The terms “Wholly Foreign-Owned Enterprise” or “WFOE” used in this offer apply to commercial or retail activities and mean a limited liability company incorporated by a foreign individual or corporation.
The type of company commonly used by foreign investors is a Wholly Foreign-Owned Enterprise (WFOE). It is a limited liability company engaged in activities such as retailing/wholesale, import and export of certain goods in China.
A WFOE can only conduct the activities that are specified in the company’s Articles of Association and Business License.
The company name must be approved in advance. It can be reserved for up to 6 months.
The name of a company registered in Shenzhen must follow the format “Company name + City name (Shenzhen) + Principal activity + Organizational legal form (“Limited”). For example, GSL (Shenzhen) Trading Limited.
In China, there are currently no legislative requirements for the minimum share capital of foreign-owned companies, but the practice is usually different from that. When registering a company, it is necessary to specify both the total investment (the size of share capital) and how and when the capital is going to be deposited.
A company must have a registered office in China. The WFOE’s office must be located in a commercial building and must be rented for at least 12 months.
Shareholders can be both individuals and legal entities. Shareholders may be of any nationality other than Chinese.
The Board of Directors consists of at least 3 members appointed for a term not exceeding 3 years.
If a limited liability company has a “relatively small” number of members or “relatively small” investment, the Board of Directors can be replaced by an Executive Director who will perform the Board’s duties as a single person.
The director may be of any nationality and any residency. The director cannot be a legal entity (company).
Their main duty is to exercise control over the actions of the company’s management (the Board of Members and the Board of Directors) to ensure compliance with the Chinese legislation and protection of the rights of all owners.
In practice, the position of a supervisor (member of the Board of Supervisors) is rather a formality, because a wholly foreign-owned enterprise normally does not have a conflict of members or contradictions between the investors and the management.
A supervisor may be of any nationality.
Some provinces and cities may have additional mandatory positions, such as a financier or finance director.
This person, as a rule, is the signatory to the bank account and conducts all the necessary financial activities of the company, except accounting(a separate accountant is engaged for that purpose, usually an outsourced accountant).
The incorporation of a company with obtaining a license and opening an account takes about 6–8 weeks (unless the government authorities have any questions or request any confirmations/clarifications).
To proceed with company incorporation, the following information is required to be provided:
Payment for services of Chinese company registration is made on a stage-by-stage basis (see details below) and is tied to the stages of the registration process:
STAGE 1.
Compliance check* of one individual in the company structure – USD 350.
It is necessary to provide documents for directors / shareholders / beneficial owners / attorneys:
At the meeting, it is necessary to produce the original documents for verification or provide their notarized copies.
Incorporation of a Hong Kong company (HK company) – USD 2 500.
The Director/Shareholder of the company will need to provide and sign a number of documents, send scanned copies of the signed documents for approval and then dispatch the originals to Hong Kong (HK).
At this stage, we also select and check all company names, both for a Hong Kong and a Chinese company.
Time frame for the company registration: up to 5 business days after scanned copies of the signed documents are sent to HK.
Subtotal: USD 2 850
*Compliance fee:
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Payable in the cases of:
- incorporation of a company, - renewal of a company, - liquidation of a company, - transfer out of a company, - issue of a power of attorney to a new attorney, - change of director / supervisor / finance controller / shareholder / beneficial owner, except the change to a nominee director / controller. |
USD 350 (standard rate, includes the check of 1 individual)
+ USD 150 for each additional individual or legal entity if such legal entity is administered by GSL + USD 200 for each additional legal entity if such legal entity is not administered by GSL USD 450 (rate for high-risk companies, includes the check of 1 individual) USD 100 (signing of documents) |
STAGE 2.
Legalization of the HK company’s documents – USD 3 950.
The director of the HK company will need to have a video call with a Hong Kong lawyer, sign documents during the video meeting and then send them to Hong Kong, after which the Hong Kong lawyer will certify them.
Time frame: up to 10 business days from the receipt of signed documents in Hong Kong (this time frame is also affected by the general workload of notaries in Hong Kong since only a Chinese notary can do the certification!).
