The Chinese government plans to further simplify processes for businesses in China. As a part of that initiative, the State Administration for Industry and Commerce in early 2017 formulated a plan to completely digitize the business registration and licensing process, including the issuance of electronic business licenses. In a further step, the electronic business license system has been officially launched on June 10th, 2019. In addition to the standard paper-document “Chinese business license”, all companies in China are to apply for a so-called “E-business license” (电子营业执照) as well. This article will outline the difference between the traditional business license and the E-business license as well as explain the new regulations and the steps of how to acquire the E-license for foreign companies in China.
The traditional Chinese Business License
In China, it is required by law that upon setting up a business one must apply for a business license. The business license is a one-page official document that provides basic information about the registered company. This information is particularly useful to determine whether a company is legitimate or not. As a foreign company in China, it is therefore advised to always ask for the business license first before dealing with another company that one was not familiar with before. The new E-business licenses will add another layer of security, since the paper-based licenses can unfortunately be subject to forgery.
Following information is included on the business license:
• 18-digit Business Registration Number 注册号
• Company Name 名称
• Type of Entity 类型 (like LLC)
• Official Address 住所
• Legal Representative 法定代表人
• Registered Capital 注册资本
• Date of Establishment 成立日期
• Term of Operation 营业期限
• Business Scope 经营范围
• QR-Code linked to the National Enterprise Credit System
For Business Scope there are 14 defined categories such as Food & Beverage, Finance, Commerce, Education, Tourism, etc.
In order to simplify and speed up registration processes for companies in China, the government introduced the so-called “3-in-1 license” in 2015 and the “5-in-1 license” in 2016. This enables companies to file a single application for 5 of the main licenses required to set up a business in China:
1. Business License
2. Organization Code
3. Tax Registration Certificate
4. Social Security Registration Certificate
5. Statistical Registration Certificate
Only a single online application to the local AIC (Administration for Industry and Commerce) in the city of registration is required. This application must be supported by extensive documentation. The AIC will then share this documentation with various government departments as necessary in order to apply for the individual licenses. This way, the process is sped up significantly and the application workload for the company is decreased.
Furthermore, in 2014, the State Administration for Market Regulation included the QR-code in business licenses and standardized the previous 15 types of business licenses into eight uniformed A3 formats:
Format A — legal entities
Format B — non-legal entities
Format C — partnership enterprises
Format D — specialized farmer cooperatives
Format E — sole proprietorship enterprise
Format F — individual businesses
Format G — domestic funded non-legal entities, branches of domestic funded non-legal entities, domestic entities, branches of foreign-invested enterprises, branches of partnership enterprises, branches of individual businesses, foreign (regional) enterprises engaged in production and operations activities in China
Format H — branches of specialist farmer cooperatives
The QR-code can be scanned by anyone to retrieve information on the company via the National Enterprise Credit System.
Also, starting March 2019, all newly issued standard business licenses will be of a new, horizontal A3 format. Licenses issued before this date will however continue to be valid.
The new format of the business license, issued since March 2019
Every business in China is required by law to visibly display their business license. A market entity which only obtains an electronic business license shall download and print the electronic business license file and place it in a prominent position in its domicile or business premises, or clearly display it on an electronic screen or by other means. Furthermore, the legal representative of the company will be the holder of the “legal personal key” – this will be replaced by the newly issued e-business license. However, it is important to note that the e-business license is not a replacement for the hard copy business license but an additional certification of legitimacy for the company as well as a tool to store relevant information about it.
The E-business License
In December 2018 the Chinese State Administration for Market Regulation (SAMR, in Chinese: 市场监管总局) released a circular on the administrative measures for Electronic Business Licenses. It defines “Electronic Business License” as a
“Legal Electronic License” which is issued by a market authority according to relevant national laws and regulations under a unified standard and specification and carries the registration information of a “market entity.”
Furthermore, Business licenses in electronic form shall have the same legal effect as those in paper form and shall become a legal certificate to prove an enterprise’s status as a “market entity.”
After applying for the E-license online, the company will receive an E-license card equipped with a smart chip, allowing it to be read by compatible devices. The licenses can thus provide easier and faster services for companies and government entities.
No fee has to be paid for the license; it is issued by the SAMR. The SAMR is also the entity responsible for all matters concerning E-licenses in all of China.
After applying for it using the online terminal of SAMR, the electronic business license will be issued approximately within one day and stored in the electronic business license database upon establishment and registration of the market entity, and can be obtained, downloaded and used via smart mobile terminals (such as mobile phones) on which the electronic business license application is installed.
