Risk 1: The company may be put in the list of abnormal business operations by the market supervision department

According to the Interim Measures for the Management of the List of Enterprises with Abnormal Business Operations, enterprises that cannot be contacted through registered residences or business premises will be included in the list of enterprises with abnormal business operations. This information is published on websites such as the Enterprise Credit Information Network, and is also displayed in some enterprise information query apps. Once listed in this directory, it will have an impact on the reputation of the enterprise.

Risk 2: The company may be subject to administrative penalties imposed by Chinese market regulatory authorities

According to the Regulations on the Administration of Registration of Market Entities of the People’s Republic of China, market entities can only register one domicile or main place of business. Market entities should apply for registration of changes to their registered items with the registration authority. Otherwise, the registration authority shall order correction and refuse to correct, and impose a fine of not less than 10000 yuan but not more than 100000 yuan; If the circumstances are serious, the business license shall be revoked.

Risk 3: The company is unable to enjoy the right of “convenient litigation” granted by the China Civil Procedure Law

The practice of ‘plaintiff litigates at the place of defendant’ is currently prevalent in most countries around the world, with the aim of improving litigation efficiency, saving litigation costs, facilitating the enforcement of rulings, and preventing the abuse of litigation rights by plaintiffs. If the registered domicile of a company in China is not its actual business address, it will result in the outcome of a lawsuit in a different location. According to the China law, if the parties to the contract have not agreed on the jurisdiction court for litigation, the court where the currency recipient is located has jurisdiction. If the registered domicile of the legal person who is the currency recipient is not the actual place of business, there is a risk that they cannot enjoy the nearby litigation rights granted by Chinese law.

4. The company was unable to attend the litigation timely.

If the court is unable to reach the company through information registered by the market supervision department or other information clues, it will adopt a public announcement method to serve the defendant legal person and hold a court hearing. If the legal entity as the defendant fails to timely obtain litigation information and is unable to defend and provide evidence, it will inevitably affect its exercise of the right to defense in accordance with the law and increase the risk of losing the lawsuit. If the case takes effect and enforcement measures have been taken, even if the previous judgment results are corrected through other procedures in the future, such as reversing the enforcement and revoking the height limit measures on the legal representative, the impact on the company’s reputation and even property is not easily erased.

---

For litigation or legal issue relating to corporate law in China, reach a Chinese lawyer:+8613920701735

---