Action Item: The recently implemented Administrative
Measures show the Shanghai government's intention to relax and
simplify the requirements for company domicile registration.
However, the precise scope of the Administrative Measures is not
entirely clear, due to the lack of implementation provisions and
definitions for certain terms, such as "investment
relationship." Therefore, it is advisable for companies to
first inquire with the local AIC branch.
The China Administration for Industry of Commerce
("AIC") has strict requirements regarding a company's
registered domicile. According to these requirements, each company
must have a distinct address, and one address can only be used as
the registered domicile for one company. If a company operates
outside of its registered domicile, a registered branch office is
required. Residential property is normally not permitted to be used
as a company domicile. To encourage the development of small
companies and to reduce start-up costs, some local governments have
issued regulations relaxing the requirements for company domiciles
(see the attached
summary of domicile registration requirements by region). The
Shanghai municipal government followed suit by promulgating the
Shanghai Municipal Administrative Measures for Domicile
Registration (the "Administrative Measures"), which came
into effect on March 1, 2015.
Following is a summary of the key provisions of the
Most non-residential property may be used as a company
domicile. The Administrative Measures relax the requirements for
the use of non-residential property as a company
domicile, by providing that any non-residential property can be
used as the registered address of a company, unless such property
is an illegal building or is dedicated to certain public
The Administrative Measures do not make any changes to the
prohibition against using residential property for
a company domicile. If a company wishes to use a residential
property as its domicile, it must apply to the Bureau of Real
Estate Management where the property is located to first change the
designation of the property from residential to commercial
property. The change must also be approved by all interested
property owners and certain members of the community where the
property is located.
Certain related companies may share the same domicile.
The Administrative Measures provide that the following companies
may share the same domicile:
investment companies and their management company, provided
that the management company undertakes management responsibility
for the investment companies
companies that have an investment relationship
The Administrative Measures do not provide any definition or
explanation of "investment relationship." Branches of the
AIC in different districts of Shanghai appear to apply different
interpretations, and it remains uncertain as to what ownership
percentage the parent company must own of its subsidiary in order
to qualify as an "investment relationship."
Operations outside the registered address.
The AIC generally requires that a branch office must first be
registered before a company is permitted to operate outside its
registered domicile. The Administrative Measures reiterate this
requirement and provide that the AIC will penalize companies if
they are found to conduct business in places other than their
registered domiciles. The Administrative Measures do not specify
the amount of the penalty. However, to encourage investment and
economic development, some local governments have issued
regulations only requiring a record-filing for a branch office or
otherwise simplifying branch office registration formalities.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Hon'ble High Court of Bombay has held that where a Scheme of Amalgamation is executed between two companies registered in two different states [...], then the said two orders are two independent instruments.
Lawyers are pretty good at figuring it out quietly and amicably among themselves, without recourse to a public courtroom.
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