Establish a Subsidiary Company

Start up of a New Subsidiary Company

Subsidiaries have the status of legal qualification and need to bear civil liabilities independently. Any registered Chinese and foreign enterprises ( as known as corporate business entities or incorporated enterprises ) can be the shareholders to set up a subsidiary company in mainland China.

Especially through establishing a WFOE ( wholly foreign owned enterprise ) or DIE ( domestic invested enterprise ) or other corporate types to obtain recognition of legal status. Your Chinese subsidiary company has to get approval for registering a local business license and certificate of registration first, then you can use the business entity to operate daily business transactions, the whole process is easily and quickly from our practical experience.

The best reason of setting up a subsidiary company is that flexible choices for transferring investment capitals to your subsidiary companies and returning profits to parent companies ( holding enterprises ), or keeping profits in the subsidiary’s account(s). All decisions depend on the agreement of shareholdings and running situations.

Concepts of a subsidiary establishment

  • Directors appointed by the parent company
  • Independent articles of association
  • Independent assets and liabilities
  • Approval an authorized brand name
  • Tax deferrals for cumulative profits
  • Reduction, exemption of withholding tax
  • Independent VAT, invoicing qualification
  • Independent agreement of shareholdings
  • Independent corporate bank account

Timeline and Process of Registering a Subsidiary

Step 1 Pre-prepare Documents

Start preparing required and notarized legal documents.

What documents you have to prepare in your home countries:

1. Prepare 2 sets of notarized and authenticated certification of registration for your foreign incorporated business entity, include: register number, address, EID ( employer identification number ), IRS ID ( internal revenue service ) or other registered certificates. For this process we suggest you consult Chinese embassies in your home country branches. If the parent company is registered in mainland China, you only prepare an original business license, filed documents and company seal to local market and supervision department(s) to obtain verification.

2. Prepare 2 sets of notarized and authenticated passport for executive director (legal representative of the Chinese subsidiary company), this process also suggest you consult Chinese embassies in your home country branches. If a Chinese citizen to be this position, only need original resident identification card ( ID ) submitting to local market and supervision department(s) to obtain verification.

3. Prepare copy of passport for corporate supervisor (senior secretary) with color and size as 1:1. There is no doubt that if Chinese person as the supervisor of the subsidiary corporation, only need original ID. You have to courier all above legal files to SMEsChina corporation registry and submit to local supervision department(s) verifying.

Step 2 Naming, Information of Incorporation

You may choose a same or similar brand name authorized by a parent company to apply for name approval with both languages. Suggest you reading our guidance: Company Name Requirements. And same time you have to decide the amount of investment capital (as well as called: registered capital). Read more: Company Registered Capital .

Step 3 Listing Business Scope, Activities

All Chinese subsidiaries can get a business license with independent business scope and activities, if parent company is a consultant firm, your new subsidiary can be a trade company to obtain import and export permits, on the contrary in the same way. Flexible selecting business activities such as: consultant, services, IT, domestic trading, international trading, engineering, technologies and so on. Learn more: Selecting Business Scope .

Step 4 Signature and Submitting

Official legal documents and application forms will be issued by the local market and supervision department, SMEsChina assists you filling in the articles of association, appointment paper of executive director. Do not worry about registered address, SMEsChina provides a corresponding address and office services to startups and foreign companies. Learn more: Foreign Company Incorporation Requirements .

Step 5 Get the Green Light within 20 Workdays

Business license issued by a local market and supervision administration bureau, you will obtain approval:

  • 1. Certificate of name approval.
    2. 5-in-1 Business license ( original and copy ).
    3. Company chops ( stamps, seals ).
    4. Certificate of registration of foreign invested enterprises.

Whole timeline needs 20 working days processed through SMEsChina teams. If your Chinese subsidiary company needs to register import and export permits, corporation bank account, also needs additional procedure with another 10 workdays by our assistance.

FAQs for Establishing China Subsidiary Companies

2018-2019, important financial years for the Chinese tax reforming, China has reduced the tax rates for income tax, corporate income tax ( profits tax ). With a number of preferential policies coming, Chinese corporate taxes are attracting more foreign enterprises investing and establishing brands in the mainland China market.

Only one person (local citizen or nonresident) can be the executive director ( legal representative ).

If your key corporate structure needs to set up a board of directors, you have to appoint 3 people at least to be the directors, no nationality restrictions.

All directors need to provide identity documents to market and supervision checking.

As a registered subsidiary company or an existed enterprise or other corporate types, you may apply for multiple accounts depending on your actual situations. But you must open basic RMB account and capital account first. Once your business entity grow up in the future, you may open multiple general account(s) approved from different bank(s).

Once company be approved as a legal corporate taxpayer, your business license includes a tax ID printed on the license (as known as: uniform code for social credit ). You may sign an official application document ( include tax ID and corporate name ) and appoint one financial manager submitting it to the local tax office and administration authority. General taxpayer will be approved within 3 workdays, and your subsidiary company will be obtaining a certificate of VAT qualification. This is a useful certificate and proof for your tax credit records when your Chinese customers asking you providing, or other transactions or orders, like: competitive tenders, online platforms ( electronic commerce ), etc.

This is an imperative stipulation in terms of regulations on the administration of industry and commerce. Whatever corporate types you intend to establish, all Chinese companies must have a legal commercial address to obtain approval. Home or apartment addresses cannot be approved and accepted.

Company Incorporation of Non Residents
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More than 47 million companies and small medium enterprises have registered their business entities in mainland China and over 3.5 million new enterprises are incorporated during each financial year with comfortable process of registering companies due to China government implemented new rules and regulation on business registration laws since Oct. 2014. That’s Why SMEsChina is Here.