Other BriefingsChina Company Name Registration: New Measures Clarify Standards and Application Procedures
The market regulator in China has introduced new implementation measures aimed at enhancing clarity regarding company name registration requirements. These measures serve as valuable guidelines for companies, both foreign and domestic, in the selection and registration of trade names. We outline the standards for choosing a company name in China based on the latest guidelines.
Company name registration is one of the key steps for setting up a company in China. Choosing a suitable trade name is important, not only because the company name will be associated with the brand and how customers perceive the business, but also because China has a whole set of rules on choosing and registering a company name.
The State Administration of Market Regulation (SAMR), China’s market regulator, has released a new set of measures for the implementation of the Administrative Provisions on Company Name Registration (the “Provisions”).
The introduction of the Provisions, which came into effect on March 1, 2021, helped to strengthen and optimize regulations for company name registration in China. The provisions significantly simplified company name registration procedures through means such as allowing companies to submit company names through an online system, clarifying specifications for company names, and improving supervision mechanisms, among others.
The Provisions also removed the requirement for businesses to have a registered name in order to apply for business registration.
While the Provisions have proved successful in simplifying administrative procedures for companies in the two years since coming into force, the implementation measures will seek to further standardize the enforcement of the Provisions, in order to ensure a consistent regulatory environment for all market players. They will also replace the previous implementation measures that were released in 2004.
According to an official Q&A released by SAMR, the new implementation measures will help “clarify the responsibilities, authorities, and procedures for company name registration management, refine and improve company name registration management regulations, implement the main responsibilities of companies, and improve the adjudication mechanism for company name disputes.”
The new implementation measures, which will come into effect on October 1, 2023, seek to tackle non-compliance with the Provisions, in particular the illegal use of company names or the use of names that violate the Provisions’ requirements for company names.
Finally, they aim to “improve the rules and procedures for name bans and restrictions, and improve the procedures for correcting illegal and non-compliant names and adjudicating disputes.”
Company name requirements
Registering a company name is an essential step to setting up a corporate entity in China. In addition to being the name written on a company’s business license, the official name is also used in the company’s seal, bank account, and all legal documents that the company enters into.
A company’s official name is subject to strict rules with regard to its format and the content that it entails. These requirements have been further clarified in the new implementation measures, as well as the Provisions that came into effect in 2021.
Clarification on company name formatting
Company name structure
Company names should generally contain the following elements arranged in sequence:
Name of administrative division – trade name – the industry or business characteristics – organizational structure
For instance, the full Chinese name of the technology company Tencent Holdings Ltd. is 深圳市腾讯计算机系统有限公司, which in English would be directly translated as “Shenzhen Tencent Computer Systems Ltd”.
Administrative division
The administrative division included in the company name should be the local administrative division at or above the county level in which the company is located.
If, due to practical needs, the name of the administrative division in the company name needs to be placed after the trade name and before the organizational structure, then brackets should be added, such as in 乐天（上海）食品有限公司 (Lotte (Shanghai) Food Ltd).
If a registered company establishes companies with the same trade name as itself in more than three provincial-level administrative regions and has been operating for more than one year, then its name may no longer contain the name of the administrative division.
Trade name
Company trade names generally must use standardized Chinese characters, as listed in the Table of General Standard Chinese Characters managed by China’s Ministry of Education (MOE), and consist of two or more characters. These characters must be distinctive and can comprise either individual characters, words, or a combination thereof.
In practice, certain foreign-invested enterprises (FIE) may be able to use foreign vocabulary, letters, or Arabic numerals in their company name, such as “３Ｍ中国有限公司” (3M China Limited). These are mostly due to the existence of some local special rules that were released to attract foreign investors and promote local economic development. However, not all cities have such special rules. In cities where the enterprise name registration regulation is strictly implemented, FIEs will not be able to include the foreign language trade name or trademark in their company name and have to opt for the Chinese literal translation or phonetic translation instead.
The implementation measures clarify that if a company needs to translate its trade name into a foreign language for use, it must translate and use it in accordance with relevant foreign language translation principles, and the foreign name must also be in compliance with relevant regulations.
