Member Article

The State Administration for Industry and Commerce issued the Regulations for the Administration of the Registration of the Business Scope of Enterprises on 14 June 2004. The Regulations, which entered into effect on 1 July 2004, are applicable to enterprises registered inside China. Business scope The Regulations define the term ¡®business scope as the scope of the business activities in which an enterprise engages. An enterprises business scope must be registered with the enterprise registration authority pursuant to an application made by the investor or the enterprise. The business scope of an enterprise must be identical with the provisions of its Articles of Association or partnership agreement. Permitted and general business items The Regulations classify items appearing in the business scope as permitted business items or general business items. Permitted business items are business items that require an approval from a relevant authority in accordance with applicable laws and administrative regulations and the decisions of the State Council. General business items are items which do not require approval and which the enterprise can register without approval. Before permitted business items can be registered in the business scope the applicant must obtain the approval of the relevant approval authority. After the approval is obtained, the applicant may apply for registration of the business scope. If the approval authority has restricted the term of operation of the permitted business item, the registration authority must register such term of operation. An applicant registering general business items may do so on its own directly with the registration authority. It will need to select one or more types of business on the basis of the Industrial Classification and Codes of the National Economy and relevant regulations. The Regulations require that the business scope relate to the industry sector or the business characteristics in the enterprise name. If an enterprise is active in several industry sectors, the first item in its business scope will be its industry sector. Registration of changes If an enterprise changes its business scope, it must register the change with the registration authority. In the case of a business scope including permitted business items, the change in registration has to be completed within thirty (30) days from the date on which the relevant approval authority issued the approval document or certificate. In the case of a business scope with general business items, the change in registration must be completed within thirty (30) days from the date on which the enterprise decided to change its business scope. When an investor of an enterprise is changed from a domestic investor into a foreign investor or vice versa, the registration authority must register the business scope anew in accordance with the approval documents and certificates of the approval authority. Branch organisations A branch organisation must obtain approval from the relevant approval authority before engaging in the permitted business items appearing in the business scope of its parent unless relevant regulations provide otherwise. If an approval authority approves permitted business items for the branch organisation beyond its parents business scope, the parent can apply to have its business scope expanded to include the business items of the branch organisation. In that case, the words ¡®operated by a branch organisations need to be added behind the expanded business scope of the parent.