More freedom to choose company names

by Summer Xia

The Regulations on the Administration of Business Name Registration (hereinafter referred to as "the Regulations") was issued on 28 December 2020 and came into effect on 1 March 2021. 

The reform of the business name registration system is in line with the "decentralization" reform (i.e. simplifying and decentralizing government, combining management and administration, and optimizing services) presented during the 13th Five-Year Plan period.

Many of us might be familiar with the prior system based on the principle of a "first pre-approval, then register" process of business names for new company applications. 

However, with the growth of new enterprises and the development of the economy, the old process can hardly meet the requirements of the business environment. 

Consequently, to reduce business cost and stimulate market vitality, the State Council issued the Regulations for simplifying the Business Name Registration process.

The eye-catching change of the regulation is that it established a system for the self-declaration of enterprise names. 

The registration of enterprise names has been changed from pre-approval to self-declaration (Article 16). Entrepreneurs now can submit their business name through a system for the self-declaration. Individuals can log in to the system and search, select, and declare a name for their business.

The highlight is that the system will automatically do a primary check for the registrability of the business name, but leave the final choice to the applicant whether to modify the name according to the suggestion of the system or to keep the original name. 

Nevertheless, when handling the enterprise registration, the enterprise registration authority may still reject the proposed name if it fails to comply with the Regulations.

The system of self-declaration of business names provides entrepreneurs rights to choose the name they want to use, and also improves the efficiency of business name examination. 

Previously, it takes about 10 working days for the authority to approve a business, while applicants can have immediate feedback now. This amendment also shows that the enterprise registration authority starts to shift from a regulatory body to a service provider.

Additionally, the Regulation has improved the basic rules for enterprise names. The Regulations improved the basic elements and composition of enterprise names (Articles 6 to 10) and has refined the prohibitive requirements for enterprise names (Article 11). 

The Regulations set out nine circumstances for disqualified business names, including business names that may undermine the dignity or interests of the PRC, or likely to deceive or mislead the public, etc. 

The regulation also set strict guidelines for the use of the terms such as "China", "branch" and "Central". 

Lastly, it is worth noting that foreign-invested enterprises no longer enjoy special characteristics in name registration, and are allowed to use "China" within their names. 

This trend is in line with other amendments to laws and regulation that treat foreign-invested enterprises and local market entities equally.