Chinese Mainland WFOE vs Ltd.

WFOE is the abbreviation for wholly foreign-owned enterprise. It refers to an enterprise established solely by foreign investors or in partnership with Chinese mainland partners. WFOE belongs to the mixed ownership system, which means it is solely invested by foreign investors or in partnership and enjoys ownership and management rights. WFOE is a limited liability legal entity, and the responsibilities of shareholders and directors are limited to their capital contribution. WFOE does not participate publicly in the market, and its business scope is limited to the range covered by its registered capital. WFOE requires at least one shareholder and at least one director, but there is no need to appoint a legal representative. Foreigners can serve as directors of WFOE, and a company secretary is not required. The minimum registered capital of WFOE starts from 1 RMB, but the minimum registered capital varies for different industries, such as 30,000 RMB for industrial companies and 30,000 RMB for commercial companies mainly engaged in wholesale or retail business. During registration, WFOE needs to undergo capital verification, which includes providing proof of the source of funds to demonstrate the legitimacy of its registered capital.