A must in China not a maybe.
Before commencing business operations in China, companies must have obtained a business license from the company registration authority – usually the Administrative of Industry and Commence. The license demonstrates that the company is legal established. Also, once administrative formalities are completed and approved, such license is issued to the company and required to be displayed visibly within the commercial address.
Below, we answer common questions to help you demystify the legal liabilities and how to verify one.
What details are included?
Altogether, it is important to note that it is issued only in Chinese and in the Chinese name of the company.
What if such information needs to be amended?
Changes to such information are required to be filed and approved at the authorities. Therefore, once approved, the company registration authority will reissue a new company business license.
Equally, any company who do not conduct the relevant procedures for registration of change in accordance with the Law following any changes in the company's registered details shall be ordered by the company registration authority to amend its registration within a specific period of time. Therefore, if there is no rectification, the company shall be fined between CNY10,000 and CNY100,000.
How do you verify a business license?
Overseas companies working with companies in China may wish to obtain and verify the counterpart's business license. Therefore, such information can be validated via the government's company registry website. Besides, the website publicizes the basic company information including details of the business license.
Can a company operate without a business license?
Company registration is a legal requirement, and no business operations can start obtaining a business license. So, any person conducting business in the name of an unregistered company shall be ordered by the company registration authority to rectify the violation.
Also, the violating company can be subject to the company registration authority's enforcement procedures and can face fines up to CNY100,000.
What if no business operations are commenced?
Another aspect to consider is that a company shall commence business operations within six months of incorporation. If the company does not start business operations for a period of six months or more can be revoked of its business license.
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.
