PROFESSIONAL COMMENT----Chengdu COMPANY REGISTRATION
1.TYPES OF CORPOATATION
1) According to the incorporation form, we divide the company into joint-stock company limited, limited company and partnership;
2) According to the investor, we divide the company into foreign-funded enterprise, Sino-foreign joint venture, Sino-foreign cooperative enterprise, and domestic-funded enterprise;
3) According to the form of bearing the risk: we divide the company into unlimited liability (such as partnership) & limited liability (limited liability corporation)
4) Other institutions: branch, foreign business representative, office and self-employed labor.
2. SHAREHOLDERS & LEGAL REPRESENTATIVE
Chinese corporation law stipulate that the shareholder must be the natural or the legal person aged 18 years old or above and the legal representative whose duty must be the chairman of the board of the company. The legal representative has the power to sign the legal document and contract and the person who is not the shareholder can also be the legal representative.
3 COMPANY NAME
Your company name should be distinguished from the existing registered names, the industry connects with the registered capital. The company name needs to be checked and approved by the authority. The enterprise should provide three spare names to the industry and commercial bureau for checking. The mode of domestic-funded enterprise's name: “area+ commercial number + industry(or the character of industry) +limited”. If the name includes the wording “province”, the approval of Province Industry and Commercial Bureau is necessary. If the name includes the wording “ China ”, the approval of State Administration for Industry & Commerce is necessary.
4 REGISTERED AND PAID-UP CAPITAL
The registered capital is based on the different forms of company and the minimum registered capital is required as much as RMB30,000, the detailed stipulation depends on the industry and local government; in addition, the capital must be paid up actually.
5 CAPITAL VERIFICAITON
1) Domestic-funded enterprise: the registered capital can be paid by stages (individual sole proprietorship corporation excluded), and the term of payment depends on the article of association and authority's approval.
2) Foreign-funded enterprise: the registered capital can be paid by stages and the term of payment depends on the article of association and authority's approval.
3)Sino-foreign joint venture: the share of foreign investor should not less than 25%, every parties should stipulate the term of payment in the joint operation contract and pay out their own investment in the stated time, and the first investment should not be less than 15% of the total payment.
6 BUSINESS SCOPE
Business scope is narrowly defined for all businesses in China and the scope ultimately appears on the business license. Any industry as long as permitted by the law and regulation, we can operate freely. But the pre-approval is required if the special sector involve.
7 PRE-APPROVAL FOR SPECIAL SECTOR
Some special sectors need to apply for the special approval license from the relevant department. The special industries include:
The gas station, the refined oil stores in a storehouse, slaughters, the education, the religious group, the auction industry, pawning industry, engraves the chop industry, the parking lot, attorney, accountant service, bookkeeping, the talented person intermediary, the occupation introduction, studying abroad organization, the investment immigration organization, construction, decoration, the engineering, the enterprise credit, the road freight, the internet bar, the publication printing, the cosmetics, the medicine, food production management, the travel agency, the medical treatment organization, the medicine and the instrument, security and guards production management, pesticide, insurance industry, banking industry and so on.
8 REGISTERED PLACE & OFFICE
The independent operation place is acquired for all the Chinese companies, the original copies of lease with signature by Housing Management Authority or the housing property certification of enterprise or shareholder must be provided before registering. Some special industry must acquire the approval of fire and environment protection department, usually these should be handled by the clients themselves. The requirement of the operation place depends on the character of the company. Manufacturing enterprise requires the workshop which accords with the requirement of production while non-manufacturing enterprise requires the normal commercial building.
9 OPENING BANK ACCOUNT
Chinese company must open a basic account. A basic account is an account catering to customers' daily needs for transfer settlement as well as the cash receipt and payment. A non-basic account such as the paying tax and increasing capital account is the accessorial account. This kind of account can only transfer and deposit settlement while the cash withdrawals is not permitted. The companies are allowed to open many non-basic accounts and only one basic account at the bank. The domestic-funded enterprise should first open a (temporary) account and then have the business license while the foreign-funded enterprise conducts the contrary procedure. The finance and the appointed private chops are required when coping with the bank operation.
10 IMP&EXP LICENSE
In china, any enterprise should first apply for the IMP&EXP LICENSE before they are qualified for importing & exporting the stated products. IM&EX License means the enterprise can operate the custom declare by their own freely and which is accord with the stipulation. Usually the foreign-funded enterprise established in China can only import & export the products which produce in their own enterprise, this stipulation will be broadened from March 1st, 2006 and the WFFE can also apply for the same free import & export right as domestic-funded enterprise.
11 ANNUAL RETURN& TAX RETURN
Chinese company must carry out the annual return and the detailed time depends on the local government stipulation. Usually the time of annual check is from January to June.
Chinese enterprise must apply and submit the taxation report to the State &Local Administration of Taxation, the report divides to monthly, quarter and annual report. WFFE must carry out annual audit.
12 CHINESE TAXATION
Chinese taxation can be divided into 15 kinds according to the character and function: value-added tax, consume tax, sale tax, enterprise income tax (which are suitable for the domestic-funded enterprise such as state-owned enterprise, collective enterprise, private-owned enterprise, consortium, stock system enterprise), foreign investment and foreign enterprise income tax, personal income tax, resources tax, city and town land tax, city maintenance & construction tax, land value-added tax ， property tax, the vehicle ship use tax, the stamp duty, deed tax and tariff.
Usually the income tax in China is 33%, while some special zone such as SHENZHEN and PUDONG is 15%. Service industry should pay the sale tax varied from 3%-10%. The enterprise engaged in the production, processing, repair and trade industry should pay VAT varied from 4%-17%. Because Chinese government encourages the export right now, the enterprise can enjoy drawback.
