China Company Start-up Checklist, Part 2

This Article is a continuation of "China Company Start-up Checklist, Part I".

The following activities must be taken within 30 days of the issuance of the Business License:

(1) Engrave the Enterprise?s Official Seal This requires advance approval from the municipal Public Security Bureau (the police). Documents include: the original business license and a copy, letter of introduction signed by the Chinese partner, and Power of Attorney in favor of the person submitting the application along with his/her ID card (passport for foreigners).

(2) Obtain the Enterprise Legal Person Code

This code is supplied by the tax authorities at the level of government that supervises your project (national, provincial, or local, according to the identity of your project?s examination and approval authority). Required documents include (i) company seal, (ii) duplicate of Business License along with a photocopy, (iii) original Project Approval Certificate and photocopy, (iv) pre-reserved Enterprise Legal Person Code, (v) photocopy of ID (passport for foreigners) of the enterprise?s legal representative (company seal must be attached to the photocopy if the original ID is not submitted), and (vi) application form.

(3) Register with the Bureau of Foreign Exchange

This is handled by the municipal Bureau of Foreign Exchange. Required documents include copies of (i) Business License, (ii) Feasibility Study Report, (iii) Joint Venture Contract, (iv) Articles of Association, and (v) Project Approval Certificate. Foreign exchange registration is required to open a foreign exchange bank account.

(4) Open Bank Accounts in Foreign Exchange and Local Currency

The enterprise is free to choose which bank in which to open its account (caveat: some localities require that a local branch must be chosen, and some banks are not authorized to conduct foreign exchange). Historically, the Bank of China has been the most popular. Keep in mind that China is in the process of opening up its banking sector to foreign competition in line with its WTO commitments.

RMB (Chinese currency) Bank Account ? Required documents include (i) copy of the Business License, (ii) copy of the Project Approval Certificate, (iii) Power of Attorney signed by the Chairman of the enterprise?s Board of Directors authorizing the opening of the account, (iv) completed account application form, and (v) completed seal specimen card.

Foreign Exchange Bank Account - Required documents include (i) copy of the Business License, (ii) Foreign Exchange Business Certificate, (iii) Power of Attorney signed by the Chairman of the enterprise?s Board of Directors authorizing the opening of the account, (iv) completed account application form, and (v) completed seal specimen card.

Requirements may vary from bank to bank.

(5) Register with the Tax Authorities

There are two forms of tax registration ? national and local. Local tax registration for a Joint Venture whose Chinese partner is directly under municipal jurisdiction (or a Wholly Foreign Owned Enterprise whose Total Investment is over US$5 million) is handled by the Foreign Taxation Sub-bureau of the municipal Tax Bureau, while local tax registration for a Joint Venture whose Chinese partner is under the jurisdiction of a district or a county (or a Wholly Foreign Owned Enterprise whose total investment is under US$5 million) is handled by the local district or county taxation bureau; national tax registration should be undertaken at a local branch of the State Tax Bureau (China?s version of the IRS). When in doubt as to what level of bureaucracy you should attempt to navigate, please refer to your examination and approval authority.

Required documents include (i) copy of Business License, (ii) copy of Project Approval Certificate, (iii) copy of the ID of the enterprise?s legal representative (passport for foreigners), (iv) copy of the Project Proposal, (v) copy of the Tax Registration Card of the Chinese partner, (vi) copy of the Joint Venture Contract, (vii) copy of the Articles of Association, (viii) copy of the enterprise?s bank account certificate, (ix) the names of the enterprise?s directors, and (x) a completed tax registration form.

A Tax Registration Certificate will be issued.

(6) Register with Customs

This is normally handled by the Inspections Department of the local Bureau of Import and Export Commodities; however, some of the special economic zones have their own customs houses located on-site. Required documents include (i) completed application form, (ii) copy of the Business License, (iii) copy of the Project Approval Certificate, (iv) copy of the Joint Venture Contract, (v) copy of the Articles of Association, and (vi) copy of the Tax Registration Certificate. A copy of the Feasibility Study Report may be required. Export enterprises should register for preferential treatment registration for exported products (see the section on Taxes (National) for further details.

(7) Issue and Turn in the Capital Verification Report

Chinese foreign investment law requires the issuance of a Capital Verification Report, which is a document confirming the injection of Registered Capital into the enterprise by the investors. It is issued by an accountant licensed and registered in China. It should be submitted both to the examination and approval authority and to the local, provincial or national Administration of Industry & Commerce at the level of government (local, provincial or national) at which your project is being supervised. A Capital Verification Fee will be assessed.

(8) Register with the Statistics Bureau This is handled by the local Statistics Bureau. Required documents include (i) completed Registration Form with enterprise seal (in duplicate), (ii) copy of Business License, (iii) copy of Enterprise Legal Person Code Certificate; (iv) Qualification Certiificates (for real estate development and construction projects; may include an Environmental Impact Assessment), (vi) Original and copy of the Project Approval Certificate, and (vii) Capital Verification Report.

(9) Register with the Finance Department

This is handled by the local Finance Department.

(10) Register with the Labor Bureau

Register with the local Labor Bureau in connection with social security payments for employees.

Still not done - please check Chjina Company Start-up Checklist Part III...

David Carnes is licensed to practice law in California. He speaks and reads Mandarin Chinese and has several years experience working with Chinese law firms and Sino-American joint ventures. Check out his website, China Legal Bulletin, at http://www.lunaticwisdom.com/blog1.