Things you need to know about Financial Responsible Person

Published on 2021-03-01

The Coronavirus Pandemic has put a sharp focus on the importance of internal control & compliance for international business.

Understanding the local compliance requirements and avoiding risk become essential when making business decisions and working with partners. To ensure operations remain fit for purpose as they grow and expand, the companies should not underrate the importance of corporate governance and finance control.

When we dealt with recent international business restructuring or market entry in China, it points to the trend of appointing a third-party vendor as the key position of the company such as the company Financial Responsible Person for convenience.

What is the role of Financial Responsible Person (FRP)?

A quick overview of the main responsibilities of FRP:

❖ Participating in company’s major business and operation decisions
❖ Planning company financial strategy
❖ Establishing budget inspection system
❖ Allocating company operating funds and cost controlling
❖ Reviewing and approving company financial report

What is the risk of having a third-party personnelthird-party personnel acting as FRP?

Giving its main responsibilities, FRP is a vital role to a company. Chinese tax bureau requests companies to register FRP in its tax filing system. Appointing a third party vendor personal as FRP would put your company at a risk of abnormal operation or being blacklisted, just because the same vendor personal takes up the same role of her multiple clients, while one of her other clients is reported of any suspicious cases, or the vendor personal has some wrong doings itself.

The credit records of a company are linked to the credit records of the person in this position. Such records have critical impact on business credibility and business operation in terms of financing, tax credit, and other related activities.

In view of this foreseeable risk, we always strongly recommend that FRP shall be assumed by company’s senior finance personal to withhold the internal control rigor.page1image43941440

How can Tricor help?

As a global corporate service provider with presence in 12 cities in mainland China, Tricor specializes in entity formation, internal compliance & health check, financial planning & analysis, tax advisory & compliance, HR & payroll service, fund administration and ODI service, etc. We have been providing international businesses with market entry and business expansion in China, as well as assisting Chinese companies to set up, build and scale operations across Asia and beyond. Tricor China can act as your contact person at the government authority including State Administration for Market Regulation, SAFE, Tax Bureau, etc. to be the bridge of local authorities and your headquarter function team, moreover, your advisor on any China local policy update.

Contact our expert for a customized solution on your local compliance so that you can focus on your business.

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