Overview of Company Registration in China
When it comes to exports of goods like electronics and other items, China is the world’s exporting powerhouse. It has the best facilities in the world for product manufacturing because to its seamless manufacturing capabilities. Until now, multinational corporations like Apple and Microsoft have looked to China for their manufacturing resources. Another reason why businesses favour investing in China is the availability of cheap labour. As a result, businesspeople and investors register their companies in China.
Overview
With a GDP of roughly USD 14 trillion, China is regarded as having the second largest economy in the world. In addition, with 1.34 billion people, China has the greatest population in the world. The nation is situated adjacent to other developing nations, including Indonesia and India. Therefore, a businessperson would want to proceed with China company registration. Due to China's affordable labour, many businesses desire to establish local manufacturing facilities there. In addition, purchasing various types of raw materials and supplies is affordable when compared to other nations. Consequently, businesses favour investing in China. In terms of global infrastructure and chances for research and development, China's resources are quite competitive. Investors who want to open a business in China can take advantage of all the aforementioned perks.
Advantages of Chinese Company Registration
- Emerging Hubs in China- After America, China has the second-largest economy in the world. This makes it a suitable location for entrepreneurs and venture capitalists to conduct all types of investment activity.
- Low-cost Labour- In China, security labour is inexpensive. When compared to other nations, China offers a daily wage that is somewhat lower. Consequently, businesses can operate more quickly while investing less in labour. In addition, professionals give services around-the-clock, making it simple to perform various tasks.
- Asia's largest markets- Asia's greatest economy is that of China. Due to many incentives provided by the government, it has grown to become the greatest economy in Asia. When it comes to chances for foreign investment in China, the government is quite lenient.
- Import duties- There are many incentives connected to import levies on goods that are brought into the nation when Chinese companies import equipment. Chinese businesses now have greater options to gain from their investments in terms of added value. Without any tax repercussions in the US, American businesses can invest in China.
- Large-scale Resource Availability- China's manufacturing industries have access to energy and water for a variety of tasks.
Business Structures Used to Register Companies in China
Even if there are numerous advantages to starting a business in China, it is not simple to register a corporation there. This is because businesses must adapt to a fast-paced, constantly changing business environment. In addition, there are a number of industries with prohibitions on international investment. Therefore, it's crucial to pick a suitable structure before registering your company in China. The varieties of business structures for registering a corporation in China are as follows:
- 100% foreign-owned business- The owners of this Chinese limited liability business are foreigners. The concept of limited liability is one of the key advantages of creating this kind of corporation. The directors' and shareholders' liability are only capped at a certain level.
- Company for China Free Zone- The foreign investor may choose to invest in special economic zones while establishing a China Free Zone Company (SEZ). Typically, if a foreign investor needed to establish an export-oriented unit, they would think about founding this company (EoU).
- Equity Venture Company of China- Typically, this business is also referred to as an equity joint venture company, or EJV. Typically, a foreign investor would establish this type of business. Along with a foreign investor, the company would also have a Chinese shareholder who would own a set amount of the company's stock.
- Branch Office- Typically, corporations that are reregistered outside of China are not permitted to open branch offices. Establishing a branch office in China is only permitted for businesses that are organized as wholly foreign owned enterprises (WFOE) or China Equity Venture companies.
- Representative Office- The Chinese government permits foreign businesses to establish many kinds of representative offices there. Typically, creating this type of office requires prior clearance from the State Administration for Market Regulation (SAMR).
- Offshore Business- A company incorporated in Hong Kong SAR is an offshore firm. This firm may be established because Hong Kong is still a part of China. The tax imposed in Hong Kong, however, is distinct from the tax imposed in China.
Qualification Standards for Chinese Company Registration
A potential applicant must meet the following requirements in order to be eligible for the company registration process in China:
- Directors Required- The company needs a minimum of 3 to 13 directors.
- Chairman and Deputy Chairman- There must be a chairman and a deputy chairman for the company.
- Registered address for the place where the business is located- Business location must have a registered address for the company in order to conduct operations in China.
- Legal Representative- In order to complete the steps involved in registering a company in China, a legal representative must be designated there.
- Reserved Name- In addition to this, the company's name needs to be protected.
China's Company Registration Process
China has a variety of business models. Therefore, a suitable corporate structure must be chosen in accordance with the applicant's needs in order to complete the China company registration process. It typically takes two to four months to complete the registration process. The following steps must be taken in order to register a company in China:
Registration of a Chinese company name in advanceFirst and foremost, the applicant needs to reserve the company's business name. This is the initial action that the applicant must take. Therefore, the Administration of Industry and Commerce (AIC) permission would be necessary to ensure that the name does not clash with any existing names. The State Administration for Market Regulation is another avenue via which the name approval process can be conducted (SAMR). Once the applicant has reserved the name, the applicant may then submit an application for a business license. Normally, it would take about 15 business days to complete the name approval procedure. After this is completed, the applicant will need to select a location for the business' registered office.
Legal ObligationWhen the first stage is finished, there are compliances that need to be completed. The compliances that must be fulfilled are as follows:
- A local government authority must first pre-approve the lease agreement for the office in China. Municipal officials will also be a part in this.
- There is no minimum paid up capital requirement for applicants for company registration in China. To register a corporation in China, it is usually advantageous to have a particular amount of paid-up capital. The paid up capital would typically be greater than USD 20,000 depending on the sort of business conducted in China. However, depending on the type of business, different Chinese businesses may require different minimum paid-up capitals. The paid-up capital would typically be more if the business involves manufacturing. Typically, RMB 1,000,000 or USD 150,000 would be appropriate for this type of organization.
