The document summarizes the work of the Shanghai Administrative Bureau for Industry and Commerce in registering companies. It discusses the Bureau's responsibilities, the offices that handle registration, and statistics on registered companies. It also outlines reforms made to registration procedures to improve efficiency and align with international practices, such as allowing installment payment of capital contributions and recognizing human capital contributions. Going forward, the Bureau aims to further strengthen its information infrastructure, enhance public services through searchable company information, and foster relationships with other international registration authorities.

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(Translation)
Introduction to the Work of the
Shanghai Administrative Bureau for Industry and Commerce
I. Overview of companies registration offices and registration of companies
in Shanghai
(1) Companies registration offices in Shanghai and their basic functions
Shanghai Administrative Bureau for Industry and Commerce is an
organisation directly under the Shanghai Municipal People’s Government responsible
for market supervision and administrative law enforcement. Its major functions
include: registration of enterprises and businesses; market supervision; consumer rights
protection; and supervision of trademarks, advertisements, contracts and brokers. It
works under the guidance and leadership of the State Administration for Industry and
Commerce.
At present, the Bureau has a total of 22 registration offices in the various
administrative divisions in Shanghai with over 280 registration officers. These offices
are responsible for registering all domestic-invested companies, enterprises and
businesses in Shanghai and approving company names. They are also empowered and
authorised by the State Administration for Industry and Commerce to register all foreign
investment enterprises in Shanghai, as well as the business operations of foreign
enterprises, resident representative offices of foreign economic organisations and
regional offices of foreign enterprises in China.
A sound and comprehensive legal framework for company registration is
beginning to take shape after nearly 20 years’ of work. The enactment and
implementation of the relevant laws and regulations has ensured that companies are
registered according to law. The legal basis mainly includes the Company Law, Law
on Chinese-Foreign Equity Joint Ventures, Law on Foreign-invested Enterprises, Law
on Chinese-Foreign Contractual Joint Ventures, Law on Foreign-invested Enterprises,
Administrative Licence Law, Regulation on the Administration of Company
Registration, Administrative Regulations Governing the Registration of Legal
Corporations, etc.

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2) Registration of companies in Shanghai
As at the end of January 2006, a total of 484 249 domestic-invested
companies were registered in Shanghai. The registered capital amounted to RMB
1,826.5 billion. There were 105 160 domestic-invested enterprises (non-companies)
with a registered capital of RMB 341.1 billion and 29 315 foreign-invested companies
with a total investment of US$202.8 billion. The registered capital of foreign-invested
companies totaled US$109.7 billion, of which US$86.3 billion came from foreign
investors. The number of individual businesses was 280 000.
II. Efforts and reforms in economic development and in response to the
requirements for accession to the World Trade Organisation (WTO)
With continuous economic development, China’s accession to the WTO and
the promulgation of the Administrative Licence Law and the new Company Law
(implemented in January 2006), company registration in Shanghai has also undergone
corresponding changes and reform in recent years to meet changing circumstances and
align with international practices as far as possible.
(1) Building a team of registration officers
To further enhance the efficiency of company registration and promote
professionalism among registration officials, we have obtained the approval of the
Ministry of Personnel and the State Administration for Industry and Commerce to
introduce in Shanghai a registration officer system modelled on international practices.
We are the first agency that conducts such a pilot project in the country. Registration
Officers are professionally qualified administrative officials recruited through
examination and appointed to act and issue approvals on behalf of the Bureau under the
law. The registration officers are granted the power of signature, which is in line with
international practices. Emphasis is laid on five principles, namely “recruitment by
examination and appointment”, “management by rank”, “individual accountability”,
“balanced responsibility and power” and “promotion and demotion of officials”. By
restructuring the workflow, we have succeeded in removing the bottlenecks created by
the multiple layers of approval, ill-defined job responsibilities and low efficiency. Our
company registration work has thus become standardised, and the overall efficiency of
our services is enhanced.

