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Any enterprise in China which is 100% owned by a foreign company or companies can be called as WFOE. It has great potential in China as companies seek new markets, executives say that China will be the world’s top investment destination, especially Shanghai. This article compiled the the capital requirement of Shanghai WFOE Registration for your references.
The Capital Requirement of Shanghai WFOE Registration
WFOE capital requirements are sometimes a source of confusion for those looking to start up in Shanghai. Changes to WFOE registration procedures in recent years have made these much less of a concern than they used to be, but there are still some key things to understand.
- No defined minimum capital requirement any more;
- In practice, capital is still needed but it is now much more flexible for a company to set its own level;
- Timescales to deposit capital can be set in line with WFOE plans;
- Despite regulation changes, it remains important to set capital levels correctly at the start – it can be costly not to do so!
Chinese Company Law was amended in 2014 to specify no fixed minimum capital for a WFOE to be established. Prior to this, it was common to see local authorities requiring a minimum of 500k to 1 million RMB capital for consulting and trading WFOEs (and more for manufacturing WFOEs).
In some specific industries, there are still minimum levels required, but these are in specialized areas usually with financial obligations. For example, a financing or leasing company would still need a minimum of US$10 million.
In practice though, despite no legal defined minimum, capital is still required. It is not possible to set up a company in China with zero capital! Capital levels proposed will be reviewed by MOFCOM (Ministry of Commerce) and AIC (Administration for Industry and Commerce) as part of the company application, but just as importantly there are financial benefits for a WFOE in having a certain level of registered capital.
For more information about capital requirement of Shanghai WFOE Registration, please feel free to contact us, we are glad to offer our professional services for you.
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