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What is the procedure to change the business scope? 

  • First, the company should convene a shareholder meeting or board meeting to obtain their approval to change the business scope;
  • Then the Articles of Association should be revised according to the shareholders’ or directors’ decision;
  • If the change involves an industry requiring a specific approval, this shall be applied with the relevant authorities within 30 days of the initial decision to modify the business scope;
  • Finally, upon duly registration with MOFCOM and SAMR, the company will receive its revised business license;
  • The company’s tax registration shall also be updated with the Tax Bureau within 30 days after the SAMR approval to change the business scope.

What will happen if a FIE does not carry out business within its business scope?

  • The local government will send a notice to the FIE requiring it to stop the activity and to change the business scope with the local government.
  • Failure to comply with such regulation, the company will be imposed a fine.
  • For business activities which shall be conducted after obtaining specific approval, if the company continues to carry out such business disregarding the local government’s notice, the local government may revoke the company business license.
  • The contracts signed outside of the business scope will remain valid and effective except for businesses restricted or prohibited by laws and regulations.

-> This article may also be of interest to you : Main Administrations in China : Who to deal with when doing business in China ?

To know more, download our legal handbook related to setting up a business structure in China …

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