The E-business license can be applied for online on this designated site, called “E-Window” (北京市企业登记e窗通服务平台). The process is quite simple, you can register and apply in just a few steps. However, the site is only available in Chinese. Also, the applicant is allowed to submit information of employees together with the application of starting a business. By doing so, the enterprise can complete employee registration immediately without providing paper materials or claiming written certificates.
According to national law, the then issued E-business license has “anti-forgery, tamper-proof, non-repudiation and other information security features”. Furthermore, the system will not only reduce the time of the registration process but also allow for faster de-registrations. Companies which have received their license, but haven’t started a business yet, those without creditor’s right or with heavy debt can now be expected to undergo a faster closing process.
E-business license and the Social Credit System
It is apparent that the establishment of the E-business license system comes in time with the roll-out of China’s corporate Social Credit System, which aims to implement a more controlled and regulated, but also more safe and transparent market environment. The 18-digit “Unified Social Credit Number” (统一社会信用代码) which every company in China is now required to have, will be stored on the E-business license. A company without the “Unified Social Credit Number” can also not be issued an E-license. The license can be used for logging in to the National Enterprise Credit Information Publicity System (国家企业信用信息公示系统) to submit annual reports and independently publish its information to the public, which will be an integral part of the corporate Social Credit System, scheduled to be fully operational by the end of 2020.
In this context, the digitization of any information concerning businesses is a crucial step. The E-business license will therefore also be used for signing electronic files, sheets or data and where the information of and link to the business license are provided on the internet. Where the conditions specified in Article 13 of the Law on Electronic Signatures are satisfied, “the electronic signatures shall have the same legal effect as handwritten signatures or seals.”
The corporate SCS is furthermore aiming to increase information sharing between government departments. After implementation, company representatives can then take their electronic identification cards to deal with government department affairs rather than carrying around various paper licenses.
We have previously seen similar processes of digitization of business in China, such as the introduction of E-Fapiao’s, on which Ecovis made a video that can be watched here.
How to obtain the E-license
The electronic business license is to be obtained and downloaded via those whose name is registered at the market regulation authority, i.e. its legal representative (if the market entity is a corporate body or specialized farmers’ cooperative), executive partner (a partnership business), investor (a sole proprietorship), operator (individually-owned business) or the person in charge (a branch of enterprises of various kinds). The law states, that:
“after the legal representative obtains the electronic business license, he/she may preserve, possess or use the electronic business license itself, or authorize another license administrator to do the same. The market entity shall be responsible for the legitimacy, authenticity and rationality when managing and authorizing its electronic business license.”
If a company wants to change any item relating to its business license registration, the electronic business license previously downloaded to the mobile terminal must be downloaded once again. Also, if the legal representative of the company changes, the electronic business license previously downloaded by the former legal representative will be invalid, and the new legal representative must download the electronic business license once again. If the mobile device carrying the electronic business license is lost or damaged, the legal representative may use other mobile devices to download the electronic business license once again, and the one stored on the former device will be invalid.
For all companies where the legal representative is a Chinese national, the e-license can be downloaded via WeChat or Alipay by scanning one of the following QR codes:
As for foreign national legal representatives, the E-license must be collected in person at the local SAMR office. In order to successfully obtain the E-license the legal representative needs to provide the original (paper form) business license and her/his passport as identity certification within the validity period to the registration authority window. After the documents have been successfully examined, the staff of the registration authority will issue the electronic business license.
To register a partnership with multiple executive partners (or delegates), the executive partners (or delegates) shall jointly designate one of them as the electronic business license holder and apply to the registration authority for an electronic business license. In addition to the submission of an original identity certificate, a “Confirmation Certificate for the Designation of the E-business License Holder of the Partnership Enterprise” (合伙企业领取电子营业执照人员指定确认书) also needs to be submitted. This designated person shall provide the registration authority with her/his mobile phone number, and it is forbidden to use another person’s mobile phone to receive the verification code and scan the QR code to download the electronic business license. After the electronic business license is downloaded, one can authorize others to use the electronic business license as well.
If one encounters any problems with the issuance or download of the E-business license, the “Electronic Business License Service Zone” can be contacted by phone (15921120232、15921120976、15921119790、17634972034、13811780115) or via QR-code on their official website (see below). Chinese language only.
The “E-business License Service Zone”
How ECOVIS Beijing can help you
If you are considering opening a business in or expanding your business to China, for example by setting up a WFOE or Representative Office, applying for a business license as well as an E-business license will be part of this process. Our legal team at Ecovis Beijing is specialized in supporting foreign companies in setting foot in China. Setting up a WFOE or RO, including all the necessary legal steps and applications of certificates/licenses/permits are part of our daily bread and butter business and are covered by our Company Setup service. If you have any questions concerning company set up in China or other topics, don’t hesitate to contact us any time.