China Company Rigistration

Starting a new company is a really big deal both emotionally and financially. Interloop Solutions & Consultancy can make it simple. Formation, EIN, legal documents. We handle everything.

Types of Different Companies

Since 1995, foreign investment in China has been regulated by the Catalogue of Industries for Guiding Foreign Investment (Catalogue). The Catalogue is updated approximately every three years to reflect the government’s then prevailing economic and political goals and policies, and to adjust the directions of foreign investment according to the necessity of economic development of China.

Company Incorporation in China

Wholly Foreign Owned Enterprise

When targeting direct control over payments/invoicing operations in China, the type of structure required is a Wholly Foreign Owned Enterprise (WFOE, sometimes also referred to as WOFE).

Sales Office

When a foreign company wants to maximize control of its staff via its own HR, legal, and administrative departments, the Sales Office is the appropriate solution.

Representative Office

When a foreign company wants to maximize control of its staff via its own HR, legal, and administrative departments, the Representative Office (RO) is the appropriate solution.

Joint Venture

The Joint Venture can conduct business in China as a normal Chinese company, under the terms and conditions of the partnership regarding profit sharing, technology ownership, and operational control.

Wholly Foreign Owned Enterprise

Wholly foreign-owned enterprise (WFOE) is the most common form of business entity since it allows foreign investors to control the business of the WFOE

Registration and formation

Wholly foreign-owned enterprises (WFOEs) must be filed (or approved by) and registered with the Chinese authorities, including:

The Ministry of Commerce (MOC).
The National Development and Reform Commission (NDRC).
The State Administration for Industry and Commerce (SAIC).
Local authorities.

Reporting requirements

The PRC Company Law was revised and came into force on 1 March 2014. The new law replaced the annual inspections of WFOEs’ financial books with an annual reporting system. WFOEs must submit their annual report for the previous year to the relevant government authorities. The cost of annual reporting is minimal.

Registered capital

The new Amendment of Company Law abolished the statutory minimum registered share capital requirements for Chinese companies. However, there are minimum capital requirements for companies operating in certain regulated sectors, such as financial leasing and telecommunications.

Non-cash consideration

Capital contribution can be in non-cash consideration, such as industrial property rights, equipment, land use rights and equity.

Management Structure and Key Liability Issues

Management structure

The shareholder/shareholders’ meeting is the highest authority of a wholly foreign-owned company (WFOE). The general manager is its top executive and is normally nominated by the shareholders and appointed by the board. The general manager is in charge of the WFOE’s daily management.

Management restrictions

There are no specific restrictions on foreign managers.

Directors’ and officers’ liability

Directors assume fiduciary duties and must not act against the WFOE’s interests.

Parent company liability

A shareholder’s liability is limited to its contribution to the WFOE’s registered share capital. However, in certain cases, the corporate veil can be pierced.