Before operating a business in China, you must have a business license registered in mainland China
Register your company in 10 steps:
1) Select industry
Before registering a company, you will have to select the industry that best matches your business operations. This will also influence the business scope of your company. The most commonly registered industries include:
- Technology Co. Ltd
- Network Technology Co. Ltd
- Cultural Innovation Co. Ltd
- Trading Co. Ltd
- Advisory Co. Ltd
2) Business Office Address Rent Contract
An address is mandatory in order register your company. During the process of registration, you will need to provide a rent contract (minimum length of one year) with which you will register your company. Most office buildings provide such rent contracts, although depending on the location, you may have to make a deposit for it.
Before you sign the rent contract for your chosen address, you need to be careful in making sure that this office is eligible for address registration. Some addresses cannot provide this or may not be eligible for certain licenses.
3) Registered name of your company
Your official company name must be structured with the following components: the city, your company’s chosen name, your industry, and company classiffication.
Name of City – Company Name – Industry – Type of Company
For example: Hangzhou MyBusiness Technology Co. Ltd
Please note that the name of the company MUST be in Chinese.
Finding a good name which has not be used before by any other com- pany can be a daunting task, especially when you are trying to choose a name that matches your business, your branding, and appeals to a Chinese audience. Therefore, we strongly recommend that you complete this task AS SOON AS POSSIBLE when you start the process of registering a company.
4) Articles of Association
The Articles of Association is the “shareholder’s internal law” of your company. This document will include:
- Company Name and Address
- Registered Capital
- Legal Representative
- Business Scope
- Shareholder’s Name(s)
- Budget & Accounting Rules
- Investment Type, Amount & Timing
The Articles of Association should be in Chinese. The Chinese government can provide some templates.
5) Business Scope
The industry that you have selected will determine the flexibility that you have in choosing the business scope of your company. Your business scope includes what your company is legally allowed to do the products or services it is allowed to deliver. If you operate a business which is not included within your business scope, you will more than likely face multiple issues. Your chosen business scope will also permit you to deliver invoices “fapiao” regarding your business operations, so your clients/ customers can claim their expenses properly.
6) Shareholder Structure
This includes nomination of Board members, Supervisor, Legal Representative, etc.
You will have to nominate a few key people for your company. First, you will have to create your shareholder’s structure.
Who is an owner in the company?
- It could be an individual or another company
- You can choose one or multiple shareholders
% of the ownership for each needs to be decided
You will need at least THREE people. There is no restriction as to who you can set as a Board member, although many companies often choose their shareholders. Alternatively, you could decide to not have a Board and nominate only a Board Executive Chairman, once again with no restriction as to who you appoint.
You will also need to nominate your company Supervisor. You need at least one Supervisor or a Supervisory Board (with at least 3 people). Supervisors cannot be members of the Board referenced above.
The Legal Representative is one who will represent and sign documents on behalf of the company.
All of these roles can be held by foreigners or Chinese nationals. To open a company, you will need a minimum of TWO people. One individual can be the Legal Representative, Board Executive and single shareholder. However, he cannot be the Supervisor of the company at the same time – another person is needed for this.
7) Registered Capital
Companies are no longer required to engage an accounting firm to verify mandatory capital contribution and register the paid-in capital. Additionally, minimum registered capital for establishing an enterprise in China is no longer required.
However, it is still necessary to decide on a registered capital, and it will be seen as a “liability” for the shareholders in case of bankruptcy. Shareholders themselves can decide when and how the capital will be paid-in (cash or otherwise). There is no time limitation determining when you must put the capital into the company.
For strategic reasons, using a higher registered capital can attract potential clients. Therefore, an extremely low level of registered capital is not recommended. At niHUB, the companies we have registered stick with an average of RMB 1 million registered capital and a paid-in timing of 5-10 years.
If you choose to close the company, and the company is not in debt, this capital is not be required to be paid-in.
8) Passport/Business License
You will have to provide your passport, Chinese ID, and/or the busi- ness license of companies which are either shareholders, board mem- bers,or hold the positions of Supervisor and/or Legal Representative of the company.
Some local governments may require a face-to-face authentication when applying for a new company. Therefore, shareholders may have to physically go to the Industrial & Commercial Bureau—the bureau which manages company registration—at least once.
9) Business License Application & Company Seal
Today, although Chinese businesses can go through the ap- plication process almost entirely online, Foreign Invest- ed Enterprises are still required to ll out a formal application.
Your company seal can be obtained after receiving your business license.
10) Business License Record
After getting your business license, you still need to register it as a Foreign Invested Enterprise. People often forget to do this step and may undergo problems when applying to open bank accounts or other li- censes, such as an Import & Export License.