Circular on Issuing the Opinions of the State Administration for Industry and Commerce on Supporting the Construction of the China (Shanghai) Pilot Free Trade Zone

The English version is for reference only. If there is any inconsistency or conflict between the English and Chinese version, the Chinese version shall prevail.

No. 147 [2013] of the State Administration for Industry and Commerce

Shanghai Administration for Industry and Commerce:

    The Opinions of the State Administration for Industry and Commerce on Supporting the Construction of the China (Shanghai) Pilot Free Trade Zone, as deliberated and adopted at the executive meeting of the State Administration for Industry and Commerce on September 16, 2013, are hereby issued to you for your compliance and implementation.

State Administration for Industry and Commerce

Thursday, September 26, 2013

Opinions of the State Administration for Industry and Commerce on

Supporting the Construction of the China (Shanghai) Pilot Free Trade Zone

    The establishment of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “FTZ”) is an important measure to thoroughly implement the spirit of the Eighteenth CPC National Congress and adopt a more proactive opening-up strategy. With the important mission to have China further involved in international competition in the new era, comprehensively raise the level of an open economy, and accelerate the transformation of modes of economic growth, the FTZ is required by the national strategy. Maximizing the role of the administrative department for industry and commerce is of great significance in boosting the construction of the FTZ, promoting growth, reform and innovation through opening up, and forming a replicable and widely applicable experience. In accordance with the spirit of the Circular of the State Council on Issuing the Framework Plan for the China (Shanghai) Pilot Free Trade Zone and the actual needs of the FTZ, the following opinions are offered under the principles of “conducting reform and innovation through pilot programs”:

I. Pilot programs of reforming the industrial and commercial registration system to optimize the business environment in the FTZ

Pilot program of the subscription registration system for registered capital. Unless any law or administrative regulation requires paid-in registered capital of a company, a subscription registration system for registered capital shall be implemented on a trial basis for companies.

Upon implementation of this pilot program, in registering the registered capital or total shares (i.e. registered capital of a company) subscribed to by all shareholders or promoters of a company, the administrative department for industry and commerce shall no longer register the company’s paid-in capital. The company’s shareholders (or promoters) shall independently agree on the amounts of subscribed capital, manner of contribution, and periods of contribution, as recorded in the bylaws of the company. Shareholders of a limited liability company shall be liable for the debts of the company only with their respectively subscribed contributions, and shareholders of a joint-stock limited company shall be liable for the debts of the company only with their respectively subscribed shares. Companies shall publish the amounts of contribution subscribed to by shareholders or shares subscribed to by promoters, manners of contribution, periods of contribution, and payment of contributions through the market participant credit information publication system. A company’s shareholders (or promoters) shall be responsible for the veracity and legality of payment of contributions.

Registration conditions for registered capital shall be relaxed. Except as otherwise required by any law, administrative regulation, or decision of the State Council regarding minimum registered capital in a particular industry, the provisions on minimum registered capital of RMB 30,000 for a limited liability company, RMB 100,000 for a one-person limited liability company, and RMB 5,000,000 for a joint-stock limited company shall be cancelled. The amount and proportion of initial contributions from all shareholders (or promoters) in the formation of a company shall no longer be limited. The ratio of money contribution by all shareholders (or promoters) of a company to registered capital shall no longer be limited. The periods of full payment of contributions by shareholders (promoters) of a company shall no longer be required.

Pilot program of the registration system of “business license before other permits”. Unless any law, administrative regulation, or decision of the State Council requires any prior licensing in enterprise registration, a registration system of “business license before other permits” shall be implemented in the FTZ on a trial basis. An enterprise in the FTZ may engage in general business operations upon applying to the administrative department for industry and commerce for registration and obtaining a business license. Where the business of an enterprise in the FTZ involves any prior licensing in enterprise registration, the enterprise shall apply for a business license to the administrative department for industry and commerce after obtaining a permit or approval document. Where an enterprise in the FTZ applies for engaging in any other business requiring licensing, it may engage in such business only after obtaining a business license and a permit or approval document.