To be noted, however, the understanding of “in accordance with relevant foreign language translation principles” is subject to interpretation. For example, “旺德福” (wàng dé fú) might be translated as “wonderful” in accordance with the Chinese character pronunciation, rather than “prosperity, ethics, happiness” in accordance with the direct translation of the Chinese characters. Meanwhile, the foreign translation of the company name normally does not need to be approved.
Administrative divisions and industry characteristics can normally not be used as the trade name (or components of a trade name), except where this name or word has another meaning, and the public can easily distinguish between the two meanings.
The personal name of an individual investor may be used as the trade name.
If a company’s trade name includes a word relating to “China” (such as 中国, 中华, 中央, and 全国 in Chinese), then it will undergo a review by SAMR and be submitted to China’s cabinet, the State Council.
If an FIE is wholly funded or held by a foreign company and therefore contains the word “(China)” in its trade name (such as in the name “Maersk (China) Shipping Co., Ltd.”), then its trade name must be consistent with the translation of the name or the trade name of the foreign company, in accordance with relevant laws and regulations.
As stipulated in the Provisions, trade names may not contain any of the following elements:
- Words related to major national strategic policies, which can cause the public to mistakenly believe that they are related to state investment, government credit, and so on;
- Misleading words such as “national level”, “highest level”, and “best”;
- Words that are the same as or similar to the names (including abbreviations, font sizes, and so on) of other companies that have already achieved a certain level of influence in the same industry;
- Words that express or imply that it is a non-profit organization; and
- Other words or phrases that are prohibited by laws, administrative regulations, and these Measures.
Note that the Provisions also prohibit the use of company names that do any of the following:
- Damage national dignity or interests;
- Damage social public interests or hinder social public order;
- Use or disguise the use of the names of political parties, party, government, or military organs, mass organizations and their abbreviations, specific titles, and troop numbers;
- Use the names of foreign countries or regions and international organizations, as well as their common abbreviations and specific titles;
- Contain obscene, pornographic, gambling-related, superstitious, terror, or violent content;
- Contain content that discriminates against ethnic, racial, religious, or gender groups;
- Violate public order and good customs or may have other adverse effects;
- Deceive or misunderstand the public; and
- Contain other situations prohibited by laws, administrative regulations, and state regulations.
Industry or business characteristics
The terms used for the industry or business characteristics in a company’s name must be determined based on the company’s main business operations and the standards set out in the Industrial Classification for National Economic Activities. If there are no fitting provisions in these standards, people can refer to industry customs or professional literature to find the correct expressions.
If a company uses the name of a local administrative division as a component of the industry or business characteristics in the company name, it should refer to industry customs or existing professional literature as a basis for the decision.
A registered company may not use the industry or business characteristics in its name if all of the following circumstances occur at the same time:
- The company operates across more than five economic industry classifications (as defined in the Industrial Classification for National Economic Activities);
- The company has established more than three companies with the same trade name as itself and these have been operating for more than one year; and
- The industries or business characteristics of each company are different from one another.
Organizational structure
Companies must include a name of an organizational structure in its name that is consistent with its organizational structure or responsibility in accordance with the law. You are not allowed to use words that could cause the public to mistake it for another organizational form.
Specifically:
- Companies must include the words “limited liability company” (有限责任公司), “limited company” (有限公司), “joint-stock company” (股份有限公司), or “company limited by shares” (股份公司) in its name.
- A partnership must include the words in brackets “(general partnership)” (普通合伙), “(special general partnership)” (特殊普通合伙), or “(limited partnership)” (有限合伙) in its name.
- A wholly individually-owned company must include the words “(wholly individually-owned)” (个人独资) in its name.
If a registered company controls more than three legal entities, then the word “group” (集团) may be used in front of the corporate structure. When registering for a name change to include the word “group”, the name of the group must be submitted together with the parent company of the group.
The name of a group must be consistent with the name of the administrative division, trade name, and industry or business characteristics of the parent company of the group.
The names of subsidiaries and joint-stock companies authorized by the parent company of a group can bear the name of the group. The parent company of a group must disclose the name of the group and the information of the group members to the public through the national company credit information disclosure system.
Names of branch companies
Names of branch companies must be preceded by the name of the company to which it is affiliated, followed by words such as “branch” (分支), “branch factory” (分厂), or “branch store” (分店). The industry and location of the branch must also be indicated in the name. The location or industry may not be indicated if they are the same as that of the affiliated companies.
