1.About WOFE
2.The Advantages of WOFE
3.Registration Procedures
4.Documents Required
Wholly Owned Foreign Enterprises (WOFE)
About WOFE
The registered capital of a Wholly Foreign Owned Enterprise (WFOE) should be subscribed and contributed solely by foreign investor(s). A WFOE does not include branches established in China by foreign enterprises and other foreign economic organizations. The Chinese Laws on WFOE do not have a clear definition of the term of "branches". The term of "branches" should include both the branch companies engaged in operational activities and representative offices, which are generally not engaged in direct business activities. Therefore, branches and representative offices set up by foreign enterprises are not WFOE.
The WFOE is a Limited liability company wholly owned by the foreign investor(s). With China's entry into the WTO, more and more investors prefer to set up WFOE other than other forms of enterprises.
Because WFOE has its own advantages, it has been the most popular enterprise form for foreign investors to set up. In general, the advantages of a WFOE include, but not limited to: Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner; Ability to formally carry out business rather than just function as a representative office and enjoy the right of issuing invoices to their customers in RMB (Chinese Currency) and receiving revenues in RMB; Capability of converting RMB profits to US dollars for remittance to their parent companies outside China; Protection of intellectual know-how and technology; Greater efficiency in operations, management and future development.
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The Advantages of WFOE
The advantages of establishing a WFOE, compared with other types of enterprises, include, but not limited to:
◆ Independence and freedom to implement the worldwide strategies of its parent company without having to consider the involvement of the Chinese partner;
◆ Ability to formally carry out business rather than just function as a representative office and being able to issue invoices to their customers in RMB and receive revenues in RMB;
◆ Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
◆ Protection of intellectual know-how and technology;
◆ No requirement for Import / Export license for its own products;
◆ Full control of human resources
◆ Greater efficiency in operations, management and future development.
Important
One of the most important issues in WFOE application is business scope. Business scope needs to be defined and the WFOE can only conduct business within its approved business scope, which ultimately appears on the business license. Any amendment to the business scope requires further application and approval. Inevitably, there is a negotiation with the approval authorities to approve as broad a business scope as is permitted.
Generally business scope includes investment consulting, international economic consulting, trade information consulting, marketing and promotion consulting, corporate management consulting, technology consulting, manufacturing, etc.
With China's entry into WTO, more and more business is open to WFOE especially in trade, commercial and wholesale businesses.
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Registration Procedures
Foreign companies are not allowed to directly submit the application documents to the relevant authority. They must retain a PRC entity that is authorized or permitted by relevant authorities to act as a sponsor. The sponsor will submit all the documents to the examination and approval authority on behalf of the foreign enterprise. Procedures to set up a Wholly Owned Foreign Enterprise in Shanghai are as following:
Step1: Company name checking and registration (about 5 working days)
Step2: Approval Certificate (about 15 working days)
Step3: Business License (about 7 working days)
Step4: Organization Code License (about 1 working day)
Step5: Tax registration(about 7 working days)
Step6: Open an RMB bank account (about 3 working days)
Step7: Register Foreign Currency Certificate (about 1 working day)
Step8: Capital verification(about 7 working days)
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Documents Required
The documents required for setting up a WOFE are listed as below.
1. If the investment is made by a foreign company, the Business License notarized by notarization office and attested by the Chinese Embassy in that Country is needed (The original passport is needed if the investment is made by an individual/ individuals);
2. Original copies of the Credibility Letter(Bank Reference Letter to prove that the investor has a good financial credibility) from the foreign company’s bank;
3. The Photocopy of the ID card or passport of the Legal Representative of the foreign company(not needed if the investment is made by an individual/ individuals);
4. The resume and 2 one-inch (headshot without hat or accessories) photos of the Legal Representative of the proposed WOFE;
5. 5 proposed Chinese company names for the proposed WOFE;
6. The business scope of the proposed WOFE;
7. The Chinese version of all documents mentioned above;
8. The address of the proposed WOFE, 2 original copies of the house leasing contract, a photocopy of the Certificate of Estate Property and a photocopy of Record-Keeping Certification of the House Leasing.
Important
Other documents needed are subject to the type of the WFOE. Three main types of WFOE are trading company, manufacturer and consulting.company.
Registered Capital
Generally, the parent company will need to invest a minimum registered capital of USD140,000. The registered capital can be composed of cash and equipment to be used for production by the WFOE.
Our Services
We provide one-stop service for foreign companies that would like to set up wholly foreign owned enterprises in Shanghai. Our services include but not limited to:
• Introduce laws,policies and WFOE application procedures;
• Draft application letters, standard articles of association, standard feasibility study, and providing samples for necessary documents such as board resolution, bank reference letter, etc.;
• Research and obtain approval for the name of the WFOE;
• Obtain approval certificates from various authorities;
• Perform all the necessary financial, tax, labor, banking, customs and other registrations;
• Open the bank accounts required;
• Obtain the necessary work permits and resident permits for the legal representatives, etc.
Other than the above -listed services, we also provide customized service upon request. With our broad network, we can provide the following services: sourcing for suitable office, sourcing for local staff and management, suggesting best salary structure , law consulting, trademark registration and protection, and other business related services. Fees will be quoted on a case-by-case basis.
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