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Shanghai Business Setup

Foreign-funded Establishment in Shanghai

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Foreign-funded Establishment in Shanghai is also known as Wholly Owned Foreign Enterprise (WOFE). It’s a limited company, the establishment of which is governed both by the Company Law of PRC and Law of the PRC on Enterprises Operating Exclusively with Foreign Capital.

Establish a Foreign-funded company in Shanghai can engage itself in approved business activities and issue tax invoices on its own. It is a corporation and a tax resident. All shareholders of Shanghai WFOE should not be Chinese nationals.

Foreign-funded Establishment in Shanghai-Name 
The name of Shanghai Foreign-funded Company is governed by "Regulations on the Management of name of Enterprises". Since Shanghai Foreign-funded Company is a limited liability company, its name should be in the form of "Name of City + Name of the Enterprise +Industry+ Company Limited ". Accordingly, a company registered in Shanghai will normally bear a name like: US Corp Software Development (Shanghai) Limited.

There are certain restrictions on the use of company names 
1. It should be in Chinese;
2. Arabic numerals, foreign characters or alphabets are not allowed;
3. It should not have content that contradicts national policies, damages social ethics, religions and culture;
4. It should not have content which damages fair competition and misleads the public;
5. Unless special approval is obtained, it should not contain the following restricted words: China, Chinese, National, State. "International" is a restricted word unless it is used to designate the industry in which the company is operating, e.g. ABC International Trading Company Limited.
Name of Shanghai Foreign-funded Company has to be approved by the government before registration.

Foreign-funded Establishment in Shanghai- Application Procedures 
1.Application for approval of intended investment activities (project proposal). The examination and approval authority shall reply within 20 days on receipt of the proposal.

2.Application for intended name to be used by the Foreign-funded Company with the Shanghai Administrative Bureau for Industry and Commerce.

3.Application for the approval of feasibility study, constitution (memorandum and articles of association). A feasibility study will be prepared covering financing, site selection, technological process, equipment, raw material supply, market survey, economic results, foreign exchange, infrastructure facilities, etc.Articles of Association should be prepared and submitted to the examination and approval authority. The examination and approval authority shall reply within 30 days on receipt of the feasibility study report and articles of association.After the feasibility study report and articles of association have been approved, the applicant shall apply to the examination and approval authority, which shall issue the Approval Certificate within 3 days after receiving the application.

4.Registration with the Administration for Industry and Commerce. The company may then register with Shanghai Administrative Bureau for Industry and Commerce within 30 days after receiving the Approval Certificate and apply for the business license. Shanghai Administrative Bureau for Industry and Commerce shall issue the business license within 10 working days to those projects approved by the examination and approval authority of Shanghai. The enterprise is deemed as established on the date when the business license is issued.

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