Company formation in mainland China may initially seem straightforward due to efforts to streamline and simplify the process over the past decade. However, for overseas investors, the differences in the legal system and business environment can still be confusing. As a result, many investors seek assistance from experienced consultancies or law firms specializing in corporate law. These professionals provide guidance and compile a list of required documents to facilitate the preparation process.
Here is a typical list of documents we provide to our clients, which often leads to further correspondence for clarification. Based on these correspondences, we address common client questions as follow:
1. Shareholder Information
For a company investor, provide the Certificate of Incorporation, Articles of Formation, or an equivalent document certified by the Notary Office, and then legalized by Chinese embassy. However, after China’s participation in the Hague Convention of 1961 early November of 2023, legalization of documents in Chinese embassy is not needed anymore (For more information, you may check our previous post to know more: China’s Accession to the Hague Convention of 1961 Simplifies International Document Authentication )
For an individual investor, the original passport is required (certification is unnecessary if there is a recent entry recording).
2. Passport Copies and Authorization Statements
Submit passport copies of the company’s Legal Representative, Manager, Director, and Supervisor, accompanied by related statements of authorization by the shareholders.
The Legal Representative can be either the Manager or Director, but neither the Manager nor Director can be the Supervisor.
3.Registered Capital
There is currently no threshold for the amount of registered capital, and there is no deadline for capital contribution.
However, it is not advisable to claim a large capital injection without following through. Please refer to our previous post for further analysis.
Note that the registered capital amount should be in Chinese Yuan (RMB).
4.Business Scope
The business scope refers to the current and future activities of the company. It is important to clearly define this scope.
We will help our clients to choose the accurate standard expression as long as our clients provide detailed information about their intended business activities, such as selling products in China or exporting specific electronic applications from China, then we will define it as “international trade”.
It is recommended to include a broader business scope as long as it remains related to the main business, allowing for more operational flexibility.
5.Proposed Chinese Names
Prepare three to five proposed Chinese names for the China company, as the company name needs to be applied for initially.
Keep in mind that there are restrictions on company names. You may consult with us to determine what names can and cannot be used while bear in mind the following rules:
* Official company names should use standardized Chinese characters.
* Company names should consist of more than two Chinese characters.
* The industry should be indicated in accordance with the company’s main business and national economic industry classification standards.
* The organizational form should be indicated in the company name in accordance with the law.
* Company names must not violate the law, public order, good customs, mislead the public, or have other adverse effects.
6.Office Address and Documentation
Provide a physical office address, along with leasing contracts or a certificate of real estate ownership to validate the office location.
Vertical addresses are not allowed in China, and the size of the office will be a factor in approving work permit applications for employees. Shared offices are acceptable for setting up a company.
7.Articles of Association
The Articles of Association (or bylaw) are important document that outline the internal regulations and structure of the company. We will assist in preparing the Articles of Association after thoroughly understanding the shareholders’ intentions.
It is essential to note that the above list of documents is not exhaustive, and additional documents and procedures may be required based on specific circumstances and local regulations.
The company formation process involves legal and administrative complexities that necessitate careful attention and expertise to ensure successful establishment and compliance. Before starting the process, it is recommended to consult with a trustworthy consultant who can guide investors through the entire process, ensuring all legal requirements are met and facilitating a smooth and successful company formation.
