In an effort to modernize and streamline company registration procedures in China, the State Administration for Market Regulation issued Order No. 95 on December 20, 2024, promulgating the Implementing Measures for the Administration of Company Registration (“Measures”).
Effective February 10, 2025, the Measures aim to improve the business environment, ensure transaction security, and support the establishment of a unified national market by promoting standardization, transparency, and accountability in the registration process. These regulations apply to all companies undergoing registration and filing procedures in China, including foreign-invested enterprises, unless explicitly exempted by other regulations.
Key Highlights of the Measures
The Measures contain 29 provisions in total. These provisions address various aspects of company registration and administration, including capital contributions, business scope, regulatory oversight, public disclosure requirements, responsibilities of intermediaries, real-name verification, proof of address, and processes for business closure or deregistration. Each provision is designed to enhance transparency, compliance, and the efficiency of the registration system in line with China’s revised Company Law.
In this article, we focus on discussing the key points that CW considers important to emphasize:
Capital Contributions
Limited Liability Companies (LLCs):
Under the most recently revised Company Law of China which was enacted on July 1, 2024 , the amount of capital contributions subscribed for LLCs by all the shareholders should be fully paid up by the shareholders within 5 years as of the date of establishment.
The Measures provides transitional arrangements for those LLCs established prior to the enactment of the newly revised Company Law, which remains consistent with the Provisions of the State Council on Implementation of the Registered Capital Management System under the Company Law which came into effect on July 1, 2024.
Here are the transitional arrangements:
- If the remaining term for shareholders to fully pay their subscribed capital exceeds five years as of July 1, 2027, the company must adjust its capital contribution period to less than five years by June 30, 2027, and record this adjustment in its articles of association. Shareholders are obligated to fulfill their capital contributions within this revised timeframe.
- However, no adjustments are required if the remaining term is already less than five years as of July 1, 2027, or if the registered capital has been fully paid.
Joint Stock Limited Companies: For those established before June 30, 2024, promoters or shareholders must complete full payment for their subscribed shares by June 30, 2027.
Exemptions: Companies registered before June 30, 2024, whose operations involve national interests or major public interests, may be permitted to adhere to their original capital contribution timelines established before June 30, 2024.
Enhanced Oversight of Capital Contributions
To ensure transparency and accuracy in capital contributions, the Measures introduce stricter oversight and enhanced disclosure requirements. For companies registered before June 30, 2024, the company registration authority will evaluate the legitimacy of their registered capital under the following circumstances:
- Extended Capital Contribution Periods: Companies with capital contribution periods of 30 years or more will undergo scrutiny, as such extended timelines may be deemed unreasonable.
- Excessive Registered Capital: Companies with registered capital of 1 billion yuan or above will also be reviewed to assess feasibility and intent.
- Other Abnormal Cases: The registration authority will investigate any situations that deviate from standard commercial practices.
In conducting these assessments, the authorities may consider factors such as the company’s business scope, operational status, shareholders’ capacity to contribute capital, principal activities, and asset scale. Where necessary, external professional organizations may be engaged for valuation or consultation with relevant authorities. Companies and their shareholders are obligated to cooperate fully by providing explanations and supporting documentation.
Appointment of Registration Liaison Officers
To ensure effective communication and accountability throughout the registration process, the Measures formally codify the requirement for companies to appoint registration liaison officers. While it has been common practice for companies to designate a point of contact, often through a third-party agent, issues with invalid or inaccurate contact information have hindered communication with registration authorities. The Measures aim to rectify this by explicitly mandating the provision and maintenance of accurate contact information for these officers, who can be legal representatives, directors, supervisors, senior executives, shareholders, or employees. This provision strengthens the registration authority’s ability to connect with the appropriate individuals when necessary, ensuring smoother communication and facilitating compliance.
Strengthened Regulations on Intermediaries Handling Company Registration
When it comes to company registration and regulatory filing, many companies choose to entrust professional service firms with these tasks. In light of this, the Measures impose stricter requirements on intermediaries (e.g., professional service firms) handling company registration and filing:
Intermediaries must adhere to principles of honesty and integrity, fulfilling their duties lawfully and transparently.
Intermediaries must clearly identify their agency status and submit a power of attorney authorizing them to act on behalf of the applicant.
Intermediaries are prohibited from engaging in fraudulent practices, including submitting false materials or concealing critical facts.
Severe penalties, including fines and confiscation of illegal income, will be imposed on intermediaries engaging in fraudulent activities. Companies should therefore look for reliable professional service firms that possess a strong understanding of local regulations and have a proven track record of successfully handling company registration and filing procedures.
Business Scope
For all companies, the business scope must comply with China’s Negative List for Market Access, which is a document that outlines sectors prohibited or restricted for all businesses operating in China. Business activities requiring prior approval or licensing according to the Negative List for Market Access must obtain the necessary approvals before being included in the company’s business scope.
Additionally, foreign-invested enterprises must also comply with the Special Administrative Measures (Negative List) for Foreign Investment Access, which lists out sectors and business activities in which foreign participation is either restricted or prohibited.
Companies must clearly define their business scope during registration, and any subsequent changes must be formally registered with the company registration authority.
It is worth noting that the business scope is closely linked to the registered capital, as it serves as a key criterion for authorities to assess whether a company’s registered capital is appropriately set—neither too low nor excessively high.
Therefore, it is crucial to align a company’s business scope with its registered capital, making certain that the capital is proportionate to the scale and financial requirements of the intended activities.
What CW Can Do For You
The Implementing Measures for the Administration of Company Registration provides further clarity on the company registration requirements in China. Foreign businesses operating or planning to operate in China should familiarize themselves with these changes to ensure compliance and avoid potential pitfalls.
Our team provides tailored solutions to help you align your business scope, capital, and operations during your company registration process in China. In addition to handling the necessary paperwork of company registration, we provide strategic advice on a range of issues that impact the long-term compliance of your China company, for example:
- Determining the optimal amount of registered capital: We help you assess your business needs and calculate the appropriate registered capital, striking a balance between demonstrating financial commitment and maintaining operational flexibility.
- Crafting an accurate and comprehensive business scope: We assist in aligning your business activities with China’s Industrial Classification for National Economic Activities, ensuring your business scope is precisely defined to support your operations and minimize compliance risks.
Contact us today to request assistance or simply stay informed on any policy changes.
