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China to improve market entity registration and administration system

Wang Keju
Updated: Apr 14,2021 21:14 PM

The State Council’s executive meeting chaired by Premier Li Keqiang on April 14 adopted the draft Regulation on Market Entity Registration and Administration, to provide legal safeguards for cultivating and strengthening market entities, spurring entrepreneurship and innovation, and maintaining market order.

Thanks to institutional reforms in the business sector in recent years, the number of market entities increased by over 60 million during the 13th Five-Year Plan period (2016-2020). This has helped to boost economic vitality and resilience, and added a large number of jobs.

The reform of government functions will be deepened to turn practices proven effective into institutional norms, with a special focus on improving the basic system of market entity registration and administration.

The draft integrates the already promulgated administrative regulations on market entity registration, and sets out unified provisions on the registration and administration of enterprises of all types, self-employed individuals and specialized farmers’ cooperatives that engage in for-profit business activities in China.

“The Regulation is to advance both deregulation and oversight wherever appropriate, to provide legal safeguards for cultivating and strengthening market entities and promoting fair competition,” Premier Li said.

Business registration will be made easier. One-stop services will be accessible online where applications will be processed in a time-bound manner, and inter-provincial approval will be made available.

Registration departments should provide on-the-spot registration for market entities whose application materials meet statutory requirements. For cases where registration cannot be approved on-site, competent departments should complete the registration within three workdays. Electronic and paper business licenses are of equal legal efficacy.

Documentation requirements and registration procedures will be simplified. Registration departments should not require applicants to repeatedly provide relevant information that can be accessed via the government information sharing platform. If the application materials are incomplete or inconsistent with legal format, the registration departments should notify one-off the applicants of the materials that need to be supplemented or corrected.

To resolve “difficulties in deregistration”, the regulation stipulates that market entities that have not incurred or already paid off debts, employees’ wages, social insurance contributions, taxes payable, among others, and have promised in writing to assume relevant legal responsibility and make public announcements as required, may deregister with simplified procedures. Public announcements are not needed for self-employed individuals.

A dormant business mechanism will be established to help lower businesses’ operational costs. Market entities may decide on their own to turn dormant for a certain period of time due to difficulties caused by natural disasters, accidents or public health emergencies, and need to file with the registration departments. The dormancy period should not exceed three years.

Real-name registration of market entities will be implemented. Market entities will be held accountable for the authenticity, legality and validity of their materials submitted, and disclose annual reports and registration-related information in line with the regulation.

Market entities will see their registration revoked if they are found to provide falsified materials or commit other fraudulent acts during registration. The persons in direct charge should not apply for registration again within three years.

Registration departments should exercise multi-tiered and category-based oversight in light of the credit status of market entities. The regulatory approach of combining randomly selected inspectors who inspect randomly selected entities and the prompt release of results, will be adopted in the supervision over registration items.

The draft also specifies the legal liability and penalty measures for violations. Penalties will be better targeted, and business licenses will be revoked in serious cases, to safeguard a market order featuring honesty, trustworthiness and fair competition.