For foreign investors which intend to newly establish a company in the People’s Republic of China (“PRC”) and existing PRC companies which intend to change their company names, the first step is always to conduct a name pre-registration with the Administration for Industry and Commerce (“AIC”). In practice, when applicants make an onsite application for pre-registration of the company name, it often happens that they are informed by the competent AIC that the proposed names are not available since such names were already registered by other existing companies. Until now the applicants then had to submit a new application, which is time-consuming and not very efficient.
On October 18, 2016, the State Administration for Industry and Commerce issued the Guiding Opinion on Opening the Corporate Name Database to Push Ahead with Corporate Name Registration Administration Reform in an Orderly Manner (“Guiding Opinion”). The Guiding Opinion aims at facilitating the registration of company names and improving registration efficiency. We summarise below the major content of the Guiding Opinion.
1. The database of company names (“Name Database”) will be opened to the public
Under the Guiding Opinion, no later than 1 December 2016 the local AICs shall open their Name Database to the public in order to enable applicants to check and verify by themselves whether their proposed company names are available for pre-registration.
2. Content of the Name Database to be opened
According to the Guiding Opinion, the Name Database shall include the following company names:
- names of existing companies;
- former company names which were changed by companies less than 1 year ago;
- names of companies, whose business license has been revoked but which failed to complete de-registration formalities;
- names of companies which have completed de-registration formalities due to cancellation of business licenses less than 3 years ago and of companies which have completed de-registration formalities due to other reasons less than 1 year ago;
- company names which have already be submitted for pre-registration but are not pre-registered yet; and
- company names which have already been pre-registered and are still within the validity term (although the company is not duly established yet).
The Name Database shall enable applicants to search for company names by entering trade names and industry descriptions. If the applicants discover that their proposed company names are the same as or similar to the company names in the Name Database, they will need to come up with another company name.
3. The Guiding Opinion further provides that in the future, if a proposed company name neither violates the interests of existing companies nor is against the laws or regulations, the applicants can apply for registration of the establishment of the company directly. In other words, it is expected that the current company name preregistration system may be abolished in the future.
The new public access to the Name Database is an important step forward to cut red tape in company registration. For applicants it will in the future be much easier and less time-consuming to check the availability of proposed company names. However, it remains to be seen how long it will take the local AICs in practice to actually set up the public access.