China Business License explained
Tags: Company Verification, Credibility, Doing Business in China, SMBs and SMEs
This article is provided by Ms. Bing Li, a business lawyer in China with over seven years of experience in both law firms and legal departments of large corporations. Her expertise is in compliance review, general corporate matters, Mergers & Acquisitions (M&A), Foreign Direct Investment (FDI).
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Introduction to the Chinese Business License
A business license is the registration certificate issued to a legal entity by the registration authority, certifying its establishment and existence. The business license of a legal entity is equivalent to the identification card of a natural person. It’s usually on an A3-size piece of paper with “Business License” title and details written in Chinese text (see image below).
All for-profit legal persons/entities must hold a business license upon registration. Business license certification includes companies, non-corporate enterprises, partnerships, farmer’s cooperatives, sole proprietorships, individual businesses, non-legal person enterprises, branches, and branch offices.
Details on the Business License
Information on a business license usually includes at least the following. Here is a sample of the Business License.
- Unified social credit code (or identifier)
- Official company name
- Registered address
- Company type
- Legal representative/person in charge
- Registered capital
- Establishment date
- Expiration date
- Business scope
- Registration bureau
- Issuance date
There is also a QR code on the certificate. By scanning the code, you can look up more information on the National Enterprise Credit Information Publication System (“NECIPS,” in “Chinese “国家企业信用信息公示系统”). The NECIPS is an official database, which publishes basic information about for-profit legal persons/entities.
Business scope is the scope of business activities undertaken by an enterprise. There are two categories:
- Permitted Business (in Chinese “许可经营项目”)
- General Business (in Chinese “一般经营项目”)
Permitted Business refers to an activity requiring approval from an industry’s regulating authority. If an enterprise conducts such activities without obtaining the required approval/permit/license, the activity shall be penalized.
General Business, on the other hand, does not require additional approval.
Verifying a business license
Because a business license is the identification certificate of a legal entity, always check the license before doing business with such an entity.
Here are some practical tips:
- Scan the QR code to see whether the registration is still active.
- Check the content on the business license and the information on the NECIPS to confirm consistency and authenticity.
- Check whether the proposed business partnership falls within the registered business scope.
- For permitted business, always check whether the industry’s regulating authority requires another approval/permit/license.
- Engaging in an unregistered business activity does not necessarily make such activity null and void. (Note: “null and void” is a legal term that typically means “without force or binding power”). But consult a business lawyer if you have questions about the validity of such business activity.
Want to check the Business License of your potential partner? Want to get more information on the business partner you are dealing with?
Consult with a lawyer or have a Chinese lawyer conduct a due diligence service for you. It’ll confirm that your potential business partner is in good standing and is legally qualified to engage in certain businesses, and whether it has the capital required or is simply a shell company.