Jurisdiction - China
Reports and Analysis
China – Localization Plan For International Accounting Firms.

5 June, 2012

 

Legal News & Analysis – Asia Pacific – China – Regulatory & Compliance

 

On May 2, 2012, the Ministry of Finance, State Administration for Industry and Commerce, MOFCOM, State Administration of Foreign Exchange and the China Securities Regulatory Commission jointly issued the Plan for Localizing Conversion of Sino-Foreign Cooperative Accounting Firms, which took effect on May 10, 2012. The plan applies to the well-known big four international accounting firms in China: Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers. Under the plan, the "big four", upon expiration of their current business licenses, are required to convert their form of organization from "Sino-foreign Cooperation" to "Special General Partnership". Generally, qualified partners of the re-organized accounting firms must hold either a Certified Public Accountant, Certified Public Valuer, Certified Tax Agents or Certified Cost Engineer license issued in China. During a transition period (until December 31, 2017), Hong Kong, Macao, Taiwan residents or foreigners who do not have the required licenses but are otherwise qualified may take the post of partner, but their number must be lower than 40% initially, and must be lower than 20% by the end of the transition period, after which the specific conditions for such qualified foreigners to take the post of partner will be subject to mutual governmental agreements. The plan also stipulates that only Chinese citizens are qualified to hold the position of Chief Partner of the re-organized accounting firms. Current foreign Chief Partners of the "big four" may continue their term for another 3 years. 
 
The full Chinese text of the plan is available here
 
 

 

For further information, please contact:

 

Elizabeth Cole, Partner, Orrick

ecole@orrick.com
 
Thomas Man, Partner, Orrick
tman@orrick.com
 
Brad Herrold, Orrick
bherrold@orrick.com
 
Veronica Lockyer, Orrick
vlockyer@orrick.com
 
Yan Zeng, Orrick
yzeng@orrick.com

 

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