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Ownership · Management · Registration updates
A signed equity transfer agreement does not move ownership. Chinese law requires tax clearance, amendment registration with the market regulation authority, foreign-investment reporting and a real handover of chops, banking and tax access, generally within 30 days of the resolution.
Request a Company Change Review ↗01 / Scope the whole change
Under the Regulations on the Administration of Registration of Market Entities, a company must apply for amendment registration within 30 days of the resolution or of the event that triggers the change. Missing that window is common, and it is usually the smallest of the problems caused by treating a change as a paperwork exercise.
| Change | Corporate documents | External updates | Main risk |
|---|---|---|---|
| Equity transfer | Shareholder resolution, equity transfer agreement, amended articles, updated shareholder register. | Tax filing and clearance, AMR amendment registration, foreign-investment change report, bank and foreign-exchange records. | Unpaid registered capital following the transferor under Article 88, and tax assessed on a valuation the parties did not expect. |
| Legal representative | Removal and appointment resolutions; amended articles where the office is tied to a named post. | New business licence, bank mandates and tokens, tax and e-invoicing credentials, government platform accounts. | The outgoing person keeps working authority over payments and filings. |
| Director, supervisor or manager | Resolution, appointment documents and statutory records. | AMR filing where the role is on record, plus internal delegations and signing authority. | The public record no longer matches who actually manages the company. |
| Registered address or business scope | Resolution and articles amendment. | Licence, permits, tax registration jurisdiction, bank, customs and contracts. | Trading outside the registered scope, or an address that fails a site check. |
| Registered capital | Resolution, amended articles, and creditor notice for a reduction. | AMR registration and public disclosure on the national enterprise credit system within 20 working days. | A reduction done without the statutory creditor procedure can be challenged. |
02 / Equity transfer tax
This is where transfers most often stall. The registration authority will generally expect the tax position to be settled before it processes a shareholder change, and the tax bureau applies its own valuation rules if the declared price looks low.
Individual seller
Equity transfer income less the original cost of the equity and reasonable expenses is taxed as "income from property transfer" at 20%. The seller is the taxpayer and the buyer is the withholding agent, under SAT Announcement 2014 No. 67.
Corporate seller
A Chinese company selling equity includes the gain in taxable income at its normal rate. A non-resident enterprise selling equity in a Chinese company is generally subject to withholding tax on the gain, subject to any applicable double tax treaty.
Both parties
Equity transfer documents are taxable property transfer instruments under the Stamp Tax Law, at 0.5‰ of the price. Both the transferor and the transferee are stamp duty taxpayers on the same document.
The rule that surprises sellers
Announcement 67 lets the tax authority assess the transfer income itself where the declared amount is obviously low without a justifiable reason. Declared income below the share of net assets attributable to the equity, or below the original investment cost, is expressly treated as obviously low. Where the company owns land use rights, buildings, unsold property, intellectual property or mining rights, the comparison is against the fair value of those net assets, not book value.
Assessment methods are applied in order, starting with the net asset method. In practice this means a transfer at "1 RMB" or at historic cost in a company holding appreciated assets should be modelled before signing, not explained afterwards.
03 / Registered capital
The revised PRC Company Law took effect on 1 July 2024 and replaced open-ended subscribed capital with a five-year limit. Any buyer of equity in a Chinese company should price this before signing, and any seller should understand that selling does not always end the obligation.
Five-year rule
For a limited liability company, shareholders must pay their subscribed contributions in full within five years of incorporation. For companies registered before 30 June 2024, State Council Order No. 784 requires the remaining contribution period to be brought within five years and recorded in the articles by 30 June 2027, with payment due inside that adjusted period.
Article 88
Where a shareholder transfers equity whose contribution deadline has not yet fallen due, the transferee takes on the obligation to pay. If the transferee then fails to pay in full on time, the transferor bears supplementary liability for the shortfall. A private agreement allocating this between buyer and seller binds only those two parties; it does not displace the statutory position toward the company and its creditors.
Confirm the registered capital, how much is actually paid in, the contribution deadline currently recorded in the articles, and whether the company has already adjusted for the 2027 transition. A company with large unpaid capital is not a cheap acquisition; it is a funding commitment with a deadline attached. Registration authorities may also challenge a capital figure or contribution period that is clearly out of line with the company's scope, operations and shareholders' capacity.
04 / Completion sequence
Tax before registration, registration before banking, banking before foreign exchange. Attempting these in parallel usually means one authority rejects the file because another has not updated yet.
Critical path
Confirm the evidence required at each handoff before the transfer agreement fixes the timetable.
Plan the Change Sequence ↗Licence, articles, shareholder register, paid and unpaid capital, contribution deadlines, permits, outstanding tax filings and any abnormal-operations flag.
Shareholder resolution, transfer agreement, waiver of pre-emptive rights by other shareholders where relevant, appointment and removal documents, amended articles.
Value the equity, report within the 5 working day window, declare and pay individual income tax, corporate income tax and stamp duty, and obtain the evidence the registry will want to see.
