China Wholly Foreign Owned Enterprises (WFOE or WOFE) are the most common adopted invest vehicles of foreign investors in China. The company's registered capital is one of the issues that the registered company needs to consider at first. Now, BC will analyze how to determine the registered capital of the company, as follows:
How to determine the registered capital of China WFOE
The registered capital is also called legal capital. It is the total amount of capital subscribed or subscribed for by all shareholders or sponsors as stipulated in the articles of association of the company system and is registered in the company registration authority.
Shareholders of Co., Ltd. shall bear limited liability for the company with the amount of capital they have subscribed to.
The limited liability is the limited discharge liability, which refers to the form of liability that the investor will only be responsible for repaying the debt of the enterprise against the capital invested by the enterprise itself, if the capital is insolvent, and the excess part is naturally exempted.
The greater the registered capital, the better
The greater the registered capital, the more responsibility the company must assume. Therefore, when registering capital, it is important to calculate what is sufficient to match your current financial ability or ability to expect capital. Registered funds are inflated, and the lack of shareholders' own ability will allow them to fall into unnecessary dilemmas.
The company's strength and financial resources also cannot be explained by registered capital alone. It is not advisable to increase the registered capital to obtain the idea of improving the company's strength. Only not making payments will reduce your company’s credit.
Suggestions:
1. We must do our best to determine the company's registered capital and commitments for actual contributions in accordance with our operational needs.
2. Incremental as appropriate, registered capital can be adjusted according to operating conditions.
Capital increase: When the company is in it’s initial stages, the registered capital can be set to a lower amount. Later, after the company expands, the company has the ability to assume greater responsibility and business needs do to change.
3. Business normalization: Peer standards have great reference significance. Different industries have different requirements for registered capital. We can refer to the registered capital of companies in the same industry and compare it with our company’s actual situation in order to make good decisions.
Registration System
The registered capital and current company law should be handed over to the registration system.
That is, shareholders of the company voluntarily agree to subscribe for the amount of capital contribution, the mode of contribution, and the time limit for investment. It should also be recorded in the company's articles of association.
The subscription system is the total amount of registered capital subscribed and registered by the industry and commerce department only. It does not need to register paid-in capital, and no verification documents for capital verification are collected. The business license is no longer the actual income.
The subscription registration system does not require the use of corporate funds, which can effectively improve the efficiency of capital operations and reduce business costs.