China’s legal system is known for its complexity, with legal registration being a key component. In order to operate a business in China, it is essential to comply with the numerous laws and regulations related to legal registration. This article provides a comprehensive guide to the statutes and case law related to legal registration in China.

The Company Law of China is the primary statute governing legal registration. The law was enacted in 1993 and has undergone multiple amendments. The law sets out the types of companies that can be registered, the required documentation, and the procedures for registration.

Another important statute is the Foreign Investment Law, enacted in 2019, which outlines the requirements for foreign investors who want to establish a presence in China.

Important Cases in China

Important cases in China have touched on legal registration, such as the dispute between Chongqing Changan Automobile Co., Ltd. and Changan Ford Automobile Co., Ltd. over the use of the name “Changan”. The court ruled in favour of Chongqing Changan Automobile Co., Ltd., which had registered the name first. Another case involved the tax deductibility of fees paid by Shenzhen Huitongda Communication Co., Ltd., which the court ruled were tax deductible.

Despite the legal framework for registration in China, businesses still face challenges when trying to register. One major challenge is the bureaucracy involved in the process, with different agencies having their own requirements and procedures. Additionally, the language barrier can be difficult for foreign businesses that are not familiar with Chinese.

Registered businesses are also viewed as more trustworthy

Despite the challenges, legal registration is crucial for businesses wanting to operate in China. Registered businesses have access to a range of legal protections and benefits, including access to government services and protection under the law. Properly registered businesses are also viewed as more trustworthy and reliable by customers, suppliers, and other stakeholders.

According to a report by the World Bank, China ranks 31st in the world for ease of doing business, taking into account factors such as the ease of starting a business, registering property, and obtaining permits. Legal registration takes an average of 18 days in China, which is slightly longer than the global average of 12 days.

List of corporate registration laws in China

China’s legal framework for business registration is governed by various statutes and landmark cases. The Company Law of the People’s Republic of China is a fundamental statute that lays out the prerequisites for establishing a business in the country. This law recognizes three types of companies in China, namely limited liability companies, joint stock companies, and partnerships. Each company type has its own set of legal guidelines, which need to be followed for proper registration.

Apart from the Company Law, the Foreign Investment Law of the People’s Republic of China is another significant statute that governs business registration in China. The Foreign Investment Law was enacted in 2019, and its primary objective is to provide foreign investors with a level playing field in China.

It offers guidance on the registration, establishment, and operation of foreign-invested enterprises, replacing earlier laws such as the Sino-Foreign Equity Joint Venture Law, the Wholly Foreign-Owned Enterprise Law, and the Sino-Foreign Cooperative Joint Venture Law.

Sino-Foreign Cooperative Joint Venture Law

China Legal Registration

In addition to these statutes, landmark cases have played a vital role in shaping China’s legal framework for business registration. For instance, the 2006 case of Teco Electric & Machinery Co. Ltd. v. Hainan Machinery Import & Export Corp highlighted the importance of registering joint venture agreements with relevant authorities to validate them. The court, in this case, also emphasized the need to adhere to the legal requirements for registering joint ventures in China.

Similarly, the 2016 case of Beijing Lantian Hotel Ltd. v. Shanghai Zhengke Real Estate Development Co. Ltd. was a dispute between two companies over the ownership of a hotel property in Beijing. The Supreme People’s Court of China ruled that contracts between two companies must be registered with the relevant authorities to be legally enforceable. The court also highlighted the significance of adhering to the legal requirements for registering contracts in China.

Find a Local Lawyer

Contact us

China Legal Registration: A Comprehensive Guide