On April 6, 2017 the PRC State Administration for Industry and Commerce (“SAIC”) published an announcement to publicly soliciting comments on the SAIC’s Opinions to Raise Registration Efficiency and Actively Promote the Reform of the Registration System of Enterprises’ Names (“Draft Opinions”) until April 14, 2017.
The names of enterprises and their changes are currently subject to a pre-registration process for which SAIC and its local counterparts are responsible. Such process normally needs to be handled on the site or online in a few more advanced cities. Applicants often are required to provide 2-3 name proposals to be reviewed by SAIC without having any official channel to make sure in advance whether the names they intend to use might wholly or partially conflict with any existing registered company names.
In 2013, the Chinese central government simplified certain company registration formalities. Later, the SAIC released some guidelines in 2016 instructing the local registration authorities to step-by-step open the enterprise name banks (“2016 Guidelines”) so that enterprises should be furnished with reliable official information to decide on their own names. Now, the Draft Opinions further push this enterprise name registration reform.
The Draft Opinions are being sought for public comments on with the following main points.
- Overall opening of enterprise name banks before October 1, 2017: local registration authorities which do not open the name banks shall establish public enquiry navigation platform equipped with enquiry methods and procedures to ease name checks.
- Enterprise name enquiry and comparison system (“Comparison System”): to be established according to existing statutory company naming rules in parallel to the name banks’ opening, and to provide the applicants with screening and tip services for their reference and selection. For instance, in case of a new name violating the rules or existing names, such rules or existing names shall be shown as evidence; in case of similarities, a list of existing similar names shall be displayed.
- Combination of the Comparison System and online application/registration: this will optimize the online registration while the applicants will have the full information right and selection freedom in naming, and do not need to upload or submit additional paper documents.
- Combined registration process: within the same jurisdiction and competence, the in-charge may merge the name pre-registration into the company registration process (for the latter the SAIC is concurrently impelling the nationwide online registration system to be realized by the end of this October).
- Trial cancellation of name pre-registration: localities with own legislative competence are encouraged to completely cancel the name pre-registration and require the applicants to be self-responsible for their name selection. Names that are deemed as improper shall be ordered to be corrected and, in case of incompliance, publicized in the company register.
- Quick mediation + compulsory correction in case of disputes.
- Conflicts with trademarks: conflicts and disputes between company names and registered trademarks or unregistered famous trademarks shall be handled in accordance with relevant laws.
Theory or reality?
On one hand, the name registration reform plan of SAIC is encouraging. The realization would greatly relieve the companies from an outsdated and very inefficient name selection process. On the other hand the seemingly ambitious goals of SAIC also leave questions and concerns.
For instance, progress of company name banks’ opening has been slow. In cities like Shanghai, Beijing and Shenzhen there has been no official announcement or guidance to a specific company name bank allowing applicants to check existing company names. Unless this changes, SAIC could face strong challenges to complete the national wide name bank opening before October 2017.
Probably for the above reason the “Comparison System” seems even more theoretical for the time being, although – if working - it would significantly help during the establishment process. As of April 2017, company name pre-registration can already be handled via an on-line process in some locations like Beijing, Shenzhen, Shanghai Pudong New District, etc. But applicants do not yet have the possibility, during the online process, to actively make a comparison between their selected names and existing ones. Instead, they can only passively be informed of a result generated by the system whether their names are registrable, and are not able to see any reason or evidence if their names are rejected.
Establishing the Comparison System could significantly help to increase the companies’ freedom in developing company names. Such reform could further facilitate or even abolish the current online name pre-registration process. It would be appreciated if SAIC added a clear schedule for the system setup, followed by action plans and implementing provisions. This would be helpful to give the public more transparency and the confidence in welcoming the realization of the reform.