Foreign investor’s first company in China can no longer use “(China)” in its name
In China, the name of an enterprise without administrative division is the best annotation of the size and strength of the enterprise. Well-known foreign investors like to add “(China)” to the names of the companies they invest in, highlighting the global business deployment on the one hand and their operational strength on the other.
The newly revised Regulations on the Administration of Enterprise Name (the “New Regulations”) came into force on March 1, 2021. We have introduced the major changes brought about by the New Regulations, especially the new regulations put forward for the first time that the names of enterprises operating across provinces may not include the name of administrative divisions. Does this mean that the requirements of enterprise names without administrative divisions have been relaxed?
After the implementation of the New Regulations, Youly happened to help a client set up a foreign-invested enterprise with the name “(China)”. As a result, we could get a glimpse of the real meaning of “inter-provincial operation” and its impact on investment and registration practices. In short, if enterprises want to use enterprise names without administrative divisions (for foreign-invested enterprises, including the use of enterprise names with the word “(China)”), the requirements are not relaxed, but tightened.
(1) The old requirement for registered capital has not been cancelled.
The 2004 version of the Measures for Administration of Enterprise Name Registration (the “Measures”) stipulates that enterprises with a registered capital of not less than 50 million RMB may use names without administrative divisions. At present, the Measures are still effective and still serve as one of the bases for the market regulatory authorities to examine and approve the declaration of enterprise names. (The State Administration for Market Regulation has incorporated the revision of the Measures into the legislative work plan for 2021. We will continue to pay attention to any changes at that time.)
(2) The supporting documents of inter-provincial investment should be submitted.
According to the New Regulations, the names of enterprises operating across provinces, autonomous regions and municipalities may not include administrative divisions. Now it seems that this is an extra requirement in addition to the lower limit of registered capital. In practice, if a foreign investor intends to set up an enterprise with “(China)” in its name, the market regulatory authority will require the investor to submit proof that it has set up enterprises in more than two provinces, autonomous regions and municipalities. The document needs to be submitted not only online to the General Administration (electronic version), but also offline to the local market regulatory authorities (paper version).
According to the above latest requirements, if a foreign investor invests in China for the first time, even if the registered capital of the proposed enterprise reaches 50 million RMB, the enterprise cannot declare to use the enterprise name with the word “(China)”. Only when a foreign investor has set up enterprises in more than two provinces, and the proposed new enterprise meets the minimum requirement of registered capital (RMB 50 million), can the proposed enterprise declare and use the enterprise name with the word “(China)”.
It should also be noted that if an established foreign-invested enterprise needs to change its name to an enterprise with the word “(China)”, it requires that the enterprise itself has set up subsidiaries in more than two provinces, which has nothing to do with the investment of the parent company in China.
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