On May 11, 2015, the State Administration of Industry and Commerce (“SAIC”) released the Circular Specifically Implementing the Policy of Issuance of a Business License Before Prior Approval Obtained (Gong Shang Qi Zhu Zi [2015] No.65) (the “Circular”).  Concurrent with the release of the Circular, the SAIC published a list of 39 matters that still require prior approval before business registration can be made, and a list of 34 matters that still require prior approval before changing or annulling a registration, pursuant to the requirements of the State Council.

According to the Circular, where laws, regulations or the State Council state that an approval can be obtained following the issuance of the business license, no prior approval is required. Accordingly, applicants who apply for business registration with the relevant local branch of the SAIC (the “AIC”) will not be required to provide permit documents and certificates from relevant authorities in order to conduct the business registration. Instead, such applicants shall register such permits and certificates in the Public Business Information Database within 20 days after acquiring them.

The Circular specifically lists matters that still require prior approval before amendments, terminations and dissolutions can be made to the business registration. For these matters, enterprises are still required to obtain prior approvals from relevant authorities in accordance with laws, regulations, administrative rules and decisions of the State Council before the requested amendment, termination or dissolution will be processed.   

If AIC provisions on the timing of approvals for business registration or matters relating to amendments, terminations or dissolutions of business registrations conflict with other laws or State Council decisions, such conflicts shall be submitted to the provincial government for resolution. 

If localities wish to reduce the number of matters requiring prior approval before business registration can be made, change prior approvals to post approvals, or cease implementing the relevant administrative approvals, it shall first report its proposals to the provincial government an apply for approval or authorization from competent authorities in accordance with legal procedures.  The result of this procedure is that some localities may have prior approval requirements for business registrations, or amendments, terminations or dissolutions of business registrations, which are inconsistent with the SAIC’s lists. 

The SAIC may alter the matters requiring prior approval before business registration can be made in accordance with evolving conditions. Therefore, the SAIC may add or remove matters requiring prior approval, and provide an updated list to the public.

Of note, the Circular still lists the following matters as requiring prior approval before business registration can be made:

  1. Forming or changing foreign-invested enterprises still requires prior approval from the Ministry of Commerce, departments authorized by the State Council, or local governments;
  2. Forming and managing personal credit information businesses requires prior approval from  the People’s Bank of China;
  3. Forming publishing businesses or publishing export businesses requires prior approval from the State Administration of Press, Publication, Radio, Film, and Television;
  4. Forming Sino-foreign joint ventures, cooperative printing enterprises, foreign-invested packing and decoration printing enterprises, and other enterprises that engage in the publication printing business requires prior approval from the component provincial counterpart of the State Administration of Press, Publication, Radio, Film and Television. 
  5. Forming operating entities and branches of foreign-invested banks, PRC financial institutions and banks and their branches, and non-banking financial institutions and their branches require prior approval from the China Banking Regulatory Commission.

In addition, the following businesses require prior approval before business registration can be made:  express delivery, general aviation, the establishment of pawn shops and its branches, and the exclusive distribution and wholesale of tobacco.

Of note, the Circular still lists the following matters as requiring prior approval before amendments, terminations or dissolutions to the business registration can be made: 

  1. Amending a permit for the operation of a labor dispatch service requires prior approval from the Ministry of Human Resources and Social Security;
  2. Forming and amending direct sales enterprises and its branches requires prior approval from the SAIC, the Ministry of Commerce, and the Ministry of Public Security;
  3. Any amendment to the following by publishing institutions requires prior approval from the State Administration of Press, Publication, Radio, Film, and Television:  changing its name, changing its sponsors, or other authorities, changing its business scope, changing its capital structure, a merger or division, or the establishment of branches;
  4. Amendments to the business scope, or a merger, acquisition or division of a video production or an electronic publication production business requires prior approval from the competent provincial counterpart of the Department of Publication.
  5. Any amendment to the following by foreign-invested banks requires prior approval from the China Banking Regulatory Commission:  changing the registered capital, working capital, name, place of business, address, scope of business, the shareholding of the business, or shareholding percentages, or amending the articles.  
  6. Amending, terminating or changing the business scope of a Sino-foreign invested banking financial institution or non-bank financial institution, or any of their branches requires prior approval from the China Banking Regulatory Commission.

In addition, the following businesses require prior approval before amendments can be made to a business registration: financial guarantors, personal credit information institutions and securities, insurance and futures companies.

Since 2014, there has been a comprehensive reform of with the introduction of a registration system for the subscription of registered capital and the cancellation of minimal threshold requirements for registered capital.  The Circular represents a continuation of the State Council’s consolidation and reform of approvals required prior to business registration.  It lowers market access thresholds and further reforms the business registration system. Having fewer prior approvals for both business registration and amendments to business registration will lower costs for forming business and improve government administration and efficiency.