Wholly Foreign-Owned Enterprise / WFOE is a form of a limited liability company, a 100% share in which is owned by foreign investors. In Shanghai, the minimum registered capital shall be no less than CNY 500 000 and shall be paid within 2 years from the date of incorporation.
However, it is now possible to register a WFOE in Shanghai Free Trade Zone / SFTZ in China, where registration and capital requirements are greatly simplified. That is the kind of company we would like to draw your attention to.
The following types of companies are available for registration in the Shanghai Free Trade Zone:
The first type will be suitable for exporting goods from China.
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Name of the Company
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- must be in Chinese (English names are used for reference only)
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Director
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- no residency requirements (may be either a resident of China or a foreign person)
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Legal Representative
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- is responsible for the management and development of the company
- is responsible for all legal matters related to the company's activities - is the manager of the bank account - may be the same as the director |
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Shareholder
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- foreign individual or legal entity
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Business Activity
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- should be determined prior to company registration, as it affects the choice of name, the amount of capital, the process of registration and obtaining licenses
- some types of activities require a pre-approval license (education, logistics, medicine, food industry) |
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Share Capital
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- recommended share capital amount for trading companies is USD 50 000 – 100 000
- the amount shall be declared upon registration and shall be paid in installments or in full (if possible or necessary) |
The procedure of registration and obtaining a license takes approximately 3 months (the period depends on the desired company structure, type of activity and it can take more time).
During the visit to Shanghai, the agent will arrange the submission of documents for opening bank accounts (basic, FTE), so one trip will be enough.
The company registration steps are as follows:
1. It is necessary to determine:
2. Payment for services
3. To register a company with a shareholder – legal entity incorporated in Hong Kong, the following documents are required:
3.1 For the Shareholder:
3.2 For the Legal Representative:
3.3 Copy of the Director's passport.
4. Checking the availability of the company name in the local companies’ register
Once the name of the future company has been checked, we can move on to preparing the documents for incorporation.
All documents must be in Chinese or with a certified Chinese translation.
At the end of registration of the WFOE, a set of constitutional documents* will be prepared, containing:
Certification of documents and apostilles, if necessary, shall be paid for separately.
*The contents of the set of documents may vary depending on the company’s structure and activity.
It is advisable to provide the bank with basic supporting documents concerning the company's activities (contracts, invoices, reference letters from partners, proof of address, e.g. utility bill). Sometimes the bank may ask for a letter of intent to be signed by the client or supplier, realizing that the company is brand new and has not yet carried out any activities. Nevertheless, the banks' instructions usually require the client to provide a contract or invoice. It is acceptable to send scanned copies of the supporting documents after the meeting with the bank’s officer.
Prior to obtaining Internet Banking access, payments may be made by sending payment instructions concerning incoming and outgoing transactions to the bank by mail. Such instructions shall be signed by the director or persons designated as signatories and shall bear the company seal.
There are banks with the possibility to connect a customer's account to a full-fledged Internet bank. However, many banks have restrictions on the use of the account: you can only make transactions within the territory of China.
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Services
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Fees
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Incorporation of a WFOE (including government fees, preparation and provision of original constitutional documents of the company, as well as the company seal)
NOT including the following expenses: |
EUR 5 500
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Renting a registered office address
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EUR 3 500 / year
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Nominee Director – citizen of China
(a person that will assist in signing documents and do other activities) |
EUR 6 500 / year
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Financial Controller – citizen of China (if required)
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EUR 3 500 / year
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Registration of the WFOE with the Ministry of Commerce of China
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EUR 990
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Obtaining an Import & Export License
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EUR 1 250
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Assistance in opening a bank account
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EUR 3 950
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Working with the Shanghai Free Trade Zone administration
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EUR 3 000
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Accounting service
To be deposited on a quarterly/half-year basis: EUR 900 / EUR 1 800 accordingly. |
EUR 300 / month
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Operational assistant for interaction with the bank, accountant and tax authority**
To be deposited on a quarterly/half-year basis: EUR 3 600 / EUR 7 200 accordingly. |
EUR 1 200 / month
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Compliance fee
Paid in case of: |
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) |
*The fees are valid as of August 2024.
**In order to have successful cooperation between the accountant, bank and client, as well as to efficiently deal with various issues, a WeChat group will be created, in which the company director, accountant, bank’s representative (if possible) and the English- and Chinese-speaking assistant (provided by us) will communicate and settle various issues.