On March 1, Shenzhen and Zhuhai (Guangdong Province) became the first mainland Chinese cities to implement new business-registration rules designed to significantly reduce the bureaucratic hurdles involved in applying for and renewing operating licenses.
Administration for Industry and Commerce (AIC) branches in both cities announced they have waived commercial registration fees.
Also, applicants for licenses in these cities no longer need to submit registered capital and paid-in capital information for their business.
Previously, AIC officials would perform a mandatory audit of this information before granting a license.
Shenzhen Market Supervision Administration deputy director Wang Shujie told the media, “Our audit staff has changed the previous multi-level review of the program. [Under the new system,] after the materials are submitted at the registration window, our staff will audit the information, and will issue the license if all things are proper.”
According to 21st Century Business Herald, applicants often bribe AIC auditors to produce fake reports.
In other cases, the Herald said, companies have inflated their coffers with borrowed cash to fool auditors.
Last year, several media reports claimed some local AIC branches had begun restricting access to financial information within corporate reports.
Sources: Caixin Net (财新网), 21st Century Business Herald (21世纪经济报道)
A version of this post appeared in the China Compliance Digest. For a limited time, subscribers to China Compliance Digest will receive the China Anti-Corruption Handbook (normally $750) and FCPA Blog membership (normally $495) at no extra charge. Details are here.