Every WFOE has mandatory positions that must be filled by the appropriate personnel. To find out who they are and what their responsibilities entail, we urge you to read the following article.
PTL Group specializes in company registration in China. We make sure that China company registration is done right, because doing so will help us focus on the real goal: long-term WFOE management. To help our clients, we provide extensive operational support for registered entities. This is where our knowledge and expertise really make a difference.
We hope you find the following information useful.
Key Positions & Responsibilities in a WFOE
Whether they are individuals or legal entities, shareholders raise and inject the WFOE’s capital, and thus have the highest level of authority. As such, they get to determine the company’s objectives, outline its policies and decide how to man the key positions of the WFOE (as described below). Usually, the shareholders will be the same as in the WFOE’s mother company.
Executive Director / Board of Directors
Normally, the Board consists of an odd number of Directors (1,3,5, etc.). A single director is the Executive Director, but in the event of 3 or above, a chairman should be appointed.
These individuals are responsible for developing and implementing the company’s agenda as dictated by the shareholders. They operate as the shareholders’ execution arm and carry out decisions on their behalf.
The directory members are appointed by the shareholders. Their term is valid for 3 years and they can be re-appointed.
The legal representative is an employee who possesses legal authority to execute the powers and duties of the company, and is accountable for them. Consequentially, this individual is a key figure involved in all aspects of the company’s operations and serves in practice as one of the company’s executives.
The legal representative comes into play in one of the following scenarios:
- The legal representative serves as the Chairman of the Board.
- The legal representative serves as the sole Managing Director.
The general manager administers the company’s day-to-day operations. This position can be concurrently manned by one of the Board members or the Managing Director. However, the dual role puts an enormous amount of power at the hands of one individual.
The general manager’s responsibilities are as follows:
- Supervising business operations and manufacturing processes, and reporting to the Board.
- Attending Board meetings.
- Devising specific policies and basic management systems.
- Deciding on new hiring or terminations.
- Any other responsibilities specified in the company’s Article of Association.
The financial manager has the financial executive authority; thus, he or she is involved in all the company’s financial operations: preparing financial reports, financial audits, tracking cashflow, etc.
Due to the heavy responsibility and vast access that come with the role, the financial manager has to be authenticated by providing real ID and phone numbers. He or she must even be photographed at the tax bureau. Therefore, in many cases foreign companies choose to appoint a local service provider, such as PTL Group, to fulfill this position.
The Tax Bureau Contact Person
The Tax bureau contact person is the employee who liaises between the WFOE and the tax bureau. This person is not authorized to execute other financial activities. For the real name verification process and the ongoing communication with the tax bureau, the tax bureau contact person must have a local phone number in China, and should be able to read Chinese. That said, this employee does not have to be a Chinese citizen.
While in many cases companies opt to outsource this position, in some areas the local regulations stipulate that the position must be filled by one of the WFOE’s employees.
The simple responsibility of the supervisor, or the board of supervisors (based on the company’s size), is to monitor the activities and performances of the senior managers. Their job is to oversee key personnel performances and to ensure there is no abuse of power.
In order to avert a conflict of interest, the supervisors are not allowed to serve in any managerial position within the company (i.e. one of the positions mentioned above). This is precisely why at least two people are required for a WFOE registration. However, shareholders and employees in lower positions, whether or not residing in China, can act as supervisors.
Chinese law provides supervisors with an array of powers and access to the company’s documentation. They are allowed to:
- Inspect the company’s finances.
- Recommend hirings or terminations.
- Advise Board gatherings.
- File lawsuits against “corrupt” officials.
The aforementioned positions are required by law for company registration in China. Of course, each China company registration process is unique, so adjustments are made quite often. Before starting a business in China, make sure you consult with a professional and experienced service provider. At PTL Group, we will support and guide you before, during and after your China company registration.
Last updated: May 2021
Regulations in China change relatively frequently. For the most up-to-date regulations, please check in with us.