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Online CBA: Do Companies Set up in China Have to Undergo Annual Inspections?

Q: Do Companies Set up in China Have to Undergo Annual Inspections?

A: According to the circular issued by the State Administration for Industry & Commerce (SAIC), beginning 1 March 2014, the following types of entities that have obtained business registration licenses are exempt from annual inspection: limited liability companies, companies limited by shares; non-corporate enterprise legal persons, partnership enterprises, sole proprietor enterprises and their branches, enterprises from foreign countries (regions) coming to China to engage in business activities as well as other business entities.

Previously, the annual inspection system has been a substantial burden to all types of enterprises: it has not only taken up a lot of their time and efforts, but might also have led to loss of market opportunities. Now that annual inspection has been changed to the filing of annual reports, enterprises find it convenient to issue their annual reports at specified timelines, thus making them more proactive in disclosing information. Also, society will exercise oversight of the enterprises, forcing them to improve self-regulation.

Meanwhile, the SAIC is also asking local AICs at different levels to further increase their supervisory efforts commensurate with the situations of local enterprises and economic development. These local AICs are supposed to conscientiously undertake their supervisory roles by investigating and punishing all types of activities that are in violation of the laws and regulations of enterprise registration administration.

(The HKTDC provides one-on-one China Business Advisory Service free of charge to assist companies in resolving problems encountered when doing business in China. For enquiries and appointments, please call (852) 1830 668 or register online.)

Content provided by Picture: HKTDC Research