Published by ChinaMNC · Shigu

Shigu Company Registration: Common Questions Answered

A practical FAQ for foreign founders on registering a Shigu company in China, covering structure, capital, address, licensing, and timelines.

Shigu Company Registration: Common Questions Answered

For foreign founders entering the Chinese market, the Shigu (wholly foreign-owned enterprise, WFOE) remains a common vehicle for establishing a local presence. Registration involves several steps and local requirements that often prompt questions. Below are answers to frequent questions, based on general practice. This article is for general information only and is not legal, tax, or investment advice; requirements vary by city and change over time, so confirm details with local authorities and qualified professionals.

What is a Shigu company?

A Shigu is a limited liability company wholly owned by foreign investors. It allows a foreign parent or individual to conduct business in China without a Chinese partner. It is distinct from a representative office (which cannot earn revenue) and a joint venture (which involves Chinese shareholders).

Who can be a shareholder?

Foreign individuals and foreign companies can generally act as shareholders. Individuals typically provide a passport; companies provide incorporation documents, often notarized and legalized (or apostilled where applicable). Some sectors restrict or require specific qualifications for foreign investment.

Is there a minimum registered capital?

For most sectors, China no longer imposes a universal minimum registered capital for a Shigu. However, capital must be reasonable and sufficient for the proposed business, and some licensed industries (e.g., certain logistics or education activities) set specific thresholds. Registered capital is subscribed, not necessarily paid upfront, but paid-in timing must align with the company’s articles and applicable rules. Consider the amount carefully: it affects liability and credibility.

Do I need a physical office address?

Yes. A Shigu requires a registered address, typically a commercial property. Some cities allow certain virtual or shared-office arrangements, but rules vary. The address must be documented (e.g., lease and property certificate) and may be inspected. If your business needs a specific zoning or permit, the address must comply.

What business scope can I choose?

The business scope describes permitted activities. It should match your actual operations and any required licenses. General items can often be stated broadly, but regulated activities (e.g., food, education, logistics) require pre- or post-approval. Avoid listing activities you do not intend to conduct, as this can complicate compliance and tax matters.

What documents are typically required?

Common items include:

• Investor documents: passport or corporate documents, notarized/legalized as required.
• Company name: several alternatives for pre-approval.
• Registered address proof: lease and property ownership certificate.
• Articles of association and appointment documents for legal representative, directors, and supervisors.
• Business scope and capital details.

Local authorities may request additional items. Translations into Chinese are usually needed.

How long does registration take?

Timelines vary by city, sector, and document readiness. Name pre-approval, business license, and subsequent steps (seals, bank account, tax registration) can take several weeks to a few months. Licensed activities add time. Plan for document preparation and notarization/legalization to be a significant part of the schedule.

What happens after the business license?

Post-licensing steps typically include:

• Carving official seals (company seal, legal representative seal, finance seal).
• Opening a bank account (basic account) and, if needed, a foreign currency capital account.
• Tax registration and invoice setup.
• Social insurance and housing fund registration if hiring employees.
• Customs registration if importing/exporting.

Foreign exchange and capital contribution procedures should follow banking and SAFE requirements.

Can a Shigu hire foreign employees?

Yes, subject to work permit and residence permit rules. The company must be eligible to sponsor foreign workers and comply with local labor and immigration requirements. Chinese employees are hired under local labor contracts.

What are common pitfalls?

• Underestimating licensing: assuming a general business scope covers regulated activities.
• Address issues: using an address that does not meet zoning or documentation requirements.
• Capital planning: setting registered capital without considering paid-in timing and operational needs.
• Document legalization: incomplete notarization/legalization delaying the process.
• Post-registration compliance: missing tax, accounting, and annual reporting obligations.

Do I need local professional help?

While not mandatory, engaging local counsel, an accountant, or a corporate services firm can help navigate document formalities, licensing, and post-establishment compliance. Ensure any advisor is qualified and transparent about fees.

General information disclaimer

This article provides general information about Shigu company registration in China and is not legal, tax, or investment advice. It does not create a professional-client relationship. Requirements differ by city, industry, and investor circumstances and may change. Always consult local authorities and qualified professionals before making decisions.