On December 30, 2024, China’s State Administration for Market Regulation (SAMR) announced new Company Registration Management Implementation Measures (the "Measures"), which will come into effect on February 10, 2025. These new measures aim to refine the company registration process, aligning it with the recently amended Company Law and related administrative regulations. The initiative is designed to enhance the corporate regulatory framework in China, promoting transparency, compliance, and sustainable market practices.
In this article, we break down the key provisions of these new measures, explaining what businesses need to know about the upcoming changes.
Key Changes in Company Registration and Capital Requirements
One of the most notable updates concerns the handling of registered capital—a central issue in the registration and management of companies in China.
Registered Capital Payment Deadlines
The Measures stipulate that if a Limited Liability Company (LLC) increases its registered capital, the shareholders must pay the increase within five years from the date of registration change. This aligns with the amended Company Law provisions, which set similar deadlines for initial subscribed capital payments.
For joint-stock companies, the increased capital must be paid in full before the registration change. These updates aim to ensure that companies adhere to more defined timelines for capital contributions.
Review of Registered Capital in Special Circumstances
Under certain circumstances, companies that were established before July 1, 2024, will undergo a review by the registration authority. This review will focus on issues such as the business scope, capital contribution ability, asset scale, and project operations. The authority will evaluate the registered capital contributions of companies in the following scenarios:
The company’s subscribed capital contribution period exceeds 30 years.
The company’s registered capital exceeds RMB 10 billion.
Any other circumstances where there is an issue with the authenticity of the registered capital or its practicality.
In these cases, companies may be asked to make necessary adjustments to ensure compliance with the principles of authenticity and reasonableness. These provisions aim to prevent companies from registering false capital contributions and ensure that companies operate in a fair and transparent manner.
Exemptions for Some Companies
LLCs registered before June 30, 2024, will be granted special exemptions from adjusting their capital contribution timelines. These exemptions apply to companies where the capital contribution period is less than five years by July 1, 2027, or those that have already fully paid their registered capital.
Enhanced Transparency and Disclosure of Registered Capital
The new rules also focus on improving transparency. Shareholders of LLCs are required to publicly disclose detailed information about their subscribed and paid capital, including the payment amount, methods, and dates. Similarly, joint-stock companies must disclose the number of shares subscribed by their promoters. This information must be made available via China’s National Enterprise Credit Information Publicity System within 20 business days.
This enhanced disclosure is expected to increase transparency and public accountability, fostering trust and reducing the possibility of fraudulent activities in company registration.
Changes in Registration and Filing Procedures
The Measures also introduce significant updates to the company registration process and requirements for record-filing.
Proof of Domicile or Business Place
To address the issue of false address registrations, the new Measures mandate that companies submit proof of their domicile or business place usage when applying for registration. However, if the ownership or usage rights of the address can be verified through inter-departmental data sharing, the company may be exempted from submitting proof materials, streamlining the process.
Separate Register System
A new separate register system will be introduced for companies unable to adjust their capital contribution periods in compliance with the Company Law by June 30, 2027. These companies will be listed in a separate register, which will include businesses that:
Have had their business licenses revoked.
Have been ordered to close or cancel.
Cannot be contacted through their registered address and are thus listed as operating abnormally.
Companies placed on this list can apply for restoration of their registration status if they meet the necessary conditions. This system aims to maintain accountability and transparency in the business environment, particularly regarding companies that are no longer operational or compliant.
New Scrutiny on Debt Evasion and False Registrations
A key provision of the Measures is the crackdown on malicious debt evasion, fraudulent registrations, and attempts to bypass administrative penalties. Companies found to engage in these activities, such as through asset transfers or improper changes to legal representatives or shareholders, will face stringent scrutiny. The registration authorities will deny or revoke registration for such companies.
Moreover, company names that violate registration regulations or capital contributions that remain irregular will not be approved. These provisions are aimed at reducing fraudulent activity and ensuring that companies follow the law.
Personnel Registration and Updates
The Measures introduce clear guidelines for company personnel management, including the removal of directors, supervisors, or senior management who no longer meet legal requirements. The updated rules stipulate that:
If a person serving as a director or senior manager becomes ineligible, the company must remove them within 30 days of becoming aware of the situation.
If the company fails to comply, the court will enforce the removal and require the registration authority to update the company’s records in the National Enterprise Credit Information Publicity System.
This ensures that company records reflect accurate and up-to-date information about its leadership, enhancing transparency and preventing misuse of power.
Impact on China’s Business Environment
These new company registration measures are expected to significantly improve China’s business environment by increasing regulatory transparency, accountability, and administrative efficiency. The enhanced disclosure requirements and crackdown on false registrations will create a more reliable and trustworthy market, which is crucial for attracting both domestic and foreign investment.
Additionally, by encouraging more efficient capital utilization and strengthening governance, the Measures aim to support China’s high-quality development in key sectors such as green energy and high technology.
What Businesses Need to Do
To comply with these new requirements, businesses must review their internal processes and ensure they are aligned with the updated registration and disclosure rules. Companies should focus on strengthening governance, particularly regarding shareholder contributions and director appointments, to avoid penalties.
Furthermore, businesses should maintain open communication with regulatory authorities and consider seeking professional assistance for complex filings or when navigating any ambiguities in the new regulations.
China’s introduction of the new Company Registration Management Measures marks a significant step toward enhancing the corporate regulatory framework in the country. By improving transparency, cracking down on fraudulent practices, and encouraging efficient capital utilization, these changes aim to create a fairer, more stable, and competitive business environment. Companies must adapt to these new rules to ensure compliance and continue to operate smoothly in China’s evolving market.
