China Releases New Company Registration Measures: What You Need to Know

China has introduced new measures for company registration management, aimed at facilitating the implementation of the amended Company Law. These measures address key areas such as company registration, document filing, registered capital requirements, shareholder deregistration, and more. The initiative represents a major step forward in enhancing China’s corporate regulatory framework and promoting sustainable, transparent market practices.

On December 30, 2024, the State Administration for Market Regulation (SAMR), China’s market regulator announced the Company Registration Management Implementation Measures (hereinafter referred to as the Measures), which will come into effect on February 10, 2025.

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The Measures aim to implement the newly amended Company Law and the related administrative regulations, addressing prominent concerns such as adjusting the timeframe for registered capital contributions, resolving challenges in company deregistration, and preventing false registrations. The Measures will also apply to foreign-invested enterprises (FIEs).

Earlier in August 2024, the SRMR solicited public feedback on the draft Measures.

In this article, we highlight the provisions businesses need to know.

New rules for registered capital

The time limit for payment of the increase in registered capital

The Measures stipulate that if an LLC increases its registered capital, then the shareholders must fully pay the increased capital within five years from the date of the registration change. This aligns with the new time limit for payment of initial subscribed capital introduced in the amended Company Law.

Meanwhile, a joint stock company must fully pay the increased capital before registering the change.

Review of registered capital in special circumstances

The Measures stipulate provisions that will allow the company registration authority to evaluate a company’s business scope, operating conditions, shareholders’ capital contribution capabilities, main projects, asset scale, and other aspects in certain circumstances. This applies only to companies established before July 1, 2024 (the date the amended company came into effect) in the following circumstances:

• The company’s subscribed capital contribution period exceeds 30 years;
• The company’s registered capital exceeds RMB 10 billion; and
  Other situations that violate the principle of authenticity and do not conform to objective common sense.

If a company is found to violate the “principles of authenticity and reasonableness” and has an abnormal capital contribution period or registered capital amount, the registration authority can request it to make timely adjustments.

This provision was previously proposed in the draft version of the Provisions on the Registered Capital Registration Management System of the PRC Company Law but was removed from the final version passed in June.

No adjustment for some subscription period

Under the new measures, limited liability companies (LLCs) registered before June 30, 2024, are granted special provisions regarding the adjustment of their registered capital subscription timelines. LLCs with outstanding registered capital subscription periods that, as of July 1, 2027, are less than five years or have already fully paid their registered capital are exempt from adjusting their subscription timelines.

This provision complements the requirements stipulated in the Provisions on the Registered Capital Registration Management System of the PRC Company Law,  which require companies established before July 1, 2024, that have a subscribed capital payment term exceeding five years to make the required adjustments before June 30, 2027.

Enhanced disclosure of registered capital information

LLC shareholders are required to publicly disclose details of their subscribed and paid capital, including the amount, method, and date of payment. Similarly, joint-stock companies must disclose the number of shares subscribed by their promoters. All such information must be made available to the public via the National Enterprise Credit Information Publicity System within 20 business days of its occurrence.

Changes to company registration and record-filing

Requirements for application of domicile or place of business

To address the issue of “false address information” in business practice, the Measures stipulate that when applying for the registration of a domicile or business place, a company should submit proof of the domicile or business place usage in principle. If the existence and ownership or usage rights of the domicile or business place can be verified through inter-departmental data sharing, the registration authority may simplify the requirements and exempt the submission of proof materials.

Introduction of the “separate register” system

The Measures state that if a company cannot adjust its capital contribution period as required by the Company Law by June 30, 2027, due to certain circumstances, then it will be included in a separate register by the registration authority. The circumstances are:

• Having its business licenses revoked;
• Being ordered to close or being canceled; or
• Being unreachable through its registered address and thus being placed on the abnormal business operations list.

Companies that have been added to the separate register can apply to the registration authority to restore their registration status. The registration authority shall review their application and restore their registration status if they meet the required conditions.

If a company is included in the separate register, the registration authority will no longer count or manage it as a registered company. The registration authority will also replace the company name with its unified social credit code, the 18-digit registration number given to every company, on the National Enterprise Credit Information Publicity System and hide other information.

One social credit code per company

The Measures clarify that a company can only have one unified social credit code. If a company’s registration is canceled or deregistered, the registration authority will permanently retain the unified social credit code to ensure it can be traced in the future.

Improving the business environment by strengthening company registration procedures

To crack down on malicious debt evasion, the Measures stipulate that acts of maliciously transferring assets, evading debts, or circumventing administrative penalties—such as through changes to legal representatives, shareholders, registered capital, or by dissolving companies—will face stringent scrutiny. If such activities potentially harm public interests, related registration or filing will be denied, and any previously processed registrations will be revoked.

Meanwhile, registration will be prohibited in six specific situations:

1. Company names that fail to comply with company name registration regulations.
2. Registered capital, shareholder contribution timelines, or amounts that are significantly irregular and remain uncorrected.
3. Failure to obtain prerequisite approval documents required before registration.
4. Reapplication by individuals directly responsible for false registrations within three years of revocation.
5. Situations that endanger national security or public interest.
6. Any other circumstances that violate applicable laws or administrative regulations.

Registration management of company personnel

Audit committee member record-filing

The Measures stipulate that companies with an audit committee must simultaneously record information about the directors serving as members of the audit committee.

One of the changes in the amended Company Law is the provision to allow LLCs and joint-stock companies to establish an audit committee within the board of directors, in which case it would not need to establish a board of supervisors (or appoint any supervisors). The audit committee can be “composed of directors on the board of directors [and] exercise the powers of the board of supervisors”.

