China Company Setup Laws

China Company Setup Laws

• A lease agreement for a China office is required by foreign investors before China company setup. INCORP INTERNATIONAL provides shared office space for our Clients at US$750 per month to support China business formation. Chinese company offices must be located in a prime office premises pre-approved by local government and municipal authorities.
• In accordance with the China company setup, each China company must appoint i) at least one shareholder and one director ii) a Chinese legal representative and a Chinese board of supervisors.
• A Chinese legal representative must be appointed, according to article 38 of the Chinese company law, A Chinese legal representative can act on behalf of a firm to conclude contracts and submit reports to regulators. A Chinese legal representative has the authority of a director and shares some corporate liability
• The Chinese Company Law requires limited liability companies to have ‘the board of supervisors’ (made up by shareholders and employees) to serve as a government reporting body. The board of supervisors are legally obliged to report directors, supervisors, or senior officers to the relevant authorities, should there be a breach of the articles of association.
• The activities of a company setting up a company in China are restricted to those on its business license issued by the provincial government. Hence, it is critical for a foreign investor about to register a company in China to carefully prepare incorporation documents. To ensure the scope of business license matches the planned activities of the company, INCORP INTERNATIONAL handles all pre-incorporation documentation for Clients
• After the China business registration, monthly and quarterly financial statements must be submitted to the local authorities.
• A treaty whereby all Chinese financial institutions will legally disclose the holdings of all their American Clients to the authorities from 2015 was signed in 2014 by the US and Chinese Governments. Our American Clients must file the details of all their Chinese holdings with the IRS, as failure to do so will result in penalties of up to i) 10 years of imprisonment and ii) US$500,000 fine.
• All employers and employees must contribute to a pension fund. thus, employees will have to contribute a certain percentage of their salary to meet the local authorities requirements
• Three basic types of employment contracts are provided by the Chinese law: provides fixed-term contract, non-fixed term contracts, and contracts expiring upon completion of certain tasks.
• There must be a justified reason for termination within the employment term certain justifications that allow for cause of termination are stipulated in the Chinese law.
• The de-registration process can take a minimum of 6 months. INCORP INTERNATIONAL provides this service to our Client for US$1,250. Our Client maintains a resident company secretary and a legal registered office during this 6 months period.
• According to the Chinese Company Law, the minimum registered capital is between US$15,000 and US$140,000 depending on the industry and the province of registration. Our Client can pay up this capital in the following ways i) deposit 100% of this capital within 6 months of the date of incorporation or ii) deposit 20% of the registered capital within 3 months of incorporation date and the remaining 80% within 2 years after the date of incorporation. In order to verify that this capital is contributed in accordance to China Company Law The paid up capital must be audited by a certified public accounting firm in China.