Key points
  • Define a realistic business scope before the name or structure is fixed.
  • Confirm the registered address, lease documents and capital plan early.
  • Expect document legalisation and translation to be the most common source of delay.

For many international businesses entering China, a wholly foreign-owned enterprise (WFOE) is the preferred structure because it allows the foreign investor to hold the entity directly and to conduct permitted business activities in China.

The incorporation process is administrative, but it is not simply a matter of filing forms. The scope, address, capital and shareholder documents need to be consistent with one another, and each will be reviewed at different points.

1. Define the business scope first

The business scope describes what the company is permitted to do. It should reflect the actual business, use the standard wording accepted by the registration authority and take account of any sector-specific restrictions.

China maintains a negative list for foreign investment. Activities outside the restricted or prohibited categories are generally open, but licensing rules can still apply. A scope that is too narrow may need to be amended later; a scope that includes regulated activities may trigger additional approvals before the company can trade.

2. Secure the registered address

The registered address must be supported by the property documents and lease. In Shanghai, the landlord’s ownership certificate, the lease and any required filing or consent documents should be reviewed before signing. If the premises are shared or serviced, confirm that the address can be used for company registration.

Founders sometimes sign a lease before checking whether the address supports their intended business scope. That can be an expensive sequence to reverse.

3. Set a realistic capital plan

For many sectors there is no general statutory minimum registered capital, but the amount still needs to be commercially sensible and consistent with the business plan. The contribution timetable in the articles of association should match the funds actually available.

Capital is also relevant to work permits, tax registration and the credibility of the entity with banks and counterparties. The figure should not be chosen simply because it looks impressive on paper.

4. Prepare shareholder and officer documents

Foreign corporate shareholders usually need to provide constitutional documents, a board resolution or power of attorney and evidence of the authorised signatory. Individual shareholders provide passport copies and, where required, proof of address.

Documents executed abroad may need notarisation and legalisation, or an apostille where the issuing state is a party to the Apostille Convention. Chinese translations are generally required. The exact treatment depends on the document, the issuing country and the authority receiving it.

5. The registration sequence

  1. Company name search and reservation.
  2. Submission of the incorporation application, articles and supporting documents.
  3. Business licence issued by the market supervision authority.
  4. Company seals, bank account and foreign exchange registration.
  5. Tax registration, invoicing set-up and social insurance registration.

The order matters. Banks and tax authorities will ask for documents produced at earlier stages, and signatures may need to be repeated if the underlying information changes.

6. Post-establishment compliance

Once the company is trading, it needs bookkeeping, tax filings, annual reporting, employment contracts and social insurance for staff. Foreign employees need work and residence permits. These are ongoing obligations, not a final step.

It is worth deciding before incorporation who will handle accounting, payroll and corporate secretarial work. The answer affects the bank account, the finance function and the timing of the first filings.

What to prepare before instructing a lawyer

  • The proposed business activities, in plain language and in the wording you hope to register.
  • Identity and corporate documents for each shareholder.
  • A short description of the address and the lease, if one has been identified.
  • The proposed investment amount, funding source and timetable.
  • Any existing agreements with Chinese partners, landlords or customers.

With those items in hand, the legal work can focus on structure and consistency rather than on collecting basic information. The result is usually a shorter path from decision to trading.

General information. This note does not constitute legal advice and may not reflect your circumstances. It reflects the position as at the date shown. For advice on a specific matter, contact the firm.