Home
Internal
published on 9 April 2021 | reading time approx. 2 minutes
by Christina Gigler
The State Council promulgated the Provisions on the Administration of Enterprise Name Registration (“New Provisions”) on 28 December 2020, which have been effective since 1 March 2021. The previous provisions have been in force since 1 September 1991 and comprised of in total 34 articles, whereas the New Provisions have been shortened and only contain 26 articles.
Generally speaking, the New Provisions have been slightly restructured and some provisions have been formulated in more detail, whereas other partly descriptive or obsolete provisions have been deleted from the New Provisions.
New is, for instance, the mentioning of a unified business name declaration system and database, which shall be centrally administered by the market regulatory departments and shall be publicly available.
According to the previous provisions there were already special requirements to the use of the term “China” (in Chinese “中国” or “中华”) in the enterprise name. Based on the New Provisions also the terms “Central Government” (in Chinese: “中央” or “全国”) and State (in Chinese: “国家”) shall be strictly examined and reported to the State Council for approval. However, the requirements for the use of the term “International” (in Chinese: “国际”) is not mentioned in the New Provisions anymore. The New Provisions furthermore added a paragraph stating that the name of a wholly foreign-owned or holding foreign-invested enterprise using the name of a foreign investor may contain the word “China”. Further specific administrative measures shall be formulated by the market regulatory department under the State Council.
Moreover, besides a provision on the name of an enterprise group/holding, the New Provisions include a sentence on branches of an overseas enterprise, namely that the branch of an overseas enterprise shall also indicate the nationality and form of liability of the enterprise in its name.
Also, the New Provisions do not distinguish between operational and non-operational branches anymore, but rather stipulate that the name of a branch shall be preceded by the name of the enterprise to which it belongs and affixed with such words as “branch” (in Chinese: “分公司”), “branch factory” (in Chinese: “分厂”), or “branch store” (in Chinese: “分店”).
Finally, Art. 16 para. 3 of the New Provisions explicitly states that the information and materials submitted by an applicant shall be authentic, accurate and complete, and that the applicant shall bear legal liability in infringing upon the legitimate rights and interests of others due to the similarity between its enterprise name and the enterprise name of others. The previous provisions contained several provisions with the options of a warning or a specific fine imposed by the registration authorities ranging from RMB 500 to RMB 50,000. The New Provisions now provide that, after an order has been issued that the use of the enterprise name shall be ceased, the enterprise must change its name within 30 days of receiving the effective legal document from the court or the enterprise name registration authority. Prior to the change, the name will be mandatorily replaced with the unified social credit code of the enterprise. If the enterprise fails to change its name within the time limit, it will be included into the list of abnormal business operation until the change is completed.
On the one side, the New Provisions bring more legal certainty with regards to the legal liability of infringing parties and the enforcement measures of the enterprise name registration authority. However, on the other side, the New Provisions lack of several previous provisions such as certain deadlines for the processing of the enterprise name registration. It will therefore be interesting to see how the authorities will apply and implement the New Provisions in practice.
Sebastian Wiendieck
Partner
Send inquiry
Rödl & Partner in China
Newsletter China