Subtotal: USD 3 950
STAGE 3.
Incorporation of a Chinese mainland company (WFOE) – EUR 19 000.
After the legalization is completed, the HK company’s documents are sent to China, and we proceed with incorporation.
What is included:
Time frame: up to 10 business days from the receipt in China of documents from HK.
Subtotal: EUR 19 000
STAGE 4.
Registration of WFOE as Foreign Trade Operator with the Commerce Bureau – EUR 990.
Time frame: 5 business days.
Subtotal: EUR 990
STAGE 5.
Obtaining an import-export permit/license – EUR 1 250.
Time frame: 10–15 business days.
Subtotal: EUR 1 250
STAGE 6.
Bank account opening – EUR 3 950.
Preliminary work will be done with the bank, after which the director will need to make a personal visit to the bank for finalizing the account opening.
Time frame: 5–10 business days (this time frame includes the opening of a USD account; approval of a foreign currency account may take a little longer due to the routine processes of the China’s financial regulator).
Subtotal: EUR 3 950
STAGE 7.
Change of the company director to your appointee or appointment of a previously selected local salaried director – EUR 990 (you may be required to send the original of your appointee’s passport if he/she is a Chinese non-resident).
Time frame: 5–10 business days.
*The average salary of a director in China is CNY 3 500 – CNY 7 000 and depends on the duties performed.
Subtotal: EUR 990
TOTAL for the start of a turnkey project: USD 6 800 + EUR 26 180
STAGE 8. SUBSEQUENT ADMINISTRATION OF THE COMPANY
The cost of mandatory company support (the first 3–6 months):
Operational assistant for interaction with the bank, accountant and tax office: EUR 1 200 / month.
For successful cooperation between the accountant, the bank and the client and for the prompt resolution of various issues, a WeChat group will be created which will include the director of the company, the accountant, the representative of the bank (where possible) and the English-speaking and Chinese-speaking assistant provided by us who will help solve various matters.
Payment is made by making a 3-month deposit / 6-month deposit: EUR 3 600 / EUR 7 200 respectively.
Accounting services: EUR 300 / month.
Payment is made by making a 3-month deposit / 6-month deposit: EUR 900 / EUR 1 800 respectively.
Total: 3 months – EUR 4 500 / 6 months – EUR 9 000
ENTIRE PROJECT TOTAL + 3-MONTH SUPPORT*: USD 6 800 / EUR 30 680
ENTIRE PROJECT TOTAL + 6-MONTH SUPPORT*: USD 6 800 / EUR 35 180
*the project’s cost includes the following dispatches of documents:
Payments under this offer are structured as follows:
1 PAYMENT: Stage 1 – USD 2 850
2 PAYMENT: Stage 2 – USD 3 950
3 PAYMENT: Stages 3, 4, 5, and 6 – EUR 25 190
4 PAYMENT: Stages 7 and 8 – EUR 5 490 / EUR 9 990
Upon incorporation of a company, a set of constitutive documents[1] is formed which includes:
After a WFOE is officially registered, it must comply with various monthly, quarterly and annual filing and reporting requirements. These filing requirements include filing monthly tax returns, filing an annual audit report which must be issued and signed by a local audit firm (Certified Public Accountant / CPA), filing annual tax returns, filing an annual return with the Business Licensing Bureau, etc. If any of these annual obligations are not met in a timely manner, a WFOE may be subject to penalties or risk its license being suspended or revoked by the Administration for Industry and Commerce.
A WFOE must keep accounts in a timely manner, file a monthly VAT return, file a monthly personal income tax return in respect of its employees, file a quarterly corporate income tax return, and file an annual corporate income tax return (at the end of the financial year).
A WFOE must prepare audited accounts under the law governing joint stock companies. A copy of the audited financial statements must also be filed with the tax office. Audited financial statements are not available to the public or foreign authorities, except those of listed companies. We can provide full post-incorporation support such as accounting, audit and tax filing for the WFOE and its employees.
[1] The set of documents may differ depending on the company’s specific structure and type of activity.