The Chinese government has been promoting the use of electronic business licenses since 2014, with the aim of digitalising and modernising business incorporation, and Shanghai is one of nine cities in the pilot program.
COVID-19, and the subsequent citywide lockdown in Shanghai, accelerated public administration into the new golden standard, streamlining bureaucracy processes and reducing paper-based applications at government counters.
A pilot program becomes a must for newly setup and established companies.
The Shanghai municipal authorities have taken approximately two years to finalise the general implementation of e-business licenses and e-company chops (see below for definitions). With travel restrictions and uncertainties, electronic business licenses and company chops have become an essential part in daily business operations. They are a must for newly registered and established companies - especially as flexible-working models become the norm post pandemic.
This article summaries the key benefits of using electronic business licenses and company chops and introduces their usage and application procedures.
What is an e-business company license?
An e-business license is a legal electronic certificate containing the registration information of market entities. It has the same legal effect as the original business licenses in hard copy. Company officers, agents, and employees who are authorised by the legal representative to utilise e-business licenses have the right to complete applications and modifications of company records, licenses, and permits issued by the local and state authorities.
How do I apply for an e-business license?
When the company legal representative is a Chinese mainland ID card holder, the company is not in abnormal status, and it has completed real name verification for their legal representative, the Chinese officer can access the Alipay or WeChat function for e-business licenses. They can then obtain the digital records of the company.
When the company legal representative is an overseas passport holder, the legal representative is required to either visit the local State Administration for Market Regulation (SAMR) office, in person, or authorise a local agent to apply for the e-business license by signing a confirmation letter and providing an email address to receive the QR code issued by the authorities.
What can companies use e-business licences for?
Companies can verify their legitimate information via "online authentication procedures", including:
- company certificates
- online authentication requests
- annual inspection evidence
- filing inquiries
- credit information and rating
- new store holder verification on e-commerce channels
The following functions provided in the SAMR system, or the general Online Government Portal, are also available:
- filing online tax declarations to the State Administration of Taxation
- filing online annual inspections to the Labor Bureau
- online direct reporting due to the Statistics Bureau
What is an e-company chop?
The e-business license is like a digital ID to log into the Shanghai e-government system. The electronic company chop is a function to digitally chop/approve/certify documents available via the Shanghai government portal for company officers and authorised agents.
How do I apply for an e-company chop?
Companies that hold CA Certificates or e-business licenses can either apply via the single-online access platform under the legal representative U-Key or e-business licenses.
What can e-company chops be used for?
- Improving working efficiency
E-company chops allow managers to sign contracts and process office automation (OA) applications online, at any time, without geographical restrictions. Compared to traditional signatures and chops, the use of electronic chops can improve working efficiency, especially for those enterprises arranging flexible-working models and multinational companies working in different time zones.
- Sustainable development
Paperless validations of documents and contracts through digital certificates will heavily reduce the number of printed copies in the office and decrease the need for storage space. Cloud uploads and filing of documents will also reduce the cost of admin operations and help transform companies into much more agile and nimble businesses, ready to embrace SAAS solutions.
Where are we headed?
It is foreseeable that there will be an increasing number of applications and changes in the way companies file for secretarial information, taxes, and data to be reported to governmental authorities and windows.
Companies that have not finalised their switch to digital certificates may get caught up in the need to do so suddenly when they are required to complete one of those procedural flows. As facilitators directly involved in back-office and administrative flows, we have witnessed how swiftly government agencies have embraced this new normal and have therefore advocated clients to embrace this step further.
How can Hawksford help?
We are an established provider of company incorporation and outsourced corporate services in China. With more than ten years of in-depth knowledge and expertise in China, we offer our clients a complete suite of setup and company secretarial services, including e-business license applications, e-company chop applications, electronic chops and license management, support with real-name verification and bank account opening. At the same time, we take the burden of regulatory, financial and tax compliance, and corporate governance, so you can focus on managing your primary business interests.
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.