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16-03-2021

Company name registration becomes easier in China

As per 1 March 2021, the amended Regulations on the Administration of Enterprise Name Registration (“Regulations”) will come into effect in China. The Regulations offer companies tools to register their business name easier and faster with the State Administration of Market Regulation (SAMR). The approval of the SAMR is required to obtain the business license and to complete the incorporation procedure of the company in China.

In this article we will deepen the key changes as introduced under the new Regulations and what the implications are for practice.

No pre-approval required
Pursuant to the old system, the company can only use its business name after receiving the pre-approval of the SAMR. This process would normally take up approximately between two and fifteen days depending on where the business will be located. Upon receipt of the Enterprise Name Pre-Approval Certificate, the company may apply for the business license.

Nowadays, the company will be able to register its business name directly through the self-declaration system of the SAMR. This system holds an intelligent examination pursuant to which companies can search, select and declare a name that they would like to register. Enterprises will be able to choose their business name promptly as no waiting period applies for using the name. The SAMR nevertheless retains the right to refuse the company name registration by giving a written explanation. There is no time limit included in the Regulations for refusing such a registration.

In addition to the self-declaration system, an open database of all the business names will become available. This provides a good framework of reference for the names that have been used by existing companies at the level of provinces, cities and counties.

Guidelines company name
The Regulations provide further guidelines with regard to the elements and the structure of the company name. The company can only register one name and the name can be used commercially. The name of the company shall at least include the following elements:

  • Place of registration of the company;
  • Full company name consisting of more than 2 simplified Chinese characters;
  • Activity and/or purpose of the company, such as Trading, Consulting, Manufacturing; and
  • The form of the company, such as Limited Liability Company.

Company names containing the word ‘China’ require approval of China’s State Council. However, wholly foreign-owned or controlled foreign-invested enterprises are allowed to use the word ‘China’ in their business name. Furthermore, old company names that are found in the self-declaration system and have been cancelled or revoked, can only be adopted after a period of 1 year.

Following article 11 of the Regulations, registration of the business name will be rejected by the SAMR if there is any of the following conditions and/or circumstances:

  • Damage to national dignity or interests;
  • Damage to public interests or hinder public order;
  • Use or disguised use of names of political, governmental and military organizations;
  • Use of names that contain obscenity, gambling, terror and violence;
  • Use of names that contain ethnic, racial, religious or gender discrimination;
  • Violating public order and good customs; and
  • Causing public deceived or misunderstood.

Dispute settlement
What is new is that the Regulations provide the opportunity for companies to act against unlawful use of the company name. Instead of filing a lawsuit with the Chinese courts, the company may request the SAMR to deal with the infringement in the form of mediation. If mediation is unsuccessful, the SAMR will make an administrative ruling no later than 3 months of the date of acceptance.

In the event that either the Chinese courts or the SAMR determines that the business name infringes the rights of the applicant, the company needs to amend its business name within a period of 30 days. If the enterprise fails to do so within the set period, then it will be included on the Directory of Enterprises with Abnormal Business Operations. Although the company can apply to be removed from the abnormal business operations category after changing the name registration, the data will still be traceable due to the permanent record of the directory.

Summary
The amendments on the Regulations marks another step by China in achieving an autonomous and transparent system for business name registration. With the disappearance of the pre-approval system, the registration of the business name becomes faster and easier in China. In addition to the mandatory registration of the company name, it is also advisable to register the trademark with the China Trademark Office. This will protect the legitimate rights and interests of the company better and enhances the circumstances of doing successful business in China.

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