Introduction

On 12th Dec, 1982; the State Administration for Industry and Commerce (SAIC) of the People’s Republic of China published the “Corporation management regulation”. The regulation stated that from 1983 onwards, SAIC would implement company annual inspection procedures over the whole country. Annual inspection is particularly useful in improving the national control over companies’ registration. SAIC makes the carry-out of annual inspection compulsory for all companies in order to ensure their existence and normal operations.

Who need to conduct annual inspection?

The companies who receive the business license, including: limited liability companies, non-company business legal persons, partnership enterprises, individual sole-source investment enterprises and branch offices, foreign enterprises, as well as other management units.

Time period for annual inspection

1st March to 30th June annually

The government agencies involved in annual inspection

• State Administration for Industry and Commerce
• Statistics Bureau
• Foreign Exchange Supervision Bureau
• Customs Bureau
• Finance Bureau
• Foreign Investment Commission
• Economic Committee

General Inspection Procedures

On-line Inspection
Companies download application forms from internet, complete and then upload the soft copies back in the Enterprises Inspection Online System. The companies would still be required to summit hard copies.

Joint Inspection
This means the government agencies mentioned above proceeds the Annual Inspection at the same time and the same place. The companies prepare all necessary materials in hard copies and submit them. All procedures could be completed in the local districtive branch of SAIC.

In the case of not complying the requirement for annual inspection

• Penalty
  If the company does not conduct its annual inspection in accordance with the regulations, business registration authority would order the company to complete the inspection on a new deadline. Besides, a company would still face penalty between RMB 10,000 to RMB 100,000. For a branch, non-corporate businesses and their subsidiaries in China engaged in business activities out of China, and other operating units, the penalty should be RMB 30,000 or below. For a partnership, a personal-owned enterprise and their branches, the penalty should be RMB 3,000 or below.
  
• Revocation of business license
  If a company cannot complete the annual inspection by the ordered deadline, the business registration authority will issue a public notice. Starting from the date of public announcement, the company would have 60 days to complete the annual inspection, before the business license is revoked by the authority.