Beneficiary Owner Filing in China Q&A (II): Who Needs to Comply?

China’s new beneficiary owner filing (BOI) measures require business entities, except individually owned businesses, to submit their beneficiary owner information starting November 1, 2024. To assist businesses in understanding the new compliance requirements, we have created a Beneficiary Owner Filing in China Q&A series, focusing on specific questions regarding the BOI filing requirements. This is issue II of the series.

On April 1, 2024, the People’s Bank of China (PBOC), in collaboration with the State Administration for Market Regulation (SAMR), issued the Measures for the Administration of Beneficial Ownership Information (hereinafter referred to as “the Measures”). These regulations officially came into effect on November 1, 2024.

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Under the new requirements, all companies, partnerships, and branches of foreign companies established in China must report their beneficial ownership information at the time of registration via the relevant corporate registration system. Entities already registered before November 1, 2024, must complete their filings by November 1, 2025.

To provide further clarity, on October 28, 2024, the Anti-Money Laundering Bureau of the PBOC released the Guidelines for Beneficial Ownership Information Reporting (First Edition) (“the Guidelines”). In Q&A format, this document addresses common questions and clarifies key reporting requirements.

To help businesses navigate these new compliance obligations, we are launching a Beneficiary Owner Filing in China Q&A Series. Each issue will tackle a specific aspect of the filing requirements.

In this second issue, we explain: Which entities are required to comply with the beneficiary owner filing requirements? Stay tuned as we break down the key compliance criteria and what businesses need to know.

Which entities need to file beneficiary owner information?

Currently, companies, partnerships, and branches of foreign companies (collectively referred to as “filing entities”) are required to file beneficiary owner information.

Given the current money laundering risk situation in China, non-company corporate entities, sole proprietorships, farmers’ professional cooperatives (and their branches), and branches of domestic companies and partnerships are not required to file beneficiary owner information. This scope may be adjusted based on future developments.

Under what conditions can companies be exempted from filing beneficiary owner information

To reduce the reporting burden on small and medium-sized enterprises (SMEs) with simple equity (partnership interest) structures, the Measures allow certain filing entities to be exempt from filing beneficiary owner information if they meet the following conditions at the same time:

• Condition 1: Registered capital (investment amount) does not exceed RMB 10 million (or equivalent foreign currency);
• Condition 2: All shareholders or partners are natural persons;
• Condition 3: No natural person other than the shareholders or partners exercises actual control or derives benefits from the entity; and
• Condition 4: There are no non-equity means of control or benefit.

To interpret, Condition 1 sets the threshold for SEMs required to report beneficial ownership, using a registered capital (or capital contribution) of RMB 10 million as the benchmark to streamline implementation, given the varying definitions of SMEs in practice. Condition 2 states that all shareholders or partners must be natural persons. Condition 3 emphasizes that no “natural person” outside the registered shareholders or partners should have actual control or derive benefits. Condition 4 further stipulates that no “method” other than equity or partnership interests should be used to exercise control or obtain benefits.

For example, if a natural person A is not a registered shareholder of Company B but controls the company or derives benefits through an agreement, Company B does not meet conditions 3 and 4 and cannot be exempt from filing beneficiary owner information.

If a company (or partnership) meets Conditions 2, 3, and 4, its beneficial owner can be identified based on its legally registered information. In such cases, if the company (or partnership) qualifies as an SME, it is allowed to opt out of reporting by submitting a commitment to reduce its compliance burden.

Entities claiming exemption must ensure the accuracy of their commitments and confirm by selecting the exemption option. False commitments will result in legal liabilities.

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