In April 2017, the State Administration for Industry and Commerce (“SAIC”) released three opinions to boost the reform on company registration: the Opinions on Promoting the Full Electronic Process for Enterprise Registration, the Opinions on Pushing Forward the Electronic Corporate Business License in All Aspects and the Opinions on Promoting the Administrative Reform of Corporate Name Registration.
This process has already been initiated in 2013 when the Chinese central government simplified certain company registration formalities. Thereafter, last year, the SAIC released some guidelines instructing the local registration authorities to step-by-step open the corporate name databases (“2016 Guidelines”). Now, the Draft Opinions further push this corporate registration reform with the aim of optimizing the transparency and the time-consuming to proceed for companies which file for registration in China.
When registering a company, the applicant currently used to go through many steps of online registration and in-person application material submission at the local AIC counter. Further, the current online registration system does not accept scanned supporting documents. The corporate name record is also subjected to a pre-registration process with local AIC counter. Applicants are often required to provide 2-3 corporate names proposals to the SAIC without having any official channel to make sure in advance whether the names they intend to use might wholly or partially in conflict with any existing registered company names or prior rights.
In light of the existing issues, the goal pursued by the SAIC’s reform would be to improve the turn-around-time and streamline the registration workflow for all types of companies. According to the Opinion, the SAIC work to upgrade the online registration process which would allow applicants to register an account online, upload scanned supporting documents and authorize e-signatures when submitting the application.
The SAIC foresees to establish a national unified administrative system for obtaining electronic business licenses and generate such electronic business licenses, regardless of whether registration is carried out online or in person. Hard copies will be still available if requested.
This reform also optimizes the transparency and the efficiency of the company name registration process by establishing online name query platform which providing screening tips on applying for a new enterprise name: (i) if an enterprise name is prohibited or already exists, the tips will explain the grounds for prohibition or give a list of existing enterprise names; (ii) if an enterprise name is restricted, they will identify the restricted terms and specify which certificate or authorization document is required to complete the application; or (iii) in case of a similar enterprise name, they will list the similar names and draw attention to the risk of rejection and possible infringement. The Opinion also plans to simplify the application process by combining enterprise registration and enterprise name registration and by removing the requirement to submit the enterprise name pre-approval certificate if the competent authorities are the same.
Starting from last April, company name pre-registration can already be handled via an on-line process in some AIC such as Beijing, Shenzhen, Shanghai Pudong New District. The Beijing AIC online system is currently the only platform that allows foreign-invested companies (FIEs) to register their business online.
Nonetheless, even if this nationwide digitized corporate and company name registration systems - expected to be efficient in October 2017 – would ease the registration of companies – especially foreign companies - since some AIC does not have the adequate technology or resources to verify the identity of all applicants, it will be recommended for a company which would proceed to registration in China to entrust a lawyer or local agent to endorse its online business registration application.