By Matthew Zito and Maria Kotova
SHANGHAI — The rectification of names (正名) is a central Confucian doctrine based on the idea that using the proper names of things—personal titles, ritual implements, plant species, etc.—has outward repercussions for creating harmony in one’s social relationships and the world at large.
In China, the importance of finding the right name is as true for companies as for individuals, as highlighted by name approval being the first step in establishing a company in China. But what happens when the name originally selected for your business, for one reason or another, needs to be changed?
The procedure for changing the name of a company in China turns out to be quite complex, though it is far simpler, for example, than changing one’s business scope. Because a company’s name is displayed on several types of official documents (such as its business license, company chop and tax registration certificate), any changes to this information must be filed with each respective governing authority. It is crucial that companies duly prepare for each step in the process prior to filing an initial application, as deadlines at later steps are incurred by the completion of earlier ones.
In Step 1, a name change must be filed with the local State Administration for Industry and Commerce (SAIC) at which the company was originally registered, and requires the following:
- A written application for a change to the company’s registered information, signed by the legal representative;
- A resolution or decision on the change, made in accordance with the Company Law; and
- Other documents as specified by the local SAIC.
Similar to an initial application for name pre-approval, a written application for a change of company name should contain at least 3 proposed names (including a preferred one) in compliance with “Measures for Implementing the Administration of Enterprise Name Registration” effective from June, 2004. If the first proposed name has already been registered by another company, then officials will approve one of the other proposed names.
The general structure of a company name is as follows:
[Admin. Division]+[Trade Name]+[Industry]+[Organization Type]
An example naming structure of a WFOE:
[Shanghai]*+[Trade name]+[Consulting]+[Co., Ltd]
*Alternatively, the administrative division can be placed in brackets after the Trade Name or Industry, e.g. XXX Consulting (Shanghai) Co., Ltd. This is permitted for foreign-invested enterprises only.
The structure of a company name is standard for all parts except for the Trade Name. However, specific requirements govern one’s choosing of this component. For instance, the Trade Name must use Chinese characters (it is prohibited to use Latin characters/pinyin or Arabic numerals) and should contain more than one character. Unless approved of by SAIC, the company name may not contain any of the following: “中国”(China), “中华”(China), “全国”(National), “国家”(State), “国际”(International).
If the change is approved, within 10 days the authorities will issue a notice of approval and a request that the company modify its business license accordingly. A fee of RMB100 applies to any change of registered information. In theory, any changes to a company’s name must be filed with the local SAIC within 30 days of the decision to make the change. Failure to file a change in registered information can result in a fine of between RMB10,000 and RMB100,000.
RELATED: Choosing Your Trademark Name in China
Where a change to the name of a parent company affects the registered information of its branch company(s), an application must also be filed for a change to the branch company’s registered information. A subsidiary is not able to bear independent civil responsibility and therefore should take the company’s name followed by the word “Branch” (“分公司”、“分厂”、“分店”等字词). Applications must be made within 30 days of the change to the parent company’s information and with the branch company’s original SAIC body of registration. This must be signed by the company’s legal representative and accompanied by a copy of the company business license affixed with the company seal.
Step 2, the company must file an application with its original SAIC body of registration for a change of information on its business license. Applications to do so must be submitted within 30 days of the change in company registered information as completed in Step 1. This requires:
- An application to change the registered information, signed by the legal representative and chairman of the board;
- A resolution to change the registered information, issued by the chairman of the board;
- Approval for the change in registered information as obtained from SAIC in Step 1; and
- Other relevant documents.
A decision will be issued by the authorities within 30 days of the receipt of an application. The related fee is subject to the determination of local SAIC. Failure to register a change in registered information can result in fines and an injunction to rectify the situation within a specified time limit.
In Step 3, after a name change has been registered with local SAIC for both the company (Step 1) and its business license (Step 2), the company must then go about updating other documents on which its name appears, including various types of chops (Financial Chop, Company Chop, Customs Declaration Chop, etc.), which must be newly carved and registered with the company’s local Public Security Bureau.
Other documentation to be updated includes the company’s registered information with State Administration of Foreign Exchange (SAFE), the Finance Bureau and the Statistics Bureau, as well as its Customs registration, banking information, foreign trade operator registration with MOFCOM and its taxpayer registration.
Updating tax registration is quite complex, but is a crucial step in the overall process, as it affects the company’s ability to issue fapiaos (and thereby allow its customers to deduct input VAT). Firstly, the company must apply for a change in registered information with its original State Administration of Taxation (SAT) of registration, within 30 days of the initial approval as obtained in Step 1. This requires the following:
- Approval from local SAIC to modify the company registered information and the business license;
- Documentation of a change in taxpayer registered information (not applicable, unless the name change is accompanied by a change in other registered information);
- The company’s original taxation registration certificate (original and duplicates); and
- Other relevant materials.
The company will then be asked to fill out an application form for the change in registered information, which will be processed by the taxation authorities within 30 days of receipt. If successful, the company will be issued a new taxation certificate. Various punishments apply to a company that fails to register changes to its registered information with the taxation authorities.
Moreover, the company will have to make changes to all ongoing contracts with suppliers and clients. The related parties are not required to sign a new contract, however, but may instead sign an amendment to the original. The same applies to all labor contracts with employees, for which amendments should be signed by both the employer and employees.
As illustrated by the above, changing the name of a company in China is no easy task. Given the proper planning, however, it can be done. Depending on the number of documents needing to be updated, the overall process can carry on for months, excluding the time required for the company to prepare internal documents. For these and other reasons, companies are strongly advised to contract the expertise of an experienced services provider, such as the professional tax and legal advisory team of Dezan Shira & Associates.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
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