Company Incorporation Step by Step: China
23/07/2020 — by Celestine Loh
This article covers the main points on registering a company in China. Read on for details on China’s requirements, procedures, and the estimated timeline to register a company.
Minimum Setup Requirements to Register a Company in China
There are several different business structures to choose from in China when setting up a business. The process is a complicated and requires careful attention to the various steps.
- Directors – 3 to 13
- Chairman – 1
- Deputy Chairman – at least 1
- Address of place of business
- Legal Representative of Company
The entire process takes approximately 2-3 months to complete as China requires comprehensive documents for the full application.
Step 1: Pre-register your Chinese Business Name
There are many businesses in China and it is therefore suggested to have in preparation at least 6 proposed business names when applying for the pre-registration process.
To get the company name, you should seek approval from the local district Administration of Industry and Commerce (AIC) to ensure that your name does not conflict with others in operation.
Approval can take between two and fifteen days depending on where you want to open your business.
You will have to decide the official place of business, i.e. the district and official business address.
Step 2: Certificate of Approval
Once the business name has been registered, you must apply for the certificate of approval issued by the district-level AIC.
As mentioned, it requires much documentation. Therefore, it is important to prepare beforehand in order for it to be as smooth and hassle-free as possible.
The main documents required are:
- Approved business name
- A valid office address
- Identification details of the company’s legal representative
- Identification details of the company’s supervisor
- Description of business scope
- Shareholder information
- Official notary documents of the shareholders
- Articles of Association
- Amount of registered capital and total investment
- A feasibility study. This is to prove to the authorities that the company is feasible and needs to include a comprehensive business plan and a budget.
All of the above documents must be prepared beforehand to be submitted in order to receive the Certificate of Approval.
Step 3: Obtain Business Licenses
This is the most important step in incorporating your company. This step has also been streamlined to a one-stop, “5-in-1” registration application process. This application when approved by the district-level AIC, will issue out 5 business licenses which basically bring your company into official existence. You should prepare the same documents as in Step 2 as the AIC might call for selected documents depending on the type and scope of your business.
The licenses issued are:
- Business License
- Organisation Code/ Organisation Registration Certificate
- Tax Registration Certificate
- Social Security Registration Certificate
- Statistical Registration Certificate
Step 4: Creating your Company Stamp
After obtaining the licenses, it is crucial to also have an official company stamp created. The company stamp will be used on all official documentation. In order to register for a company stamp, several documents like certificate of approval and business licenses need to be prepared.
All financial statements and business tax returns must be filed monthly in the Chinese language. All companies must submit the annual report from the year before to the State Administration for Market Regulation (SAMR). The period to do so is from 1st January to 30th June.
Corporate Tax Requirements
China’s tax structure for companies depends on the type of business activities. On average, the standard tax rate is 25% but if it qualifies under the China government business scheme, it can be reduced to 15%.
Annual General Meeting
All China-registered companies must hold their Annual General Meeting for each financial year. The period it should be held depends according to the type of company structure it adopts.
For private companies or companies limited by guarantee, it must be held within 9 months after the end of its accounting year.
For any other company falling outside of the above category, it must be held within 6 months after the end of its accounting year.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.