Terina Nie
► As of March 15th 2022, the “Several Regulations on the Registration Confirmation System of Market Entities in Pudong New Area of Shanghai” (“Regulations”) have been officially implemented, specifying that “the registration authority will conduct a formal review of the application materials.”
► The promulgation of the Regulations marks that the registration of market entities in Pudong has officially changed from administrative “license” to administrative “confirmation”. Although it seems that there is only one word difference, what changes will it bring to the registration of enterprises?
01 From Recordation to Publicity
In the past, whenever a company needed to change its directors, supervisors and senior executives, it needed to sign the corresponding application forms, resolutions, appointment and removal letters and other documents in order to handle the necessary recordation procedures with the registration authority. Especially when it comes to foreign-invested enterprises, the documents often need to be signed abroad and sent back to China, so it could take several weeks for a simple personnel change.
After the implementation of the Regulations, for enterprises in Pudong, when it comes to the change of non-legal representative directors, supervisors, the contact person and the recipient of foreign-invested enterprises’ legal documents, the enterprises only need to announce the change through the National Enterprise Credit Information Publicity System or Government Online-Offline Shanghai platform within 20 days from the date of change. The enterprises do not need to go to the registration authority to file recordation, and the registration authority will no longer collect relevant resolutions and appointment and removal documents.
The company is therefore responsible for the legality, accuracy and completeness of its public content and documents, as well as the relevant resolutions, appointment and removal documents and any other documents related to the changes shall be kept by the company. The registration authority will randomly check these documents are in order. If the public information or relevant documents are false, the company will more than likely be included in the “black list.”
02 One Certificate, Multiple Addresses
Under normal circumstances, if a company wants to carry out business activities in places other than the registered address, it can only choose to set up a branch in the actual place of business to meet the compliance requirements. Now, for the enterprises in Pudong New Area, the Pilot Free Trade Zone and Lingang New Area, if the place of registration and the actual address to carry out business activities belong to different registration authorities in the above-mentioned areas, such enterprises can record multiple eligible business premises, without applying for a business license in each registration authority.
For example, if a company is registered in Lingang and its business address is located in Zhangjiang, it only needs to file the address at the registration authority in Lingang, and does not need to set up a branch in Zhangjiang. Meanwhile, setting up a branch is still one of the options available for the companies.
03 Simplify Business Scope Registration
After the implementation of the Regulations, enterprises in Pudong only need to register their main general activities, activities require a specific license and activities involved in the Special Administrative Measures for Access of Foreign Investments (Negative List) on their business licenses. The registration authorities allow enterprises to carry out general business activities beyond the registered business scope, but shall not carry out licensed-activities without a specific license, otherwise the relevant licensing department will impose penalties according to the law.
Summary
As the first regulation of Pudong in 2022, the Regulations show respect for the autonomy of enterprise registration, and once again “reduce the burden” for registration and recordation of enterprises, whilst also strengthening the enterprises’ publicity obligations and integrity responsibility.
DaWo Law firm has extensive experience when it comes to assisting foreign investors in incorporating companies and handling any change formalities in Shanghai and across China. If you are looking to start your business in China, please feel free to contact us.
