From March 1, 2021, enterprises in China can benefit from a revised regulation on Business Name and Registration. Following the State Council Order, the pre-approval of enterprise names before registration has been canceled. A company name is an important aspect of registering an enterprise in China because it manifests the company’s brand and value.
Have a look at our previous article on Registering an Enterprise in China: Some Conditions
The recent move aims to not only cut the red tape and optimize the business environment in China. It also further strengthens the protection of business rights in terms of the brand identity.
Key points of the revised regulation on business name registration and administration
Removal of the step for pre-approval of enterprises name
Submitting a business name was one of the prerequisites for obtaining a business license in China. The new regulation, however, eliminates this part which makes it easier for businesses to register for a license.
The pre-approval step usually takes five to seven days. With the new regulation, businesses will now be able to reduce the time they could get a business license.
Clarification of rules for registering foreign-invested enterprises, branches, and enterprise groups
The following are some of the rules clarified for foreign-invested enterprises under the new regulation:
1. The “one name for one business” principle pertains to the legal protection accorded to each business name.
2. Standard Chinese characters should be used for business names and ethnic characters are allowed to use for businesses in ethnic autonomous areas.
3. Business names that fall under the following intentions are not allowed:
- hurt the country’s dignity or interests;
- against social and public interests or order;
- contain content suggesting discrimination based on ethnic group, race, religion, and gender;
- violate good morals or might have other adverse impacts; and
- are likely to deceive the public or cause misunderstanding.
4. If the business name contains the words like “China” and “National”, it will be subject to stringent review and approval from the State Council.
5. The business name should reflect the company’s primary business and industry classification standards for national economic activities.
Establishment of a mechanism for enterprise name disputes
An enterprise can sue another enterprise to the People’s Court if it deems that the latter has infringed on the former’s name rights and interests. The registration authority will have the power to mediate after accepting the complaint and make an administrative ruling if the mediation fails.
On the other hand, if an enterprise engages its name in unfair competition, the registration authority will demand a change in the enterprise’s name within a deadline. If the enterprise fails to do so, it will be listed in the List of Enterprises with Abnormal Operations. Where the enterprise transfer or license another party to use its name, it should disclose the information in public via the National Enterprise Credit Information Publicity System.
Online submission of the business name for immediate use
One of the major benefits of the new regulation is establishing a “system of independent declaration of enterprises name”. The applicant can submit related information and materials through the online business name application system. This means that unlike before where there is a pre-approval system of the business name, an enterprise can use a self-declaration system.
In a self-declaration system, the enterprise can log in to the online system and declare its preferred name. The system will automatically filter the names following the compliance measures. Moreover, the said online system will have a database for all registered enterprises’ names, allowing new applicants to avoid conflict with registering names that other enterprises already have.
Conclusion
The Chinese government has provided several reforms for streamlining the procedures for businesses operating in China. Improving the business name registration is one way of minimizing administrative approval for businesses. Hence, it will cut the processing time needed for starting a business in China.
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