Apply to the market regulation authority within 30 days of the resolution and collect the reissued business licence.
Where the change does not itself involve amendment registration, a foreign-invested enterprise must submit a change report through the enterprise registration system within 20 working days of the change occurring, taking the date of the resolution where one was passed.
Bank account and mandates, tax and e-invoicing credentials, foreign exchange registration, customs registration, industry permits, social insurance and housing fund accounts, contracts and platform logins.
05 / Operational control
In China, whoever physically holds the chops and the banking tokens can bind and pay from the company, whatever the register says. A change project that stops at the licence leaves the old party in operational control, and recovering chops through a dispute is slow and expensive.
Original business licence, articles, resolutions, shareholder register and written delegations.
Company chop, legal representative chop, finance chop, invoice chop and contract chop, with their Public Security Bureau filing records, plus premises keys.
Bank USB keys and tokens, payment approval rights, account signatory updates and the finance chop.
Tax bureau and e-invoicing logins, customs and foreign exchange accounts, corporate email and government platform credentials.
Where a chop needs to be replaced because the outgoing party will not return it, the replacement involves reporting the loss and re-carving through a licensed engraver with Public Security Bureau filing. See how China company chops work →
06 / Failure patterns
Every one of these is recoverable, but each costs far more to fix after completion than to check beforehand.
Commercial terms are fixed, then the tax authority assesses transfer income on net assets and the tax bill lands on a price that no longer works.
The buyer inherits a funding deadline, and under Article 88 the seller stays exposed if the buyer does not pay.
The former legal representative or signatory still controls payments weeks after completion.
It is a separate obligation from AMR registration, with its own 20 working day deadline.
Chops, tokens, accounting records, original documents and platform access cannot be accounted for, and nobody notices until something is needed.
Company-change FAQs
The questions buyers and sellers ask most often when transferring ownership or replacing management in a Chinese company.
Not by itself. The transfer needs a shareholder resolution, settlement of the transaction tax, amendment registration with the market regulation authority and updates to the shareholder register and articles. Until the registration is done, the public record still shows the former shareholder.
An individual seller pays individual income tax at 20% on the transfer income less the original cost of the equity and reasonable expenses, treated as income from property transfer. A company seller includes the gain in its corporate income tax. Both parties also pay stamp duty at 0.5 per mille of the transfer price on the equity transfer document.
No. Under SAT Announcement 2014 No. 67 the tax authority can assess the transfer income where the declared amount is obviously low without a justifiable reason. A price below the equity's share of net assets or below the original investment cost is expressly treated as obviously low, and assessment normally starts from the net asset method.
The seller is the taxpayer for income tax on the gain, but the buyer is the statutory withholding agent for an individual seller. The buyer must also report the transfer to the tax authority within 5 working days of signing, and tax is declared by the 15th of the following month.
Under Article 88 of the revised Company Law, where equity is transferred before the contribution deadline falls due, the buyer takes on the obligation to pay. If the buyer then fails to pay on time, the seller bears supplementary liability for the shortfall. An agreement between buyer and seller can allocate the cost between them but does not change this position toward the company or its creditors.
The revised Company Law, effective 1 July 2024, requires a limited liability company's subscribed capital to be paid within five years. Companies registered before 30 June 2024 must bring the remaining contribution period within five years and record it in the articles by 30 June 2027. A buyer should treat outstanding registered capital as a dated funding commitment, not as a discount.
Amendment registration should be applied for within 30 days of the resolution or of the event that triggers the change. Adjustments to subscribed or paid-in capital, contribution method or contribution period must also be published on the national enterprise credit information system within 20 working days.
Yes. Under the Measures for Foreign Investment Information Reporting, where a change does not involve amendment registration, the foreign-invested enterprise must submit a change report through the enterprise registration system within 20 working days of the change, taking the resolution date where one was passed. This is separate from the registration filing.
Yes. The legal representative is printed on the business licence, so a change means the registration is updated and a new licence is issued. The bank mandates, tax credentials and government platform accounts then have to be updated separately.
It is far simpler when they do, because the chops, licence and banking devices usually sit with them. Where they refuse, the company can still act through a valid shareholder or board resolution, and chops can be reported and re-carved, but the process takes longer and should be planned with advice.
For a limited liability company, other shareholders generally have a right of first refusal on a transfer to an outsider on the same terms. The articles may add further requirements, so both the statutory position and the company's own articles need checking before terms are agreed.
Inventory the original business licence, all chops with their Public Security Bureau filing records, bank tokens and signatory rights, tax and e-invoicing credentials, customs and foreign exchange accounts, accounting records, contracts and platform access. Whoever holds the chops can bind the company regardless of what the register says.
Related China company guides
Use the pillar guide to see how this topic connects to the complete company-registration process.
Company change review
Tell us what is changing, the current ownership and registered-capital position, and the target completion date.
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Reviewed by Mingcheng Yin, Tax and Compliance Manager Last reviewed