China’s huge market and increasingly sophisticated economic and political system has attracted a large number of foreign investors to invest. At present, the main foreign investments in China include foreign joint ventures, Sino-foreign cooperative, wholly foreign-owned and foreign-invested. The wholly foreign-owned enterprise has been favorite by the foreign investors with its simple management and self-financing.

What is a wholly foreign-owned enterprise?

Wholly foreign-owned enterprise (WFOE) is the corporate setting up in China according to relevant Chinese laws, which capital is invested by foreign investors, but does not include branches of foreign companies, enterprises, other economic organizations in China, such as branches, offices, representative offices and so on. In general, the organizational form of WFOE is a limited liability company. The liability of foreign investors for the enterprise is limited by the subscribed capital contribution amount, but WFOE can also be other forms of liability of certification, in which case, the responsibility of foreign investors on corporate is applicable Chinese laws and regulations.

Application requirements

According to the Implementation Rules for Enterprises with Foreign Investment Law of People’s Republic of China, the registered capital of the WFOE must adapt to its business scale, the proportion of registered capital and total investment shall comply with the relevant provisions of China. Investors of applying for a wholly foreign-owned enterprise can be a foreign enterprise legal person, also a foreign natural person. Conpak CPA has set up offices in Shenzhen and Shanghai, and has a thorough understanding of the Mainland’s foreign investment policy. In particular, we remind investors to apply for the establishment of wholly foreign-owned enterprises must be conducive to the development of China’s national economy. The Chinese government welcomes in particular the export of goods and technology advanced foreign-funded enterprises.

Providing information

Foreign investor establishes a foreign-owned enterprise should apply for the examination and approval authorities, and submit the following documents:

1. Legal business (personal investment passport) certificate by the local notary office and local foreign consular (Hong Kong company can be without certification);

2. Credit certificate issued by the Bank (including the number of corporate deposits and funds between settlement credibility);

3. Copies of proof of identity of the directors and others;

4. Delegate book of directors;

5. A copy of proof of identity, resume and photos of legal representative;

6. Proof of the use of company property (including a rental agreement, proof of ownership, etc.);

7. Application for the establishment of foreign-funded enterprises;

8. Feasibility study report;

9. The articles of association of the enterprise;

10. Other Information.

Registration Process

WFOE registration process involves multiple departments :

Company name search -> Prepare and send documents -> Handling PREPAID code ->Bid for business license – > Apply for organization code -> Apply for tax registration to IRD -> Handle other registration

Note: IRD = Inland Revenue Department

It should be reiterated that except for land, all of the investment of foreign-owned enterprise is privately owned by the foreign investors. The incomes of enterprise operations and management activities in accordance with the approved articles of China’s association, which are wholly owned and disposable by the investors after tax. In addition, when the enterprise is terminated, should be timely noticed to be liquidated in accordance with the statutory procedures. If you desire to set up a wholly foreign-owned enterprise registration in Mainland China or need more information, please contact us at any time.