterprises including auditing, verification of capital, tax consulting, foreign investment consulting, management consulting service, assets appraisal (should apply to the state-owned assets administration department for asset appraisal qualification before related operations), and other related services at the request of customers.
  4. Both parties in the new accounting firm shouldn’t engage business in the name of original firms after the establishment.

V. The branches

  1. The firm that will apply to set up an branch firm should meet the requirements below:
    1)    the board of directors is running in proper way,
    2)    general managers of Chinese and foreign parties are capable of function continuously,
    3)    among the manager staffs the amount of Chinese managers should not be less than 50%,
    4)    there was no bad records in its operation conforming to the relevant provisions in last 3 years,
    5)    no illegal and irregularities records in last 3 years.
  2. The branch firm should fulfill the following conditions:
    1)    There should be more than 10 Chinese full-time staff within stipulated age among all the employees including at least five China CPAs.
    2)    necessary operating funds,
    3)    fixed office premises.
  3. The firm should submit the following application documents for establishment of the branch firm:
    1)    application letter,
    2)    a written report stating that the firm and branch firm can both fulfill the above-mentioned requirements,
    3)    appointment letter of superintendent issued by the board of directors of the firm,
    4)    list and resumes and relevant certificates of Chinese CPA and managing staff of both parties,
    5)    property certificate and use proof document of the office premises.
  4. principles of examinations and approvals of establishments of branch offices:
    1)    the branch firm shouldn’t established in the same province area where the headquarter locates,
    2)    the branch firm doesn’t has independent legal entity, and should engage business in the name of its headquarter, accept the supervision and guidance; the headquarter should take responsibilities of its branch firm’s operating. The superintendents of branch firm should be appointed by headquarter, and the list should be reported to China CPA Institute.
    3)    Branch firm’s names should be put in the way like “headquarters’ name + the name of location + branch firm’s name”,
    4)    The examination and approval procedures of establishment of branch firm are the same as that of headquarter.
    5)    The permanent establishment of foreign accountants’ institution shall be revoked in three months if it’s been established in the same area as the branch firm.

VI. Legal basis

The national development and reform commission, ministry of commerce of the foreign investment industrial guidance catalogue (30 November 2004 and 2005 released on January 1)

The national Treasury Chinese-foreign cooperation interim measures for the administration of certified public accountants (1996) released on March 28.

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