Company name self-declaration service
The Provisions introduced a new self-declaration platform to facilitate the registration of company names, called the company name declaration system.
Applicants can submit relevant information through this system or at the service window of the company registration authority. Through these systems, they can also look up, compare, and screen the proposed company names in order to select one that meets the name standards.
Each market province, autonomous region, or municipality has its own company registration system, which is open to the public, such as the one for Guangdong.
The implementation measures provide more clarity on the information and materials that need to be submitted. This includes the company name that has been confirmed by all investors, the address, and the names or personal information of the investors. Applicants are responsible for the authenticity, legality, and validity of the submitted materials.
The system will automatically compare the company name submitted by the applicant to other existing company names. It will then provide an explanation of restricted or prohibited names or warn of any risks with the chosen name, based on rules for restricted and prohibited names and name similarity.
Remember that company names that contain one of the names for “China” must be reported to the State Council for approval, and applicants must therefore also look up, compare, and screen the name in both SAMR’s company name declaration system and the company name database.
The following behavior is prohibited when declaring a company name:
- Maliciously hoarding company names without intending to use them and occupying name resources, thereby causing harm to public interests or disrupting public order;
- Submitting false materials or using other fraudulent methods to declare a company name;
- Deliberately declaring a company name that is similar to another’s name (including abbreviations, trade names, and so on) that has prior influence; and
- Deliberately declaring a company name that is prohibited by laws, administrative regulations, or implementation measures.
The registration system will retain the company that has been submitted for a period of two months. The retention period will be increased to one year if the applicant is required to undergo additional processes in order to register a company, such as where the establishment of an entity requires approval, or certain areas within the proposed company’s business scope require approval.
Upon request, company registration authorities can issue a name reservation notification to the applicant.
Applicants should complete company registration before the reservation period expires. Company names reserved during the reservation period may not be used for business activities.
Dispute resolution
The implementation measures outline in detail the process for resolving disputes related to company names.
Under these measures, when a company believes that another company’s name violates its own legal rights, it can either file a lawsuit in court or request the responsible company registration authority to handle the dispute.
The responsibility for resolving company name disputes lies with the company registration authority, which may appoint qualified arbitrators as needed to ensure a fair resolution process.
When filing a dispute application, the applicant must provide specific requests, facts, reasons, legal basis, and evidence. Required materials include the dispute application, evidence of infringement, proof of legal standing, and other relevant documents. The company registration authority will then review the application within five working days of receipt, and inform the applicant if the application does not meet the requirements. It may also reject the application if it deems that the dispute falls outside its jurisdiction, lacks clear facts, reasons, or evidence, or if the applicant fails to make necessary corrections.
If the authority finds that one party has infringed upon the legal rights of another, it will issue an administrative ruling ordering the infringing party to stop using the disputed name. If grounds for the dispute are not established, the application is rejected.
Companies ordered to stop using a name must complete a name change within 30 days. During this process, the authority replaces the name with the company’s Unified Social Credit Code, the unique 18-digit code given to every company in China.
Legal liabilities
Companies that violate the provisions of the implementation measures on prohibited behavior when applying for a company name will be ordered to make the necessary corrections and may be liable for fines of between RMB 10,000 (US$1,374) and RMB 100,000 (US$13,744) if they do not comply or if the violation is particularly severe.
The use of a company name to engage in monopolistic or anticompetitive behavior will be penalized in accordance with relevant regulations, such as China’s Anti-Monopoly Law and its supporting regulations.
Meanwhile, if a company violates the implementation measures by using a company name to infringe upon the legitimate rights and interests of others and fails to make required changes to the business registration in accordance with the Regulations of the People’s Republic of China on the Administration of Registration of Market Entities, the company registration authority will order the company to make the required corrections. If the company refuses to do so, it may be fined between RMB 10,000 and RMB 100,000, and in serious circumstances, have its business license revoked.
At Dezan Shira & Associates, we help companies throughout the entire process of entering the China market. This includes everything from early-stage market entry research and location and site analysis to company and name registration, tax planning, and staff onboarding. If your business needs help with any phase of corporate establishment in China, please contact China@dezanshira.com.
About Us
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at china@dezshira.com.
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