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FAQ on establishing a Wholly Foreign Owned Enterprises (“WOFE”) of Consultancy

1.       What’s the nature of a WOFE?

A WOFE is a liability company established within mainland China and wholly owned by foreign investors. For a consulting WOFE, according to relevant rules and regulations, it is allowed the investors to deliver services in China. And the liability of foreign investors will limited to the amount of the registered capital.


2.       Are there any requirements to the foreign investors? Are there any ways to reduce the invest risk?

For investors, they can be individuals or companies, and both of the above two kinds investors need to provide bank reference letter to state its current standing with the bank. For company- investors, the notarized documents of their business license by the Chinese embassy in their home country are also required.

To reduce the invest risks, most investors establish a company in Hong Kong act as the holding entity of the Chinese WOFE. The holding company will take over all responsibility for the operation from the investors.


3.       What’s the requirement of minimum registered capital?

Registered capital is the injected capital to the WOFE and the amount that the investors pledged to the authority. The minimum amount is different from place to place, normally it must be more than RMB 100,000 Yuan. Additionally, the registered capital is required by the business operation until the WOFE is able to support itself from its own cash flow. So the investors have to consider that before they decided the amount of registered capital.


4.       What’s the most important position to a WOFE?

A WOFE has the following important positions, each of them are very important:

a.       Legal representative, who is appointed by the investors and holds all power of the WOFE with China;

b.       The board of directors/ executive director;

c.       Supervisor.

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