China Company Incorporation
Business Limits for the Foreign Company in China
In China, the business scopes of a company in all industries are limited strictly and precisely. The foreign companies can only trade or start doing business within its permitted operation items that are indicated on the business license. If you want to expand your business scopes, the further modifications to the business license has to apply for and obtain the permission from the related government authorities. A instant way to get a completed license is to consult with the Registry in advance. For an instance, in incorporating a consulting company, the business operation scopes may consist of investment consulting, international economy consulting, trade information consulting, marketing consulting, corporate management consulting, technology consulting and so on if you consult with them in advance.
Foreign enterprises in China are classfied into three categories. They could be a foreign joint ventures, Sino-foreign joint ventures and wholly foreign-owned enterprises ("WFOE"), respectively. As there are some restrictions with regard to the trading items for the foreign companies, in order to clarify the details, the government regulated the law of "Catalogue of Industries for Guiding Foreign Investment" and " The Catalogue of Priority Industries for Foreign Investment in the Central-Western Region" to identify the permitted and prohibited industries. Generally, the industries in China are classified into four categories, which are encouraged, permitted, restricted and prohibited, respectively. Except for the encouraged, restricted and prohibited categories that are specifically listed in the" Catalogue of Industries for Guiding Foreign Investment", the others are allowed to be invested by the foreigners.
To incorporate a foreign company in China, you should satisfy the following basic requirements:
I. Comply with the minimum registered capital requirement.
II. Have a legal address.
III. Comply with the industry’s regulations.
The requirement for the capital payment:
I. Payment in two installments: in the first phase, more than 15% capital should be paid no later than 3 months after obtaining a license. The rests have to be paid within 2 years.
II. One-time payment: the capital should be paid within 6 months after the business license is issued.
The Incorporation Procedures for the foreigners
1. Application for a license
- The first step: Make an application for a name check.
- The second step: Prepare the "Feasibility Report” and "the Articles of Association" to get the approval.
- The third step: Have a registration to the local Registry.
The company may apply for the business license within 30 days after receipt of the approval from the Registry. Normally, the local Registry will issue the business license within 10 working days after they received the complete documents from the applicant. The issue day of the business license is the official establishment date of the enterprise.
2. Capital Certify
When the investors fully paid the capital, the following documents should be prepared for an attestation by the Mainland’s Certified Public Accountant.
(1) Application report, Feasibility Report and Approval documents from the related authorities.
(2) Agreements, Contracts and Articles of Association.
(3) Proof of ID of the investors and accounting report.
(4) Proof of ID of the representatives of the company.
(5) The name approval notice.
(6) A copy of the business license or temporary business license.
(7) The bank’s confirmation documents and payment receipt.
(8) The list of the properties if the contribution is in kind without cash.
(9) The certificate or agreement of intangible assets, patent, trademark and land use right if contribution is in kind without cash.
3. The follow-up procedures after obtaining a business license
After receiving the business license, the company has to get the following licenses or certificates from the related authorities in order to be a legal entity in China:
(1) Technical Supervision: To get the "organization code number".
(2) Tax authority: To get a "certificate of tax registration".
(3) Department of Finance: To get "certificate of finance registration".
(4) Foreign Currency management authorities: To get a "certificate of Foreign Exchange Registration"
(5) Police Authority: Prepare "the seal and stamp seal " and the" foreigner working visa" for the registration.
(6) Labor and Social Security Bureau: For the social security registration.
(7) Customs: For a Customs registration.