Selecting an appropriate offshore location for setting up and operating a business is a crucial decision for most entrepreneurs. Some key factors of consideration include foreign ownership policy of the jurisdiction, company incorporation procedure and time-line, minimum statutory requirements and compliance, etc.
This article provides a comparison of company setup requirements in Singapore and China.
[ Foreign Ownership ]
Singapore allows foreign entrepreneurs to set up a Singapore private limited company with 100% foreign shareholding. There are no restrictions on the scope of business activities that a company can engage in.
China allows foreign entrepreneurs to set up a wholly owned limited liability company, also known as a Wholly Foreign Owned Enterprise (WFOE). However, companies can engage only in “encouraged” fields of business activity and not those which are “restricted” or “prohibited”.
[ Incorporation procedure ]
Company registration in Singapore is fully-computerized and can be completed within 1 day via electronic means. There are only two major steps involved in company formation – obtaining company name approval and filing incorporation documents. Post-incorporation, the company can apply for a business license (if required), open a corporate bank account and register with the tax department.
Company incorporation in China is complex and time-consuming, involving several procedures such as: submitting a project proposal, obtaining company name approval, submitting a feasibility study report, filing incorporation documents and obtaining a business license. Post-incorporation, the company is required to open a corporate bank account, register with the tax department, obtain a Foreign Exchange Registration Certificate, register with the local statistical bureau and financial bureau, etc.