2023年3月23日星期四

PolyU Startup’s Guide: Setting up a company in Mainland China

The webinar named “Setting up a company in Mainland China” organized by KTEO, PolyU on 23rd Mar 2023. Ms. Sandy Chui (Attorney at-Law, Guanghe Law Firm) was the guest speaker. Her topics mainly covered General Company Law of PRC, Legal Representative, Wholly Foreign-owned Enterprise (WFOE) and Hong Kong Company in GBA. 


Firstly, Ms. Sandy Chui introduced different types of company in China including Sole Proprietorship, Partnership, Limited Company and Franchising Company. Franchising required at least two direct shops and matured operation with trademark, etc.


Then she explained the Foreign Investment Law of the PRC (外商投資法). Where “foreign investment” means the investing activities within China directly or indirectly conducted by foreign natural persons, enterprises, and other organizations, including all the business mode mentioned above. And then she summarized the characteristics among different types of business.


After that she mentioned the Company Law of PRC (民法典 - 公司法). Capital contributions could be included cash, assets, IP, technology or land use right, etc. It is no need to contribute registered capital immediately that depends on your plan.


Ms. Chui also explained that shareholders hold >67% of the shares and have absolute controlling rights. Shareholder call up >25% of the shares that could hold irregular meeting. For directors, they should hold >34% have controlling rights of company and >25% could hold irregular meeting.


Finally, she discussed the concept of legal representative. Legal representative is assigned to nature people but not company. Legal representative would have risk including liable to compensation due to deliberate acts or serious faults, joint responsibility of withdrawing capital, administrative responsibility, coercive measures, and criminal liability, etc. If you didn’t take those risks, you could only be shareholder.


Lastly, she also explained Wholly Foreign Owned Enterprise (WFOE). Three key advantages are mentioned including Autonomy, Legal Status, Revenue and Remittance.


At the end, Ms. Sandy Chui introduced the profit tax to 15% and exceed profit enjoying free taxation to income from new foreign direct investment. There is different policy in Guangzhou-Nansha, Zhuhai-Hengqin, Shenzhen-Qianhai, etc. 

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