Why do changes to the company registration matter?
Chinese companies must keep accurate and up to date information about their structure, operations, and logistics and register that information with the proper authorities.
If a company fails to register changes to its business, it could face consequences that would put your relationship with it in jeopardy. The lack of disclosure could also be a warning sign that other aspects of the business are also dishonest.
Chinese businesses must follow a wide range of rules and regulations to operate legitimately and to be in good standing with the government. As we’ve discussed in other articles, a company’s business license and registration status are two critical elements for a Chinese business.
When a Chinese company experiences any number of changes, including its registered capital, address, shareholders, directors, or business scope, it must report these changes to its local government bureau (often referred to as the State Administration of Industry and Commerce, or SAIC) and reflect those changes in its annual return.
If the information registered does not match the information of the business (for example, if the business moved and did not register its new address), the company would be placed on the abnormal business operations list and face a number of potential restrictions until the issue is addressed and resolved.
Additional Resources
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