Pilot program of the public disclosure of annual reports. The annual enterprise inspection system shall be replaced with a public disclosure system of annual reports of enterprises in the FTZ on a trial basis. Enterprises shall submit their annual reports to the administrative department for industry and commerce through the market participant credit information publication system during the prescribed period each year, and disclose their annual reports to the public so that all entities and individuals may consult their annual reports. Enterprises shall be responsible for the veracity and legality of their annual reports. A catalogue of abnormal operations shall be established to record enterprises which fail to publish annual reports during the prescribed period through the market participant credit information publication system.

Pilot program of the project recordation system for foreign-invested advertising enterprises. Applications for formation of foreign-invested advertising enterprises in the FTZ, applications of foreign-invested enterprises in the FTZ for new advertising business, and applications of foreign-invested advertising enterprises in the FTZ for formation of branch offices shall no longer be subject to Articles 9, 10, and 11 of the current Provisions on the Administration of Foreign-Invested Advertising Enterprises, and the approval system for foreign-invested advertising enterprise projects in the FTZ and formation of branch offices of foreign-invested advertising enterprise in the FTZ shall be replaced with a recordation system, Where, after the formation of a foreign-invested advertising enterprise in the FTZ, it is necessary to replace a party to the joint venture, transfer equity in the joint venture, modify the joint venture’s scope of advertising business, or modify the registered capital of the joint venture, the approval system shall be replaced with a recordation system, and the enterprise may directly undergo the modification registration formalities.

II. Optimization of enterprise formation processes to enhance the registration efficiency in the FTZ

The power to administer foreign investment registration vested in the administrative department for industry and commerce in the FTZ. The administrative department for industry and commerce in the FTZ shall be responsible for the registration, supervision and administration of foreign-invested enterprises within its jurisdiction which have passed formation approval and recordation procedures with the Shanghai Municipal Government or a department authorized by the Shanghai Municipal Government.

“One-off acceptance” in the FTZ for enterprise formation. According to the requirements of the Shanghai Municipal Government, the administrative department for industry and commerce in the FTZ shall be supported in receiving all application materials for enterprise formation submitted by applicants to all related operation departments through exchange of electronic data or on-site processing and serving all licensing decisions, recordation documents, and relevant licenses and permits.

Pilot program of the new format of business licenses. Except for Business Licenses for Specialized Cooperative of Farmers as Legal Person and Business Licenses for Individual Industrial and Commercial Household, all business licenses for enterprises shall adopt the same format.

III. Transformation of manner of regulation of market participants and maintenance of market order in the FTZ

Reinforcement of publication of credit information and improvement of credit constraint mechanisms. A market participant credit information publication system based on the economic residency database of the administrative department for industry and commerce shall be established to promote the building of the social credit system. The administrative department for industry and commerce shall publish market participant registration, recordation and regulation information through the system. Enterprises shall publish their annual reports and qualification obtainment information as required through the system. The administrative department for industry and commerce may randomly inspect the contents of published annual reports. The administrative department for industry and commerce may randomly inspect the contents of published annual reports. The administrative department for industry and commerce shall take proper credit regulatory measures against enterprises on records of abnormal operations, market participants with lawbreaking records, and their personnel liable.

Innovation in the manners of regulation of market participants to raise the level of agency law enforcement. The role of the administrative department for industry and commerce in market regulation and law enforcement shall be strengthened, and the establishment of forms of regulation of market participants compatible with a high-standard system of international investment and trade rules shall be explored. Interdepartmental coordination and cooperation shall be strengthened to form a work pattern of regulatory departments featuring a clear division of duties, smooth communication and joint management, enhance joint regulatory efforts, improve regulatory efficiency, and jointly create a uniform, open, fair, honest, competitive, and orderly market environment.

  The opinions of the State Administration for Industry and Commerce on supporting the construction of the FTZ shall be specifically implemented by the operation departments of the State Administration for Industry and Commerce in conjunction with the Shanghai Administration for Industry and Commerce. Under the leadership of the CPC Shanghai Committee and the Shanghai Municipal Government, the Shanghai Administration for Industry and Commerce shall thoroughly implement the Scientific Outlook on Development, focus on major tasks, serve the overall objectives, conscientiously perform statutory functions, strengthen reform and innovation, expand service areas, improve service capabilities, and make positive contributions to the advancement of the FTZ construction.

Provided by Lawyers Working Committee of Pudong New Area