- In accordance with the criteria of the People's Republic of China's Companies Law, the capital of the company must be approved by a public accountant.
- The Board of Supervisors, one shareholder, one director, and one legal representative must all be chosen by the Company.
- If a foreign investor intends to register the business as a Wholly Foreign Owned Enterprise, they must register. The foreign investor enterprise filing might be used for this.
- To ensure that the firm complies with all regulations, a legal representative must be designated per Article 38 of the Chinese Companies Act. To manage the business of the company, a board of supervisors must also be chosen. The company's directors are accountable to the board of supervisors.
A certificate of approval must be requested once the business name has been registered in China for company registration. The following documents are required in order to obtain the certificate of approval:
- The company's name (As Approved)
- The business's registered office address
- The legal representative's ID
- The company supervisor's ID
- Information about Directors and Shareholders
- Shareholders' Notarial Documents
- The Memorandum of Association and the Articles of Association
- Company's Registered Capital
- A budget-based feasibility study
The applicant would then need to acquire the necessary business permits. The "five in one filing" approach, which enables the applicant to receive all business permits, is a commendable endeavour by the Chinese government. The applicant would be granted the following licenses:
- Business Permit
- Organization Registration Certificate/Organization Code
- Certificate of Tax Registration
- Certificate of Social Security Registration
- Certificate of Statistical Registration.
The business would next need to design an official stamp specifically for the business. All official documents would bear this company's stamp.
Corporate Bank AccountAfter completing all of the aforementioned requirements, the business must open a corporate bank account.
Requirements for Chinese Company Registration
A Chinese-incorporated corporation must adhere to the following regulations:
- Chinese-language financial statements must be filed. Such Statements must be submitted every month.
- The SAMR must receive the annual report. This needs to be done within the acceptable time frame (01 January to 30 June).
- Corporate tax is an expense for businesses. The business tax rate is 25%. The corporate tax rate is 15% for businesses covered by the Chinese Government Business Scheme, though.
-
An annual general meeting must be held by every company. Typically, private corporations have their annual general meetings nine months following the conclusion of the fiscal year.
-
The Chinese Accounting Standards must be followed by all businesses when updating their books of accounts. This has to be done every month.
-
A business must submit a quarterly corporate income tax return.
-
VAT Returns must be submitted on or before the fifteenth day of each month.
Documents Needed
The following papers are necessary for Chinese company registration:
- Name of the Company (As Approved)
- Identification of the legal representative
- The company's registered office address
- The directors, shareholders, and the company's supervisor Information
- Shareholders' Notarized Documents
- Feasibility study and budget for the company
- The articles of association and memorandum of association.
How to Contact Estabizz for Chinese Company Registration?
- Fill the form.
- Get a call back.
- Submit the required documents.
- Track the progress of your application.
- Get the expected results.
FAQs
- LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.
- The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name.
- The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.
- Further, no partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.
- Mutual rights and duties of the partners within a LLP are governed by an agreement between the partners or between the partners and the LLP as the case may be. The LLP, however, is not relieved of the liability for its other obligations as a separate entity.
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.
LLP form is a form of business model which:
(i) is organized and operates on the basis of an agreement.
(ii) provides flexibility without imposing detailed legal and procedural requirements
(iii) enables professional/technical expertise and initiative to combine with financial risk-taking capacity in an innovative and efficient manner
- Under “traditional partnership firm”, every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
- Under LLP structure, liability of the partner is limited to his agreed contribution. Further, no partner is liable on account of the independent or un-authorized acts of other partners, thus allowing individual partners to be shielded from joint liability created by another partner’s wrongful acts or misconduct
- A basic difference between an LLP and a joint stock company lies in that the internal governance structure of a company is regulated by statute (i.e. Companies Act, 1956) whereas for an LLP it would be by a contractual agreement between partners.
- The management-ownership divide inherent in a company is not there in a limited liability partnership.
- LLP will have more flexibility as compared to a company.
- LLP will have lesser compliance requirements as compared to a company.
Our Blog
PSARA LICENSE – Estabizz Fintech
GST DUES ( VOID PROPERTY TRANSFER ) -Estabizz Fintech
GST ( INSTALLMENT & RECOVERY ) – Estabizz Fintech
SEBI ( Surveillance of Transaction Alerts) – Estabizz Fintech
RESERVE BANK OF INDIA (Rules for payment companies outsourcing core activities) -Estabizz Fintech
RESERVE BANK OF INDIA( Guidelines for Appointment of Statutory Auditors of Banks, NBFCs) -Estabizz Fintech
RESERVE BANK OF INDIA ( Deadline for Current Account Notification) – Estabizz Fintech
RESERVE BANK OF INDIA ( Treatment of Inactive Trading account) -Estabizz Fintech
SEBI revises financial info filing formats for entities having listed non-convertible securities
SEBI notifies certification requirements for distributors, staff of portfolio management services
SEBI extends relaxations for compliance with rights issues.
SEBI extends relaxations for compliance with rights issues
SEBI extends deadline for investment advisers to conduct annual compliance audit
SEBI board okays steps to make M&As easier
SEBI proposes to revise settlement rules
SEBI approves framework for creating Social Stock Exchange
Scope of ED’s power to freeze bank accounts under Prevention of Money Laundering Act, 2002
