Register A Company In China
There are many foreign companies that are seeking overseas expansion opportunities and intend to sell products to China, given its vast population. It involves a lot of tariffs for a product to enter the Chinese market. Because of that, many foreign companies choose to set up a company in China in order to reduce operating costs.
Essentially, there is little difference between a wholly foreign-owned enterprise and a local Chinese corporation, with the exception that a wholly foreign-owned enterprise requires additional certification. Investors from Hong Kong and Macau register a company must be notarized by the local law firm, while Taiwan investors must be notarized by the “Straits Exchange Foundation” (”SEF”). Other countries’ investors must get their notarization from the Chinese Embassy of their home country.
Basic Requirement to Register a Wholly Foreign-Owned Company in China
1. Company shareholders
Wholly foreign-owned enterprises are divided into two categories: wholly foreign-owned enterprises and joint venture companies. A wholly foreign-owned enterprise can be owned by a foreigner or run by a foreign company. While under the joint venture company format, foreign investors are required to identify and register a company with a Chinese partner.
2. Supervisory Board
It is unnecessary for a wholly foreign-owned enterprise to have a supervisory board. But if the shareholder insists on doing so, it is compulsory that there must be at least three members sitting on the board, and those members can be foreigners or local Chinese residents.
3. Board of Director
A board of directors is likewise unnecessary for a wholly foreign-owned firm. However, the corporation must have an executive director, who can be either a foreigner or a Chinese national.
4. Legal Representative
The legal representative of the wholly foreign-owned enterprise can be the shareholders or hired person. The legal representative can be a foreigner or a local resident.
5. Company Registered Capital
Chinese law does not have minimum capital requirements for the formation of a wholly foreign-owned enterprise. There are no restrictions on the use of currency as company capital. It can be RMB, U.S. dollars, pounds sterling, Hong Kong dollars, etc., and that currency will be reflected on the business operating license. Note that if you use foreign currency cash remittance or foreign RMB cash remittance as registered capital, it must be paid off within five years.
6. Company Business Scope
A wholly foreign-owned enterprise must carefully define the “Business’s Scope” of the business activities that it will engage in. The company’s business activities have to follow strictly according to the business scope. China is now putting in place a system for approving the registration of foreign companies. These companies must get approval from the Chinese Ministry of Commerce because WFOE can only be used in industries where foreign participation is allowed.
7. Company Registered Address
It is worth noting that wholly foreign-owned enterprise must have a registered office address, and a lease agreement, as well as relevant certificates, need to be provided at the time of registration.
Company Registration Process
Step1: Name verification: Get an Application Form for Prior Approval of the Name of a Foreign-Capital Enterprise from the State Administration for Industry and Commerce of China (SAIC) to seek name approval. The first step in the application process is to file for your official Chinese business name. SAIC will check if the business name is available and send a notice that the name has been pre-approved.
Step 2: Rent an Office: Rent an office at the office building, sign a leasing contract, and register with the Bureau of Housing and Land Administration.
Step 3: Preparation of Articles of Association: The articles of association need to be signed by all shareholders.
Step 4: Company Registration Procedures: Obtain all the relevant application forms from SAIC, including the application form of establishment registration, list of shareholders, supervision of managing directors, registration form of the legal representative, and registration form of designated representative or proxy. After filling them out, together with the notice of name verification, articles of association, office lease contract, and a copy of the premises permit, submit them to the SAIC. The license will be available in about 15 working days. Or, you can use the SAIC’s website to apply for the relevant procedures without going to the office in person.
Step 5: After acquiring a business license, a wholly foreign-owned enterprise has to produce an official company chop and financial chop at the Public Security Bureau designated seal engraving company. Company chop and financial chop are required for the following steps.
Step 6: Tax Reporting: After receiving the license, report to the local tax bureau within 30 days for tax reporting.
Step 7: Company’s Bank Account: Finally, a wholly foreign-owned enterprise can open a bank account with a business license.