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(2) Human capital contribution pilot scheme
Different countries have different legislations on human capital contribution.
Generally speaking, all countries, with the exception of the United States and France,
exercise strict control on human capital contribution. The main reason for control is
that human capital, which is tied to an individual, may possibly harm the interests of the
creditors and the shareholders who contribute money capital. However, in view of
increasing importance of human capital in modern-day economic activities, the
recognition of human capital contribution may effectively reduce a company’s operating
costs and resolve the conflict between talent and capital. Giving monetary value to
human capital offers an alternative form of capital contribution. To this end, we
launched a human capital contribution pilot scheme in the Pudong New District on 18
March 2005.
Human capital refers to the talent tied to an investor, which is expected to
bring economic benefits to a company and can be converted into capital by legal means.
The value of human capital is manifest in the expertise, skills and experience possessed
by talented people in such fields as management, technology and sales. As far as the
companies of limited liabilities and companies limited by shares (foreign-invested
enterprises excluded) registered in Pudong New District are concerned, they are mainly
engaged in modern finance-oriented services, high-technology manufacturing industries,
and innovative and creative industries characterised by the ownership of intellectual
property rights. The contribution of human capital can be measured in monetary terms
as part of the investment. In such cases, the human capital contribution should not
exceed 35% of the company’s registered capital.
(3) Instalment payment of registered capital contributions
The previous Company Law provides for the implementation of a fully
paid-up capital system. On one hand, the high market access threshold is likely to give
rise to illegal activities relating to the advancement, auditing and false report of
registered capital, etc. On the other hand, a large amount of capital is left idle. In
view of this, a trial programme of registered capital instalment was implemented in the
Pudong New District on 18 March 2005, under which shareholders of companies of
limited liabilities are allowed to make payment of their registered capital contributions
by instalments. All the shareholders of a company are required to state in the Articles
of Association the amount of registered capital, the amount contributed in the first
instalment and the due dates for capital contribution. Individual shareholders have to
pay up their share of the capital in full by the due date specified in the Articles of
Association. The first instalment paid by all the shareholders should not be less than

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30% of the registered capital, or RMB 30,000. The remaining balance should be fully
paid up within two years from the date of establishment of the company. This
initiative was incorporated in the amendments to the Company Law, thus giving legal
status to the instalment payment of registered capital.
(4) International Forum on Market Access and Fair Competition
To promote the sharing of experience among corporate registers from all over
the world, our Bureau, the Registration Bureau of Foreign-invested Enterprise and the
Enterprise Registration Bureau of the State Administration for Industry and Commerce
co-hosted the “Market Access & Fair Competition 2005 Shanghai International Forum”
on 22 November 2005. Officials and experts from the United States Federal Trade
Commission, Australian Securities and Investments Commission, Korea Fair Trade
Commission, Federal Central Register of Germany, Companies House of the United
Kingdom, as well as international organisations such as the European Union, World
Bank, World Intellectual Property Organisation, International Federation of Accountants,
had attended the Forum and held discussions on four themes: “Market Access and
System Development”, “Market Access and Economic Development”, “Market Access
and Sectoral Supervision” and “Market Access and Government Regulation”. The
Forum has enabled us to understand the lenient market access policy and the ensuing
strict supervisory measures adopted by developed countries. At the same time, the
foreign delegates have gained a clear understanding of China’s market access policy.
III. Upcoming tasks for fostering harmonious development in the society and
coping with the global trend towards market access
(1) Strengthen information infrastructure and enhance efficiency in
company registration
The strengthening of information infrastructure is mainly concerned with the
realization of a fully computerised company registration process. We have no problem
applying internet technology to our company registration system. In fact, some of
company information has already been registered on the internet on a trial basis. Since
5 February 2001, we provided online enquiry services regarding the progress of
registration and made available standard forms for download. In other words,
applicants may make free online enquiries on the progress of registration the day after
an application has been submitted. Standard forms which are as good as those
obtained from our offices can also be downloaded. On 29 March 2001, we launched
online services to answer enquiries on different aspects of administration for industry
and commerce on the internet. A “One-stop Online Service” was introduced in April

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2003 to enable resident representative offices of foreign (regional) enterprises to make
applications for registration on the internet anytime, anywhere. Our ultimate goal is to
put in place a fully computerised company registration system, to enable the online
submission of applications, processing, checking and approval of applications, return of
documents for supplementary information and correction, payment of fees, and even the
issue of business licences.
(2) Provide company information search to society and enhance public
services
Strengthening our information infrastructure on company information and
making full use of the information to promote social and economic development are key
to enhancing our public services. We shall adopt a market-oriented approach, focusing
on market needs, cost-effectiveness and application. Resources will be pooled
together for the classification and objective analysis of accurate company information.
Before the information is issued to the public, it will be organised in a scientific and
systematic way, classified according to the subject or consolidated.
(3) Strengthen ties among corporate registers and learn from each other so
as to enhance the level of access
Company registration is a domain not much susceptible to cultural influence.
The easy communication among countries all over the world has made company
registration one of the most internationalised legal systems. Moreover, all countries
have established their own corporate registers responsible for company registration, be
they judicial bodies, administrative bodies or intermediaries. In order to complement
one another for mutual enhancement, we will strengthen our ties with corporate
registers in various countries and territories and learn from them. It will not be limited
to participation in international conference like the Corporate Registers Forum here
today, but we wish to establish an ongoing working mechanism with other corporate
registers including visits and regular communications and exchanges. We believe that
strengthening ties among corporate registers all over the world and learning from each
other will definitely be beneficial to us all.
March 2006