For an incorporation of an entity in China, there are many procedures, legal documentation and various governmental requirements. One of the documents to be submitted for the purpose of registration of a WFOE is the duly legalized Certificate of Incorporation or identity document of the shareholder of the WFOE.
In accordance with the Company Law of the PRC, the board of directors established by a limited liability company to be composed of 3 up to 13 members. However, for a limited liability company with a relatively small number of shareholders or for a limited liability company relatively small in scale, it may appoint one executive director only and does not have to establish a board of directors.
Procedures for Approval of Permanent Representative Office Established in Shanghai by Tourism Enterprises, Tourism Market Management Department of Shanghai Municipal Tourism Administrative Commission. Verification of the application shall be completed by Shanghai Municipal Tourism Administrative Commission within 30 working days after acceptance. If approved, it shall be submitted to the National Tourism Administration of P.R.C. for approval.
The head office of a representative office (RO) shall apply for deregistration upon the occurrence of the following events: (1) the head office decides to close down its RO in China; (2) the RO will not continue its operation upon the expiration of its residence in China; (3) the head office ceases to exist; (4) the RO has been ordered to close down in accordance with the law. The RO shall apply for deregistration with various registration authorities involved
China encourages foreign investors to invest in China, and with the continuous updating of the Special Administrative Measures for Foreign Investment Access (Negative List), restrictions on foreign investment access have been liberalized or cancelled in many investment areas. On March 29, 2022, the State Council of China revised and issued the latest Administrative Provisions on Foreign-Invested Telecommunications Enterprises, which comes into effect on May 1, 2022.
Equity joint ventures are the second most common manner in which foreign companies enter the China market and the preferred manner for cooperation where the Chinese government and Chinese businesses are concerned. Joint ventures are usually established to exploit the market knowledge, preferential market treatment, and manufacturing capability of the Chinese side along with the technology, manufacturing know-how, and marketing experience of the foreign partner.
Social organization refers to a non-profit organization (“NPO”) formed voluntarily by Chinese citizens to carry out activities in accordance with its articles of association to realize the common wishes of its members.
A limited liability company may set up a board of supervisors, which shall comprise at least 3 persons. A limited liability company, which has relatively less shareholders or is relatively small in scale, may have 1 or 2 supervisors, and does not have to establish a board of supervisors. The supervisor is also appointed by the investor.
Under China’s Company Law and Administration of Registration of the Scope of Business of Enterprises Provisions, a company’s business scope shall be specified in its Articles of Association and be registered with the registry office in accordance with the law. Unlike other countries, a company registered in China can only engage in operation within its business scope.
As China’s strength in the global economy continues to grow, businesses need to consider the prospect of establishing operations within its borders. This article provides general information on establishing a Foreign Invested Enterprise (subsidiary) by foreign investors, to help provide guidance and demystify the process.