What is a WFOE in China ?

Chinese law requires all foreign companies to form a WFOE if they want to invest in the country. A WFOE, or “WOFE” (Wholly Foreign Owned Enterprise), is a type of enterprise provided by Chinese law for foreign entrepreneurs and investors. The participation of a Chinese investor is not mandatory, but it can be beneficial as it will give you easier access to local markets and potentially lower tax rates.

What are the types of WFOEs?

There are three types of WFOEs: 100% foreign-owned without Chinese partners; more than 50% foreign-owned without Chinese partners; and up to 49% foreign-owned with at least one Chinese partner.

A Wfoe is flexible

Thus, a WFOE in China is the most flexible and popular form of enterprise. The registration process is relatively simple and takes about 15 to 30 days. As for its legal status, it has limited liability, which makes it very similar to LLCs abroad.It is a company registered with the Chinese authorities, and it must have a legal representative who lives in China.

How much capital contribution?

The company has a capital contribution of RMB 30,000 and must have at least three shareholders. The minimum registered capital may vary from region to region, but generally several million dollars are required in most cases. As for the shareholding structure, there are no restrictions, except that all shares must be held by individuals (no legal entities). The share does not have to be represented by a physical certificate.

What are the clauses of the constitution?

The constitution must include the following clauses: name of the company, purpose of the business, share capital, number of shares and shareholding structure (if any), minimum authorized capital for additional investments or changes in shareholding, names and responsibilities of directors and the duration of their term of office; rules for general meetings; and rules for convening extraordinary meetings (if any)

The company must also be registered with the local tax authorities. You must appoint a Chinese national as the legal representative of your WFOE, who must live in China.

What is the minimum age for a WFOE?

The minimum age requirement is 18 and there is no residency requirement. He or she can work full time or part time. The legal representative can be an individual or a company registered in China, and must have full capacity to perform duties under Chinese law for your business. You can appoint more than one legal representative if you wish by putting multiple signatures on documents, but this should not be a problem as long as they are all registered with the local authorities. The legal representative must have his or her own Chinese identity card, a permanent residence permit and a valid passport allowing him or her to travel freely in China. It is not necessary for the legal representative to live in China for a long time before being appointed as the legal representative of your company, but it is preferable that he or she has work experience.

These are the basic information you need to know about the WFOE, I hope this article has helped you to know more.