Seamless Strategies: How Rindra and Anjara Successfully Navigated Company Formation and Expansion in Guangzhou

Rindra and Anjara, a couple from Madagascar, sought my expertise for the establishment of a company in Guangzhou. They were in need of legal guidance to navigate the complexities of company formation, bank account creation, and the procurement of a work permit for their new venture.

Expatriates often find the process of registering a company in China daunting due to the myriad of considerations. These include understanding the types of companies permissible for foreign incorporation, the necessity of a Chinese partner, selecting an appropriate Chinese name, determining the appropriate registered capital, and appointing key positions such as the legal representative, director, and supervisor.

Rindra’s ambition was to set up a trading company to source goods within China for his clientele in Madagascar. With his physical presence in China, he was ideally positioned to personally visit factories, ensuring he could serve as a reliable intermediary for his clients abroad.

The couple also planned for their partner in Madagascar to become a shareholder eventually, which meant they required a corporate structure that could accommodate such a partnership.

Motivated by their goals, the couple made the journey from their residence in Wuhan to consult with me on the legal intricacies involved in registering their business. Impressed by our initial meeting, they engaged my services immediately. Their company was successfully registered just two weeks after our consultation!

Business License and Stamps received just 2 days after visiting the government office!

Rindra encountered several technical challenges during the process of establishing his company:

1. He wanted his business associate in Madagascar to become a shareholder, despite the fact that this partner was not currently in China.
2. Rindra aimed to open a bank account capable of handling foreign currency transactions and facilitating the purchase of goods within China using RMB.
3. His overseas business partner was interested in obtaining a work permit through his company to enable future entry into China.

 

I provided solutions to each of these issues.

Firstly, due to recent policy changes in Guangzhou, in-person verification is required for company incorporation, which posed a problem for Rindra’s absent partner. I suggested that Anjara temporarily hold the shares on behalf of the absent partner until he could travel to China, at which point the shares could be transferred to him for a nominal fee of 1 Yuan. We attended the verification process in Guangzhou together, where their identities were successfully confirmed in a mere 15 minutes, much to the couple’s delight at the efficiency of the procedure.

For the bank account matter, the bank conducts interviews to ensure new companies are not fronts for money laundering or illicit activities. Since only the primary shareholder is required for this interview, I advised Rindra to hold a 99% share, thus sparing Anjara the need for a second trip to Guangzhou. After considering various options, we decided to open the account with HSBC, an international bank known for its user-friendly approach to handling foreign currency.

Lastly, concerning the work permit, I recommended that the company’s registered capital be set at approximately 1 million RMB. Guangzhou authorities tend to be more flexible in issuing work permits to newly established companies. The initial work permit can usually be obtained with relative ease, and a second permit can be secured after about six months of operation, provided the company can present bank statements to demonstrate legitimate business activity and refute the possibility of being a shell company.