Shell Companies and Fake Business Registration Targeted by PBOC

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The Chinese central bank has led the release of new rules that seek to prevent the establishment of shell companies and fake businesses.

On 27 December the People’s Bank of China (PBOC) and the State Administration for Market Regulation (SAMR) issued the draft version of the “Provisional Measures for the Administration of Market Entity Beneficial Owner Information” (市场主体受益所有人信息管理暂行办法(草案公开征求意见稿)) for the solicitation of opinions from the public.

The goal of the Measures is to drive further implementation of the “Market Entity Registration Administration Rules” (市场主体登记管理条例), with “beneficial owner” (受益所有人) referring to “natural persons who are the final owners or actual controllers of market entities, or enjoy final benefits to market entities.”

PBOC and SAMR said that the rules are a “major move for raising market transparency,” and bring the registration of beneficial ownership information into line with international standards.

“Statutory equity information is not enough to reflect the beneficiary and control relationships of market entities. Beneficiary ownership information registration will help to prevent shell companies, fake registration and nested holdings at the source, and restrain financial malfeasance and various forms of crime.

“It will also help to ensure that real market actors obtain corresponding resources and the policy dividends of industrial development, and help to optimise the commercial environment.”

Chinese authorities further point out that the establishment of a state-level beneficial ownership information registration centre is one of the mandatory requirements of international standards set by the Financial Action Task Force.

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