China Laws and Regulations Update in March 2014

1. The State Council has begun circulating the “Registered Capital Registration System Reform Plan”

On February 7th, 2014 the State Council issued the Registered Capital Registration System Reform Plan (the “Plan”) with the purpose of promoting the development and efficiency of business registration systems.

The Plan makes it clear that requirements for registered capital of companies applying to be incorporated will be lowered. However, minimum registered capital restrictions could remain applicable to companies in given industries subject to relevant laws, administrative rules and decisions made by the State Council. The new guidelines stipulate that the minimum registered capital restrictions of RMB 30,000 on limited companies, RMB 100,000 on solely- owned limited companies and RMB 5,000,000 on stock-limited companies will generally be lifted. Additionally, restrictions on the proportion of registered capital that is initially subscribed by all shareholders (or initiators) upon incorporation of a company as well as the proportion of registered capital subscribed in cash by all shareholders (or initiators) to the total registered capital of a company will be lifted. The duration of existence for a company with registered capital not fully paid by its shareholders (or initiators) will also no longer be limited.

Furthermore, the Plan (with a list of industries provisionally exempt from the newly launched registered capital to-be-paid-in registration system attached), explicitly stipulates plans for reforming the system of annual examinations for business licenses, facilitating address (venue) registration procedures, etc.

2. The State Administration for Industry and Commerce has released the “Notification on Cancelling the Annual Business Examinations”

On  February 14th, 2014, the State Administration for Industry and Commerce (the “SAIC”) printed and released the Notification on Cancelling Annual Business Examinations, which allows for an exemption from annual business examinations for: limited companies, stock-limited companies, legal representatives of unincorporated businesses, partnership businesses, sole proprietor enterprises, foreign (or non-mainland) enterprises doing business in China and other applicable businesses.

3.  Payment Service Providers in the Shanghai Free Trade Zone Have Started Rendering “Cross-Border Payment in RMB” Services

Recently, with the purpose of promoting “cross-border payment-in-RMB services”, the Shanghai-based headquarters of the People’s Bank of China has formulated and distributed a document called Opinions on Rendering Cross-Border Payment-in-RMB Services by Shanghai-based Payment Service Providers (the “Opinions”) under instruction by the general headquarters of the People’s Bank. The payment service providers started rendering the cross-border payment-in-RMB services on 18 February 2014.

The cross-border payment-in-RMB services, according to the Opinions, refer to services rendered through the internet to those who need to transfer RMB capital between different countries when engaging in legitimate trade. With internet-based payments for business permits, payment service providers registered and established in Shanghai and their subsidiaries established in the free trade zone (by non-local payment service providers) are allowed to engage in cross-border RMB payment businesses.

To control risk, the Opinions requires that payment service providers strictly abide by the Measures for the Custody of Provisions of Payment Service Providers and other stipulations for the supervision and management of provisions made by the People’s Banks. The Opinions also require that these providers establish sound systems for the verification of their clients’ identification, risk rating management, risk provisions and transaction related claims, transaction and information security management, and the declaration of information relating to transactions.

4.  The Ministry of Human Resources and Social Security of People’s Republic of China has issued the “Provisional Regulations on Labor Dispatch”

On December 20th, 2013, The Ministry of Human Resources and Social Security issued the “Provisional Regulations on Labor Dispatch to govern labor dispatch as stipulated in the Employment Contract Law.

The Interim Regulations stipulate that dispatched employees must be assigned only to temporary, auxiliary, or substitute job positions and account for no more than 10% of the total staff working for an employer. The Provisional Regulations govern the conclusion and implementation of the Employment Contract and the Labor Dispatch Contract.

5. Innovation funds for small and medium-size science and technology businesses

The Shanghai Scientific and Technological Commission issued the Notification of Applications for Technological Innovation Funds Grants to Shanghai-Based Small and Medium-Size Science and Technology Enterprises in 2014 on January 14th, 2014. The funds will be granted to businesses based on four categories of focus. The online application system will open on March 7th, 2014.

The amount of funds granted to qualified businesses in the initial operational stage (start-up companies) will be RMB 100,000 for each eligible project, the amount of funds for developing enterprises will be RMB 150,000 per project and RMB 300,000 per key project (after subsidies).

This year’s innovation funds will focus on supporting the following four categories of businesses:

1). Innovation of core technologies and products in such strategic emerging industries as next-generation information technology, high-tech equipment manufacturing, biology, new energy development, new materials, energy saving and environmental protection, and energy-saving automobiles.

2). Focusing on the innovation of core technologies and business processes compatible with these new technologies, new models and business conditions, as well as the fostering of new industries.

3). Boosting the growth of small and medium-size science and technology businesses in key district (county) industries and promoting the construction of regional innovation-oriented industrial clusters.

4). Seeking projects through a variety of market-based channels: for example, turning to businesses as finalists in the China Innovative Startup Business Competitions, venture capital investment providers (with qualifications that are either approved by the Venture Capital Investment Policy Fund of the Ministry of Science of Technology or with records filed in the Municipal Development and Reform Commission, and that are within the validity period of annual examinations), incubators at municipal levels, science and technology parks of universities, colleges and other businesses recommended by social organizations that provide services for small and medium-size science and technology businesses.

6. The State Administration for Industry and Commerce issued “Administrative Measures for Online Transactions

The State Administration for Industry and Commerce issued the Administrative Measures for Online Transactions (the “Measures”) on 26 January 2014.

The Measures stipulate that business registration (as subject to the relevant laws) is required for internet-based commodity traders and service providers. Natural persons involved in online commodity trading should do business on a third party’s trading platform and provide that third party with valid personal information such as names, addresses, valid identity certificates, contacts, etc. The provision of such natural persons’ business registration (subject to the relevant laws) is required if they meet the conditions of registration.

The Measures also stipulate that online sellers must abide by laws such as the Protection of Consumers’ Rights and Interests, the Product Quality Law, etc., and shall issue invoices or other vouchers or receipts for commodities purchased or services rendered to consumers, pursuant to the relevant national regulations or commercial conventions.

Furthermore, the Measures stipulate that consumers have the right to return commodities bought from online sellers within 7 days after the date of receipt of the commodities.

7.  The Ministry of Commerce prints and releases “A (Provisional) Guide  on Intellectual Property for Overseas Enterprises”

A (Provisional) Guide on Intellectual Property for Overseas Enterprises (the “Guide“) was printed and released by the Ministry of Commerce on 8 February 2014 to help enterprises better guard against the risks of overseas investment in intellectual property and ensure the timely settlement of disputes over intellectual property.

The Guide applies where Chinese enterprises are involved in overseas investment and business cooperation relating to intellectual property, including its creation, utilization, protection and management. The Guide mainly serves as a reminder of the risks concerning intellectual property in the course of Chinese enterprises’ involvement in overseas investment and business cooperation. The Guide deals with issues on patents, trademarks, copyrights, overseas sales, production, business mergers, etc.


China Laws and Regulations Update in March 2014 — 1 Comment

  1. Hello,

    do you know how to get a copy of the Guide on Intellectual Property for Overseas Enterprises ?

    Thank you,

    S. CODA

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