On December 20, 2024, the State Administration for Market Regulation (SAMR) issued the Implementation Measures for the Administration of Company Registration (“SAMR Order No. 95”), effective February 10, 2025.
As a departmental regulation issued under the State Council’s authority, SAMR Order No. 95 standardizes how local registration authorities administer company registration, ensuring compliance with China’s broader corporate governance reforms.
SAMR Order No. 95 does not only regulate the registration of new companies but governs the entire lifecycle of corporate registration and administration, including:
- new company formation;
- changes in corporate information, capital contributions, shareholder structures, and business scope; and
- deregistration, dormant status filings, and handling of revoked licenses.
By reinforcing regulatory oversight and procedural integrity, SAMR Order No. 95 promotes accuracy, transparency, and compliance in corporate records. These regulatory updates necessitate proactive adjustments in governance structures, financial compliance, and registration procedures, particularly for foreign investors operating in or planning to enter the Chinese market.
Alignment with China's Corporate Governance Framework
SAMR Order No. 95 is part of China’s broader efforts to streamline company registration, enhance financial transparency, and reinforce compliance oversight. It is a departmental level regulation focusing on company registration administration, ensuring that higher-level laws and regulations are implemented in a unified standard at the local level, operating within a structured legal framework that includes:
Company Law of the People’s Republic of China (Revised in 2023) （“2023 Revised Company Law”) – Establishes fundamental rules for corporate governance, capital contributions, and corporate compliance.
- The Provisions of the State Council on Implementation of the Registered Capital Management System under the Company Law (State Council Decree No. 784) – Provides detailed capital contribution compliance standards and registration oversight.
- The Administrative Regulation on Market Entities (State Council Decree No.746) – Establishes a unified framework for business registration, covering all market entities, including companies.
Together, these laws and regulations standardize company registration practices, improve regulatory enforcement, and create a more structured and transparent business environment in China.
Key Highlights of SAMR Order No. 95 for Foreign-Invested Enterprises
SAMR Order No. 95 plays a crucial role in clarifying and strengthening enforcement of China’s company registration regulations. Building upon recent legislative changes, including the revised Company Law, the order provides detailed guidance and reinforces compliance requirements.
After analyzing SAMR Order No. 95, we provide a few noteworthy highlights for foreign investors:
Reinforcing the Timeline for Capital Contribution
The 2023 Revised Company Law introduces a 5-year maximum capital contribution time limit applicable to all limited liability companies (LLCs). Further, the State Council Decree No. 784 provides a transitional arrangement for companies registered before the implementation of the 2023 Revised Company Law on July 1, 2024.
SAMR Order No. 95 implements and reinforces the capital contribution timeline requirements established by the 2023 Revised Company Law, including the transitional arrangements outlined in State Council Decree No. 784.
Transitional Arrangement for Companies Established before June 30, 2024
According to State Council Decree No. 784) – Provisions of the State Council on Implementation of the Registered Capital Management System under the Company Law of China:
For an LLC registered for incorporation before June 30, 2024
- if the remaining capital contribution period of a limited liability company exceeds five years as from July 1, 2027, the company shall adjust the remaining capital contribution period to five years by June 30, 2027, and update its articles of association.
- The shareholders shall fully pay the amount of capital contributions they subscribe for within the adjusted capital contribution period.
For a joint stock limited company (JSLC) registered before June 30, 2024
- The promoters shall make full payment for the shares they subscribe for by June 30, 2027.
SAMR Order No. 95 reinforces the power of registration authorities to actively review and adjust capital structures that appear unrealistic or inconsistent with demonstrated financial capacity. This includes the authority to engage professional organizations to assess contribution schedules and the requirement for companies to provide supporting documentation to justify their capital structures.
Capital Contribution through Data/Network Virtual Assets
SAMR Order No. 95 allows for capital contribution through data/network virtual assets, provided certain rules are followed. Here’s a brief summary of the key rules:
- Eligibility of Assets: Data and network virtual assets must have a clear monetary value and be legally transferable. They should not violate laws or public interests.
- Valuation: The value of these assets must be assessed by a qualified professional appraisal institution to ensure accuracy and fairness.
- Ownership and Rights: Contributors must have full ownership or legal rights to the assets, free from disputes or encumbrances.
- Documentation: Detailed documentation, including the appraisal report and proof of ownership, must be submitted during registration.
- Proportion Limit: The proportion of capital contribution in the form of data/network virtual assets may be subject to limits, depending on the type of company and applicable regulations.
- Registration Process: The contribution must be formally recorded in the company’s registration documents and approved by the relevant authorities.
These rules aim to ensure transparency, legality, and fairness when using data or virtual assets as capital in company formation.
Timely Disclosure of Information on Shareholders’ Capital Contribution with the Public
Under SAMR Order No. 95, the rules for timely sharing of information on shareholders’ capital contribution with the public are designed to ensure transparency and accountability. Here’s a brief summary of the key rules:
- Public Disclosure: Information about shareholders’ capital contributions, including the amount, form (e.g., cash, assets, data), and timing, must be disclosed to the public through the National Enterprise Credit Information Publicity System or other official platforms.
- Timeliness: Companies are required to update and share capital contribution information promptly after any changes, such as new contributions, adjustments, or fulfillment of contribution obligations.
- Accuracy: The disclosed information must be accurate, complete, and reflect the actual status of shareholders’ contributions.
