Further updates for e-commerce company registration in China

On December 3 2018, the State Administration for Market Regulation (SAMR) issued an administrative circular (Opinions of the State Administration for market regulation on Working Effectively on the Registration of E-commerce Business Operators, hereinafter referred to as the “circular”) clarifying certain aspects of the registration procedure for companies operating in the e-commerce sector, imposed by art. 10 of the new Chinese e-commerce Act (E-Commerce Law of the People’s Republic of China), in force since January 1st, 2019.

As specified in the above provision, as well as in par. II of the Circular, e-commerce operators engaged in business activities are required to be registered as market operators (in the form of companies, individual entities or agricultural cooperatives) by the same administrative regulations as those applicable to traditional operators, with the sole exception for direct farmers, craftsmen and suppliers whose activity is not subject to obtaining any License or Administrative Authorization.

However, the e-commerce activity exercised by an individual entity is also regulated by law. In this particular case, the operator can indeed specify his/her operative online platform as the registered office, however, if the operator works through several online platforms, it must register them all as additional locations for his/her activity and the operator may even choose to register their habitual residence as the registered office.

In regards to individual entities, the competent authority for registration shall be the competent SAMR office (at regional, municipal or district level) based on the place of residence of the holder (see Circular, par. III). If the e-commerce operator elects, and registers, the online shop through which he operates as the place of conduct of his business, he shall perform his activity exclusively using that specific channel. In this case the operator will not be allowed to use the residence to exercise commercial activity in the traditional form, without the prior authorization of the Authority (see Circular, par. IV)

The e-commerce operators must also make public their commercial license or a declaration of an exemption from the obligation to register ex art. 10 of the Chinese E-commerce Act (see Circular, par. VI), by publishing it on the homepage.

Specific rules are set for holders of online e-commerce platforms, where e-commerce operators are entitled to the sale and exchange of goods and services. In particular, par. V of the circular specifies that administrators of e-commerce platforms must report to the authority identifying the information of operators present on the platform which have not yet provided the required Administrative registrations, and invite them to abide by the law.

In basic terms, apart from the peculiarities recognized in favor of individual entrepreneurs, e-commerce operators engaged in business activities are subject to every rule binding traditional operator,s leading to more control being excercised by the relevant administrative authorities.