Can difficult enterprises stop work and guarantee the number? State Council proposes to try out dormancy of enterprises

 Can difficult enterprises stop work and guarantee the number? State Council proposes to try out dormancy of enterprises

The State Council suggests to try out the dormancy system of enterprises

In October 2020, according to the unified deployment of the seventh general supervision and inspection of the State Council, 14 supervision groups of the State Council went to 14 provinces (districts and cities) and Xinjiang production and Construction Corps to carry out field inspection. They successively visited more than 1300 grass-roots units, interviewed nearly 5000 cadres and masses, enterprise leaders and entrepreneurs, and collected more than 1200 opinions and suggestions put forward by relevant parties.

When referring to the opinions and suggestions on improving the policies and measures for guaranteeing the main body of the market, the circular pointed out that the enterprise dormancy system should be tried out. Some supervision and inspection groups have reported that the market supervision department may revoke the business license of enterprises that have not submitted annual reports for two consecutive years. Many enterprises are temporarily closed due to short-term operational difficulties, but they are still willing to continue to operate. Once the business license of an enterprise is revoked, its legal representative will encounter obstacles to start a business again. It is suggested to set up a dormant period for the enterprises that fail to submit the annual report according to the regulations, reasonably set up the dormant conditions and procedures, recognize the legal existence status of enterprises during the dormancy period, and ensure the continuity of business qualification and subject qualification of enterprises.

What is enterprise dormancy? In a signed article, Wu Haifeng, Deputy Secretary General of China Society for market supervision and management, pointed out that Britain was the first country to establish commercial system, and it was also one of the countries with the most complete commercial system. In the UK, if a company shows in its daily reports that it has no significant transactions in a financial year, the Companies Registry will list it as dormant. However, dormant enterprises are not applicable to banks, insurance companies and financial service companies authorized by the financial services and Markets Act 2000. The so-called material transaction refers to any transaction that should be recorded in the accounting records of the company, with the exception of the matters in which the subscriber obtains shares from the company based on its constitutional obligations, the relevant fees paid to the Companies Registry and the penalty for late submission of accounts. The dormancy system of British enterprises is a system proposed by enterprises to minimize their cost of survival when they suspend operation.

Shenzhen has taken the lead in Trial Implementation

At present, there are different views on the definition, conditions, declaration and daily management, follow-up management of enterprise dormancy. However, as the capital of entrepreneurship, Shenzhen has begun to try it out.

This system allows the commercial subject to apply for dormancy according to the actual needs of production and operation. During the period of dormancy, it is not treated as self suspension of business. It is not included in the list of abnormal operation because the registered residence cannot be contacted. Before the expiration of dormancy, it can apply for restoration of normal business status. During the dormant period, the commercial subject still has other legal rights and interests except for not engaging in business activities. If it can apply for cancellation of registration, the commercial subject shall perform relevant obligations and accept relevant supervision during the dormancy period.

The Chinese reporters of securities companies learned by calling the official website of Shenzhen market supervision and administration bureau that the replies that can be inquired at present involve medical institutions, automobile maintenance enterprises, etc.

According to the Several Provisions, if a commercial subject needs to suspend its business, it can register with the commercial registration authority for suspension of business. During the period of closure, the commercial subject will survive. If a commercial subject intends to resume business activities during the period of business closure, it shall apply to the commercial registration authority for termination of business suspension registration before resuming business activities. A commercial subject shall, within 10 working days from the date of expiration of the suspension of business, handle the termination registration with the commercial registration authority. The business registration authority shall publicize the business suspension information of commercial subject through the unified commercial subject registration and license approval information publicity platform of the whole city.

In addition, in the commercial subject registration management regulations (Draft) issued in mid June, the closure registration system was created to allow dormant companies to suspend business while retaining the qualification of commercial entities.

SMEs or major beneficiaries

Wu Haifeng said in the article that the new epidemic has a great impact on Chinas economy, especially on small and medium-sized enterprises. Although the government has issued a series of supporting policies, in the long run, Chinas commercial system still lacks institutional design to help small and medium-sized enterprises overcome their operating difficulties.

Wu Haifeng suggested that large enterprises have stronger anti risk ability, which is not in the scope of this system. In addition, in order to maintain the stability of the financial market and protect consumers, banks, insurance, trust and other financial enterprises are prohibited; enterprises that have issued prepaid cards or collected prepaid fees, such as gyms, beauty salons, education and training institutions, are in a dormant state.

In addition, at present, Chinas tax, social security and other administrative fields have no provisions to suspend business, and it is still necessary for tax and social security departments to further study and formulate relevant measures.

Yang Chang, chief economist of the Institute of public policy and governance of Shanghai University of Finance and economics, said in an interview with that while trying out the dormant system, it is necessary to properly consider the interests of stakeholders, such as how the interests of creditors can be reasonably arranged, and how the wages and social security expenditures of enterprise employees are matched.

Zhong Gang, an associate professor at East China University of political science and law, told Chinas securities dealers that creating a dormant system is an innovation in the business management system. From the perspective of maintaining commercial security, the government needs to fully consider setting good conditions and procedures for dormant subject qualification certification, and do a good job of supporting policies in advance, so as to achieve the balance between enterprise credit management and reasonable release of pressure for enterprises. In particular, it is necessary to consider how to avoid harming the normal operation of upstream and downstream enterprises and the legitimate interests of creditors while enhancing the operational toughness of enterprises.

Source of this article: Chen Hequn, editor in charge of securities companies in China_ NB12679