In accordance with the Measures for the Annual Inspection of Enterprises, issued by the State Administration for Industry and Commerce (SAIC) in February 2006, every company which is issued a business license, including limited liability companies, unincorporated entities, partnerships, sole proprietorship company and its branches and foreign companies, is subject to annual inspection. Thus, wholly foreign owned enterprises (WFOE) are subject to the annual inspection requirements. 2012 annual inspection has officially begun on March 1 and will continue until June 30. It is required for companies established in 2012, except those established towards December 2012. However, such exemption needs to be approved by SAIC.
Annual inspection is generally conducted online. The general procedures are as follows:
- Go to the applicable Online Annual Inspection System;
- Complete registration;
- Upload required documents and complete online annual inspection;
- Local SAIC examines the online submission and makes a determination;
- Log on again to check the status;
- If approved, print out the annual inspection report and sign;
- Go to the registration authority for reexamination and pay the fee.
In many provinces and cities including Shanghai, a foreign-invested company is also required to submit the Joint Annual Inspection on the website of Shanghai Foreign-Invested Enterprises Online Joint Annual Inspection (http://www.lhnj.gov.cn/).
Those that cannot undergo the annual inspection online may submit the documents manually.
Failure to complete the annual inspection online could result in a penalty between RMB 10,000 to RMB 100,000. If a company fails to complete the annual inspection timely, the business registration authority will issue a public notice. If the company fails to complete the annual inspection within 60 days from the date of the notice, the authority may revoke its business license.