As part of the massive digitalisation and modernisation process of public administrations, the Chinese authorities have started implementing electronic business licenses and electronic company chops to streamline the registration process of companies.
Electronic business licenses
In China, all the companies have a business license which is a certificate issued by the State Administration for Market Regulation (SAMR), former Administration of Industry and Commerce (AIC), and the official proof of incorporation of the company, which includes the company name, unified social credit code/tax registration number, business scope, name of the legal representative, registered capital, establishment date, business operation period, and the registered address of the company.
Traditionally the business license has the form of a double paper certificate (original and duplicate business license). However, at this moment, some municipalities like Shanghai and Beijing have gradually abolished the paper certificate and require the electronic business license, not only for newly established companies but also for certain changes of existing companies such as cross-district relocation and for the annual reporting declaration of 2021 (to be submitted within June 2022). We also expect that every company will soon be required to present an e-business license to handle any procedures with the authorities, tax bureau and the banks as this will be the new trend in the near future.
To get the e-business license, companies should meet two preconditions:
- The operation status of the applying company should be “normal.”
- The legal representative must complete the real-name authentication through a mini-program in either WeChat or Alipay app.
The real-name verification of the legal representative is a must to obtain the e-business license, and a Chinese mobile phone number is necessary to complete the procedure. If the legal representative is a Chinese individual, the verification can be done by a face scan through WeChat or Alipay mini-program. The system will issue the electronic business license after the real-name verification and facial recognition.
Suppose the legal representative is a foreigner living abroad, they are required to visit the local SAMR office for onsite real-name authorisation. In Shanghai, the foreign legal representative may authorise a local person to apply for the e-business license by signing an authorisation letter and providing the legal representative’s email address.
The SAMR office will send a link to the legal representative’s email address to download the e-business license within three working days upon the application.
However, the foreign legal representative shall also log into the WeChat or Alipay mini-program to complete their identity verification.
License management authorisation
After receiving the e-business license, the legal representative may keep, hold, and use the e-business license by themselves or authorise another Chinese license management person to keep, hold and use the license.
License usage authorisation
Both the legal representative and the license management person, as mentioned above, can authorise other Chinese individuals to use the license on different occasions.
Electronic company chops (e-company chops)
The Chinese authorities issued a Circular in August 2020 to promote the application of electronic chops across the nation.;
The e-company chops, including e-company seal, e-finance seal and e-invoice seal, will be available for downloading in the WeChat or Alipay mini-program once the legal representative has completed the real-name verification and after the e-business license is available.
The legal representative seal, contract seal, and customs seal are still not supported in the WeChat or Alipay mini-program. Thus, they are still available only as physical carved seals.
The usage of e-company chops can be done and managed in the WeChat or Alipay mini-program, combined with the functions available from Shanghai Government One-Stop Service Windows. The usage records of e-company chops will be kept and maintained in the WeChat or Alipay mini program.
For the Shanghai Government One-Stop Service Windows platform, there is a limitation of a maximum of 20 applications/documents per day as of November 2021 that can be uploaded to the platform for the use of e-company seals in the system up to 7 calendar days for document storage.
Application scenarios
The e-company seal may be used to sign contracts, agreements, resolutions, or any other documents where the counterparty or the company accepts e-company chop, which is legitimate under the PRC laws.
It is worth mentioning that currently, the Bank of Communications and China Everbright Bank in Shanghai have already signed off a pilot program for bank accounts opening, while in the (near) future, the usage of the e-chop will be extended to company set-up registrations, tax-related matters, social insurance and housing fund, and other bank formalities gradually replacing the traditional physical seals.
How Hawksford can help?
Hawksford is an established provider of company incorporation and outsourced corporate services in China. With over ten years of in-depth know-how in China, we offer our clients a complete suite of setup and company secretarial services, including e-business licence applications, e-chop applications, electronic seals and licence management, support with real-name verification and bank account opening. Meanwhile, we take the burden of regulatory, financial and tax compliance, and corporate governance, so you can focus on managing your business interests.
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