- Accessibility: The information should be easily accessible to the public, ensuring stakeholders, including investors and regulatory authorities, can verify compliance.
- Penalties for Non-Compliance: Failure to disclose or provide false information may result in penalties, including fines, restrictions on business activities, or other legal consequences.
These rules aim to enhance corporate transparency, protect stakeholders’ interests, and maintain trust in the business environment.
Timely Filing with the Change of Key Positions such as Legal Representative, Supervisors and Senior Management Staff of the Companies
Under SAMR Order No. 95, companies are required to timely file changes in key positions, such as the legal representative, supervisors, and senior management staff, to ensure compliance and transparency. Here’s a brief summary of the key rules:
- Timely Filing Requirement: Companies must file changes in key positions (e.g., legal representative, supervisors, directors, or senior managers) with the company registration authority within 30 days from the date of the change.
- Required Documentation: The filing must include relevant documents, such as:
- Resolutions or decisions approving the change.
- Identification and qualification documents of the new appointees.
- Any other documents required by the registration authority.
- Public Disclosure: The updated information must be disclosed through the National Enterprise Credit Information Publicity System or other official platforms to ensure public access.
- Accuracy and Completeness: The filed information must be accurate, complete, and reflect the actual changes in the company’s leadership.
- Penalties for Non-Compliance: Failure to file changes within the stipulated timeframe or providing false information may result in penalties, including fines, restrictions on business activities, or other legal consequences.
These rules aim to maintain accurate and up-to-date records of company leadership, ensuring transparency and accountability in corporate governance.
Heightened Scrutiny of Application Materials
SAMR Order No. 95 mandates increased scrutiny of application materials, emphasizing the applicant’s responsibility for accuracy, completeness, and legal soundness.
Authorities are granted the power to conduct substantial review of applications for changes involving the legal representative, shareholders, registered capital, and deregistration, particularly to prevent bad-faith transfers of corporate assets and debt evasion. Here’s a brief summary of the key rules:
- Substantial Review Power: Registration authorities have the authority to scrutinize applications for changes in legal representatives, shareholders, registered capital, or deregistration to ensure compliance with laws and regulations.
- Preventing Bad-Faith Transfers: Authorities can investigate whether such changes are being used to fraudulently transfer corporate assets or evade debts, especially in cases involving suspicious or abrupt changes.
- Verification of Intent: The authorities may assess the legitimacy of the changes, including whether they are made in good faith and for lawful business purposes.
- Safeguarding Creditors’ Rights: If the changes are found to harm creditors’ interests (e.g., through asset stripping or debt evasion), the authorities may reject the application or impose conditions to protect creditors.
- Documentation and Evidence: Applicants may be required to provide additional documentation or evidence to prove the legitimacy of the changes and the absence of fraudulent intent.
- Penalties for Non-Compliance: If bad-faith actions or debt evasion are discovered, the authorities may impose penalties, such as fines, revocation of approvals, or legal actions against the responsible parties.
These rules aim to prevent misuse of corporate changes for fraudulent purposes, ensuring fair treatment of creditors and maintaining the integrity of the business environment.
Increased Accountability for Intermediary Agencies
SAMR Order No. 95 strengthens the accountability of intermediary agencies involved in company registration. The regulations place greater responsibility on these agencies for the accuracy and legality of submitted materials, increasing the risks associated with negligence or misrepresentation.
Suggestions
SAMR Order No. 95, while rooted in existing legislations, has a significant practical impact on foreign investors. Here’s what foreign investors should consider:
Ensure Accuracy and Completeness in All Filings
While China continues to streamline government filing and application procedures, don’t mistake this for relaxed oversight. Chinese authorities are prioritizing market integrity, so ensure all documentation is accurate, complete, and legally sound. This includes demonstrating the legitimacy of your capital contributions and business activities. Any attempts to circumvent regulations, particularly related to capital contributions or misrepresentation of business activities, will be met with serious consequences. SAMR Order No. 95 places greater responsibility on intermediary agencies involved in company registration, emphasizing their role in ensuring accurate and compliant filings.
Suggestions:
- Conduct thorough due diligence on any intermediary agencies you engage, clearly defining their roles and responsibilities in written agreements. (This adds a crucial point about agency oversight).
- For existing foreign-invested enterprises (“FIEs”), we suggest a brief review of current registration details to ensure they align with the new regulations, as there may be outdated information. Proactive adjustments may be necessary.
Plan and Manage Capital Contributions Effectively
As SAMR Order No. 95 clarifies capital contribution requirements, including the transitional arrangement following the 2023 Revised Company Law. Foreign investors should carefully review these timelines to avoid penalties.
Suggestions:
- For existing FIEs, it is essential to conduct a thorough review of unpaid registered capital and verify whether the remaining contribution schedule—both in terms of amount and timeline—aligns with the transitional arrangement.
- For foreign investors planning to establish an FIE in China, developing a well-structured capital contribution plan is crucial. This plan should align with the company’s business scope, projected operational needs, and shareholders’ financial capacity. While the SAMR Order No. 95 emphasizes scrutiny over companies registering unrealistically high capital amounts, this does not mean that investors should set their registered capital as low as possible. Setting the registered capital too low could lead to cash flow constraints, making it difficult to cover essential costs such as salaries, rent, and supplier payments before the company begins generating revenue. Striking a balance is key.
