Set up a company in China

Company formation activities in China

Investment activity to establish a company in China is the transfer of investment capital from Vietnam by a Vietnamese investor to contribute capital to establish one of the types of enterprises regulated in China on the basis of Vietnamese law on outward investment activities and of China with regulations on business investment conditions to: established investors.

Set up a company in China in accordance with the laws of China

After obtaining an investment permit certificate in China, in order to be able to establish a company in China, Vietnamese investors need to meet the regulations on business investment conditions in China based on the legal status of foreign investors.

Regulations on business conditions in China are of great interest. Specifically, these business conditions will be expressed in the form of written approval or business conditions that do not need the written approval of the competent authority. And  the establishment of a company in China will have to meet both the business conditions before registering the business and after the business has been put into operation.

When registering a  company in China, the business founder must obtain approval from a state agency for:

Name of the business: According to Chinese law, the first step to setting up a business in this country is choosing a name for the business. The business entity will have to apply for approval from the local Bureau of Industry and Commerce (AIC) on the business name. And that business entity can only conduct subsequent business registration acts when it has been approved in writing by this agency with the enterprise name.

Legal capital: Chinese law requires companies that want to legally register and recognize their birth to meet minimum capital regulations for each type of business. Specifically, after obtaining the approval of the State agency on the name of the enterprise, enterprises will actively open a bank account and deposit the initial capital contribution into that account and then request the bank to confirm. If the initial capital contribution is not in cash but in assets, the capital contributor here must transfer ownership of the assets to the company. The property value here must also be legally appraised. In some cases, enterprises will have to have a capital verification report from the audit agency and this is also one of the indispensable documents in the enterprise registration dossier. However, legal capital in China does not necessarily have to contribute enough at the time of business registration, but has a maximum time to make this capital contribution.

And when carrying out business activities, enterprises in certain cases will also have to apply for permission to operate with specialized agencies managing the fields in which they do business. Specifically here is the licensing system, including:

– Temporary business license: This is a type of license issued by a competent authority during the waiting period for the enterprise to fully contribute legal capital. And when an enterprise has fully contributed legal capital, the time spent in the business license will be adjusted according to the actual operation time of that enterprise.

– Compulsory business license: This is a type of compulsory license that must be obtained in China associated with certain industries such as import and export, manufacturing, trading drugs, medical examination and treatment…

Issuing a business license in China is extremely complicated and needs to meet a lot of requirements, especially for foreign investors, it is much more difficult to get a business license than for domestic investors. In addition, when conducting business activities, companies in China also have to go through many other approvals from the authorities.

Apply for a certificate of permission for abroad investment

According to current law, to establish a company in China, Vietnamese individuals and organizations must carry out procedures for applying for an abroad investment license according to the Investment Law 2020, Decree 31/2021/ND-CP and establish a company in accordance with the law of China.

Conditions to issue Investment Registration Certificate of company establishment in China

• Investment activities to establish a company in China must be consistent with the principle of carrying out outward investment activities, which emphasizes compliance with the legal system on investment in China;
• The company’s business lines established in China are not in the lines and trades prohibited from outward investment specified in Article 53 and satisfy the conditions for outward investment for conditional outward investment lines specified in Article 54 of the 2020 Investment Law;
• Vietnamese investors investing in China have commitments to arrange foreign currency by themselves or have commitments to arrange foreign currencies to carry out outward investment activities at the doors of permitted credit institutions.
• Having an investment decision to establish a company abroad in accordance with the Law on Enterprises granted by Vietnamese agencies
• There is a document from the tax authority confirming the fulfillment of the investor’s tax payment obligations. The time of certification by tax authorities is not more than 03 months from the date of submission of investment project dossiers.

Dossier to issue Investment Registration Certificate of company in China

For investment projects establishing companies in China that are not subject to approval of outward investment policies, investors shall submit dossiers of application for an Abroad Investment Registration Certificate to the Ministry of Planning and Investment. The dossier includes:

• Documents on registration of outward investment;
• Documents on the legal status of the investor;
• Decisions on outward investment shall be decided by investors in accordance with the Law on Enterprises;
• A written commitment to self-balancing foreign currency sources or a written commitment to arrange foreign currency for investors of a credit institution permitted under the provisions of Clause 3, Article 60 of the Law on Investment 2020. In case an investor submits a written commitment to self-balancing foreign currency sources, it shall be enclosed with a document from a credit institution certifying the investor’s foreign currency account balance;
• For outward investment projects in conditional business lines specified in Clause 1, Article 54 of the Enterprise Law 2020, investors shall submit written approval from competent state agencies on satisfaction of conditions for outward investment in accordance with relevant laws (if any).
• A document from the tax authority certifying the investor’s fulfillment of tax payment obligations as prescribed in Clause 5, Article 60 of the Law on Investment 2020;
• Documents certifying the location of investment projects in foreign countries in the cases specified in Article 73 of Decree 31/2021/ND-CP include: (i) Investment licenses or documents of equivalent value of the receiving country or territory; (ii) Decisions on land allocation or land lease by competent agencies and organizations in the country or territory receiving the investment; (iii) Winning contracts or contracts; contracts for land allocation or land lease; investment and business cooperation contracts enclosed with documents proving the competence of the party involved in the contract for the location; (iv) Agreement in principle on the allocation of land, land lease, lease of business location, transfer of land use rights or assets attached to land; The business investment cooperation agreement is accompanied by documents proving the competence of the party involved in the agreement for the location.
• Documents determining the form of outward investment as prescribed in Article 74 of Decree 31/2021/ND-CP.

Order and procedures to issue of Investment Registration Certificate of company establishment in China

Step 1: Prepare and submit your application

• The investor shall declare information on the dossier of application for the Certificate of abroad investment registration on the National Investment Information System;
• Submit 03 dossiers (including 01 original dossier) to the Ministry of Planning and Investment within the next 15 days.

Step 2: Receive and process documents

• Dossiers shall be received by the Ministry of Planning and Investment when there are sufficient items of documents and quantities

as a rule;

• The Ministry of Planning and Investment checks the validity of the application. In case the application is invalid or has contents that need to be clarified, the Ministry of Planning and Investment shall notify the investor in writing within 05 working days from the date of receipt of the dossier;
• In case an outward investment project has a journalism, radio and television industry, the Ministry of Planning and Investment shall consult the Ministry of Information and Communications in writing as prescribed in Clause 2, Article 72 of Decree 31/2021/ND-CP. Within 07 working days from the date of receipt of the written comments, the Ministry of Information and Communications shall reply in writing to the Ministry of Planning and Investment;

Step 3: Get the result

• Within 15 days from the date of receipt of a valid dossier, the Ministry of Planning and Investment shall issue an Abroad Investment Registration Certificate, which records the investment project code as prescribed in Article 37 of Decree 31/2021/ND-CP, and copies it to the State Bank of Vietnam, The Ministry of Finance, the Ministry of Foreign Affairs, the Ministry of Labor, War Invalids and Social Affairs, the Ministry of Industry Management, the People’s Committees of the provinces or centrally-run cities where the investor’s head office or permanent residence is registered, the tax office where the investor’s tax payment obligations are confirmed,  agency representing the owner of the investor (if any);
• In case the application is invalid or does not meet the conditions to issue the Certificate of abroad investment registration, the Ministry of Planning and Investment shall issue a written notice of refusal to issue the Certificate of abroad investment registration clearly stating the reason for sending the investor.

If you want to establish a company in China and apply for an abroad Investment Registration Certificate, please contact  Viet An Law Firm for the fastest and best support!