Enhancing the company liaison officer system

The Measures also refine the system for company liaison officers to ensure effective communication between companies and registration authorities:

• Clarified scope of appointment: A company liaison officer can be appointed from a range of personnel, including the legal representative, directors, supervisors, senior management, shareholders, or employees of the company.
• Registration and responsibilities: During company establishment, the liaison officer must be registered with the authorities, providing commonly used contact information such as a phone number and email address. The liaison officer is entrusted with handling communication between the company and the registration authority to ensure smooth interactions.
• Change notification requirement: If the liaison officer changes, the company must update the registration with the authorities within 30 days of the change, ensuring continued accountability and communication.

Deregistration of shareholders in the event of death or removal

The Measures clarify that if a company’s shareholders have died, been deregistered, or been removed, leading to the company being unable to deregister on its own, then successors or investors of the shareholders can handle the deregistration on behalf of the company. They must also indicate the relevant situation in the resolution for deregistration.

Timeframe for removal of company directors, supervisors, or senior management personnel

Article 178 of the amended Company Law stipulates the circumstances in which a person cannot serve as a director, supervisor, or senior manager of a company. These are:

1. Lack of civil capacity or limited civil capacity;
2. Being sentenced to a criminal penalty for corruption, bribery, embezzlement, misappropriation of property or disruption of the socialist market economic order, or being deprived of political rights for a crime, and the term of execution has not expired for five years, and if the person is given a suspended sentence, the period of probation has not expired for two years;
3. Being a director or factory director or manager of a company or enterprise undergoing bankruptcy liquidation and bearing personal responsibility for the bankruptcy of the company or enterprise, the period of probation has not expired for three years since the completion of the bankruptcy liquidation of the company or enterprise;
4. Being the legal representative of a company or enterprise whose business license has been revoked or ordered to close due to illegal activities and bearing personal responsibility, the period of probation has not expired for three years since the company or enterprise was revoked its business license or ordered to close; and
5. Being listed as a dishonest person subject to enforcement by the People’s Court for a large amount of debt that has not been repaid when due.

If the election or appointment of a director, supervisor, or senior management personnel violates any of these provisions, the amended Company Law states that the appointment will be invalid. In addition, if a person serving as a director, supervisor, or senior management personnel falls under one of these circumstances during their term of office, the company must remove them from their positions.

The Measures further clarify that in either of these circumstances, the company should remove the person from the position within 30 days from the date it becomes aware of or should have become aware of the situation.

Removal of company personnel information from registration

The Measures introduce a new system for the removal of information on terminated company legal representatives, directors, supervisors, or senior managers from the public registration records. Under this system, the removal of this information must also be published in the National Enterprise Credit Information Publicity System.

Previously, although the Company Law required companies to remove relevant personnel from their positions should they become ineligible to serve, it did not have clear provisions for dealing with the registration matters related to these company management personnel.

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Due to this, companies often did not actively fulfill the obligation of removing relevant personnel from the company registrations, leading to frequent legal disputes where the affected personnel would have to sue the company to have their information removed or updated in the registration records, according to Professor Li Jianwei at the China University of Political Science and Law. The lack of clear provisions in the Company Law also leads to significant disputes in the practical implementation of such removals. Courts and registration authorities across different regions have not formed a consistent approach, resulting in varied judicial opinions and reasons for judgments, which has led to inconsistent practices.

Article 20 of the Measures aims to resolve these issues by stipulating that if a company fails to comply with the effective legal documents specifying the removal of internal personnel, the court will send an enforcement notice to the company registration authority. The registration authority is then required to assist in the enforcement by removing the relevant personnel’s information from the registration records and publicizing this removal on the National Enterprise Credit Information Publicity System.

This provision effectively resolves the issue of coordination between trial and enforcement after the relevant civil judgment takes effect.

Impact of the new Measures on China’s business environment

The Measures are expected to significantly improve China’s business environment. Emphasizing transparency and regulatory clarity, the new Measures require detailed public disclosure of shareholder capital contributions and corporate registration data, which can foster greater accountability and trust among market participants. This aligns with broader efforts to create a fair and competitive landscape that attracts domestic and foreign investments.

The Measures also support high-quality development by refining regulations on registered capital and corporate filings. These adjustments encourage efficient capital utilization and provide targeted support for industries aligned with China’s economic priorities, such as green energy and high technology.

Additionally, stricter oversight of malicious debt evasion and false registrations enhances market stability by protecting public interests and mitigating potential risks. On the other hand, simplified registration processes, including improved liaison mechanisms and inter-departmental data sharing, are expected to enhance administrative efficiency further, thus reducing operational burdens for businesses.

How should businesses respond to the new company registration management measures?

To navigate the updated regulatory landscape effectively, businesses must prioritize compliance and governance. Companies are suggested to thoroughly review and align their internal processes with the new requirements, particularly in areas like shareholder capital contributions, recordkeeping, and public disclosures. Strengthening internal governance structures, including clear roles for directors and shareholders, will ensure smoother compliance with the Measures.

Meanwhile, ensuring integrity in operations is paramount. Enterprises must adopt stringent checks to prevent actions like debt evasion or fraudulent registrations, as these can result in penalties, including registration cancellations.

Last but not least, companies are also encouraged to maintain robust communication with regulatory authorities, ensuring seamless interactions and adherence to the updated requirements. Where necessary, companies can seek professional support for complex filings. However, it is important to select trustworthy and reliable service providers to avoid any negative impact on the company’s reputation or operations caused by improper conduct on the part of the agency.

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