The Problems Related to the Inconsistency between the Registered Address and the Actual Business Address
In practice, it is common for companies to have a registered address and another actual business address. The reasons are various, such as, a company has been relocated, but it forgot to change the registered address in time; or a company sets its registered address in a specific district for special preferential policies, and sets another actual business address in a more convenient district, and so on. From the perspective of administrative management, such arrangement is allowable. However, such inconsistency would still bring some negative effects to enterprises.
Regarding the litigation, there are 2 main negative impacts:
(1) If a company has been relocated during the execution of a contract, then how to determine the judicial jurisdiction court? For example, Company A is located in Pudong New District, and it signed a contract with Company B in 2019. Both parties agreed that the relevant disputes should be under the jurisdiction of the court where Party A’s domicile is located. Company A relocated to Changning District in 2020. At this time, a dispute arose, should the dispute be under the jurisdiction of the court of Pudong New District or Changning District? According to Article 32 of the “Interpretation of Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China (Amended in 2020)”, where a jurisdiction agreement stipulates the jurisdiction of the court in the domicile of one party, but the domicile of the said party changes after the conclusion of the agreement, the lawsuit shall come under the jurisdiction of the court in the place where the said party has his/her domicile at the time of conclusion of the agreement, unless otherwise agreed by the parties. Therefore, if an enterprise wants to fix the judicial jurisdiction, it is recommended to prescribe the full title of the relevant court.
(2) If the registered address is vacant, and the enterprise failed to declare its actual business address, in many cases, the court could not inform the enterprise, and has to use a public notice. If the enterprise did not be aware of such notice during the announcement period, it may fail to be present on site, and shall undertake all the negative consequences, such as being included in list of the dishonest parties subject to enforcement. In order to reduce the service of announcements, litigation costs and time for litigants, some local judicial departments and administrative authorities have jointly issued relevant regulations, in which stipulates that if a court has sent the litigation documents to the delivery
Regarding the risks related to IP protection, if an enterprise has IPR, such as registered trademarks, patent and etc., it shall go through the relevant registration procedure for changing its address. For example, if a third party filed an invalidation application for a certain registered trademark owned by an enterprise, and the enterprise did not receive the relevant documents sent by the Trademark Office, it should undertake the relevant negative consequences. (For details, please refer to the “Pay Attention to the Change of a Registered Trademark Registrant’s Information” in the 73rd issue of our “Legal Notebook”)
In addition, if an enterprise relocated, it shall go through other necessary procedures for changing its address, such as the registration information of bank account, taxation, social security, import and export, and other certificates or licenses. If the enterprise failed to go through those procedures in time, it may undertake more unforeseen risks, and extra expenses.