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New Business Registration Rules to be Implemented in Shenzhen China

New Business Registration Rules to be Implemented in Shenzhen China

On 5 November 2020, the Standing Committee of Shenzhen Municipal People’s Congress officially issued the revised Business Registration Rules in Shenzhen Special Economic Zone (hereinafter referred to as the Rules). The revised Rules will come into force on 1 March 2021. The major changes in this revision are as follows:

  1. Strike Off System

    According to Article 27 of the new Rules, if a commercial entity is listed in the abnormal operation list or marked as abnormal operation status for two years due to failure to get in touch through its registered address or business place, and no tax declaration in recent two years, the business registration authority may make a decision to strike off its name from the register.

    When the name of a commercial entity has been stroked off, it is also required to complete the liquidation and deregistration process in accordance with law. During the period of strike off, the commercial entity still exists, but shall not engage in activities unrelated to liquidation or deregistration.

  2. Deregistration Based on the Power of Registration Authority

    According to Article 31 of the new Rules, if a commercial entity fails to apply for deregistration within 6 months under one of the following circumstances, the commercial registration authority may make a decision to cancel its registration based on its power and authority:
    (1)  the busines license is revoked in accordance with law;
    (2)  is ordered to closed in accordance with law;
    (3)  the registration is cancelled in accordance with law;
    (4)  the name has been stroked off in accordance with law.

    A commercial entity is eliminated when its registration has been cancelled by the commercial registration authority based on its power and authority. But its creditor’s rights and debts still exist. The creditors of the cancelled commercial entity may apply to the commercial registration authority to cancel its deregistration decision, resume registration and carry out liquidation accordingly.

  3. Registration of Business Suspension

    According to Article 25 of the new Rules, if a commercial entity intends to suspend its business, it may register with the business registration authority for suspension of business, and the business entity shall survive during the period of suspension.

    If a commercial entity intends to resume business activities during the period of suspension, it shall apply to the commercial registration authority for termination of business suspension registration before resuming business activities. A commercial entity shall, within 10 working days from the date of expiration of the suspension of business, handle the termination registration with the commercial registration authority.

  4. Cross-industry Protection of Well-known Trademarks and Brands

    According to Article 17 of the new Rules, except for the authorization of the related rights holders, a commercial entity shall not take the well-known trademark or well-known brand name of other commercial entities as its name.

  5. One License with Multiple Addresses and One City One License

    According to Article 15 of the new Rules, if a commercial entity establishes a branch in Shenzhen, it may choose to register the branch or to merely register the information of the business place of the branch in its business license.

  6. Improving the Registration of Individual Industrial and Commercial Households

    According to Article 13 of the new Rules, if a natural person is engaged in business activities that do not need to be approved by the relevant authorities in accordance with law, they may apply for tax registration directly instead of applying for the registration of an individual industrial and commercial household.

    Meanwhile, it stipulates in Article 19 that if an individual industrial and commercial household intends to change its business operator, it may choose to establish a new one after deregistration, or to directly apply for registration of change.

  7. Facilitating Cross-border Operation of Hong Kong and Macao Enterprises

    According to Article 14 of the new Rules, enterprises registered in the Hong Kong Special Administrative Region or the Macao Special Administrative Region that meet the relevant conditions may directly register in Shenzhen to engage in production and operation activities, obtain business licenses, and engage in production and operation activities beyond the negative list of foreign investment access, and apply for bank accounts, tax registration, customs registration and foreign exchange registration upon issuance of the business license.  The specific measures shall be formulated separately by Shenzhen government.  

KAIZEN Group is equipped with experienced and highly qualified professional consultants and is therefore well positioned to provide professional advices and services in respect of the formation and registration of company, application for various business licences and permits, company compliance, tax planning, audit and accounting in China. Please call and talk to our professional consultants for details.

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