Zhejiang Releases Measures to Ease Company Registration
Nov. 28 – Zhejiang’s Administration of Industry and Commerce (AIC) recently announced the release of nine measures to conform with the reformatory policies on company registration outlined in the October 25 State Council Executive meeting. These measures will aim to stimulate investment in the province by modifying the government’s role in the market and lowering entry barriers and start-up costs for entrepreneurs.
A press release by the Zhejiang AIC explains that in order to be prepared for the new company registration system, a number of relevant laws and regulations must be revised. It is still unclear when the new measures will enter into force.
The nine measures recently announced by the AIC are as follows:
1. Build a credit information system publicizing entities in the market
- This system will encourage businesses to operate transparently by disclosing information regarding public complaints, business registration, and business status to the general public.
2. Lower the requirements for business location
- At the beginning of 2013, Zhejiang Province allowed one business location to be registered on several business licenses, or several locations to be registered on one business license. Under the new measures, requirements for business location will be loosened further in a number of industries. In e-commerce, for example, an independent ‘secretary company’ may be used as a virtual business location for the purpose of business registration and administration.
3. Lower other registration requirements
- The deadline for the initial registered capital payment of 20 percent will be extended to three months after a business license has been issued. The remaining registered capital, however, must be paid in full within two years of the business license being issued. Additionally, with the change, ‘business scope’ may be chosen from a significantly broader category of industries if a permit is not required.
4. Develop and promote electronic business licenses
- Electronic licenses will soon replace the existing digital licenses, and identify companies in online business operations. Currently, nearly 80 percent of enterprises in Zhejiang use digital licenses and will soon be able to replace those with electronic licenses.
5. Allow preparatory registration for enterprises in all industries
- Preparatory registration will be expanded to all industries, and will allow enterprises to apply to register during the preliminary phase of business establishment. It will further recognize applicants as legal entities authorized to engage in preparatory activities before they are able to complete their full business registration.
6. Build a platform for company name searching
- The AIC will develop an online database that allows applicants to search existing company names and ensure their chosen name is not already in use.
7. Expand the functions of the information sharing platform between the Zhejiang AIC and the five major banks
- These five banks include Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and China CITIC Bank
- This will allow capital verification fees to be avoided by allowing the AIC to verify registered capital through the information sharing platform. This new platform has already been in use for eight months and is estimated to have saved new enterprises over RMB80 million since its creation. More banks are expected to be invited to the platform in 2014.
8. Support the development of emerging industries
- Zhejiang AIC intends to become more flexible by accepting applications from new and emerging industries or business models.
9. Improve the service function and efficiency of the AIC
- Rather than needing to travel to the provincial AIC office in Hangzhou, businesses in Zhejiang will soon be able to process their registration at any AIC office in Zhejiang.
- The AIC has also teamed up with a number of other governmental departments including the Quality Supervision Bureau, Tax Bureau, and Public Security Bureau to provide a streamlined registration service for new businesses. Applicants will soon be able to provide all of their required documents to the AIC who will in turn pass on relevant documents to other departments for processing. This streamlined process is currently available in 75 percent of AIC offices in Zhejiang, and will soon be expanded to all offices by the end of 2013.
Dezan Shira & Associates 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 emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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