By Shelia Z Smithson 

Forming a company in China is the first huddle in the process of transacting business in China. If you set up a company using the wrong structures, it can cost you. Failing to acquire the correct license or permit for your business can result in a fatal blow. If your company does not collapse, its ability to expand and become successful can be greatly impeded.

China laws allow a hundred percent foreign company ownership. However, it heavily regulates and limits foreign-owned companies’ activities. Such companies can only transact in the business operations listed on their company license. The amount of capital required by a foreigner to commence any China company formation can be determined by the firm’s location and its business operations.

Obtaining a Business License in China

You need to complete an application form to obtain your registration certification. Other necessary documents include:

  • A lease or any other document that can act as proof of your company’s office.
  • A notice of approval showing your company name.
  • An appraisal report or capital verification certificate.
  • Representation authorization documents.
  • The identification document of your officers and your share holders identity cards.
  • Articles of association obtained from each share holder.
  • Identification and appointment documents of your company’s legal representatives.
  • Identification and appointment documents of your directors, officers and supervisors.

If your initial contributions are in the form of non monetary assets then documents that certify transfer of the relevant property titles of these assets are required. Other documents may be required depending on the issuing authorities.

Quality and Bureau Code Certificate

You must apply for your company’s organization code certificate in a period of thirty days upon obtaining your business certificate. Your application form must be completed and filed with the Shanghai organization code management center. This is a branch of the Quality and Technology Supervision Bureau. Other supporting documents include a copy of the legal representative’s identity card and the original and a copy of the business license.

Local and State tax Registration

The procedures for tax registration have become simplified since 2004. This followed the implementation of the tax registration administration measures which were conducted by the State Taxation Bureau. Two taxation authorities now exist; these are the Local Taxation Bureau and the State Taxation Bureau.

However, as the founder of a company, you are required to file tax registration just once to any of these authorities. The stipulated time limit is only 30 days from the date that you receive your registration application. You then need to the approval of the authorities to make your company seal.

In case all shareholders in the China company formation are individual investors, then the registration file will have a duplicate business license. This will be in addition to by your legal representative’s identification card. If the registration is approved, you will receive a notice making the company a limited liability company. You need to settle payment for the fee for your organization code certificate. The issuing authority is the Quality and Technology Supervision Bureau. You can then obtain the company seal.