When setting up a company in China, it must submit a document showing its registered address (a copy of the lease contract or the property deed).
This proof must be signed by the proposed manager of the company, its directors, legal representatives, shareholders and other senior management officers. And, it is provided that one address can be for incorporating one company, but in fact, it is allowed that the operation place of the company and its register address are not in the same place, the company can have multiple operation addresses; with its main office as its registered address.
For companies incorporated In Hong Kong, the United Kingdom, the BVI and other places, the respective jurisdictions expressly provide that: One address can be the registered address of a number of companies. These registrations do not require the applicant to hire, rent the said address or to sign the lease contract, but the company can register its address of its agent, secretary or accounting firm. Local people used to call it: Virtual office. They want the same and some of them have operation therein.
Using virtual office as registered address: It seems investment and costs can be reduced, and many people think that, even the risk is significantly reduced. Is it really the case?
A. Under China's current laws and regulations, it is not allowed to apply for business registration by using a virtual office as its registered address. According to The Industrial and Commerce Administration and Management regulations, without the approval of relevant departments, using virtual office as its registered address, the business license itself is not legitimate and is illegal; the business license will be revoked, their gains will be confiscated. Even a business license is obtained by using virtual office as its registered address, it shows that this is merely the successful for registration in Industrial and Commercial Administrative Departments. The consequence is bored by the enterprises itself.
Note: The concept of virtual office is generally acceptable in some economic zone. It may be the district government to provide a preferential policy to attract investment. All these needs to be approved by the regional government. On condition that it successfully obtain approval certificate issued by the relevant business administration department, otherwise the company cannot operate business legally.
B. Virtual Office can harm or border business development:-
(1) Hassles when applying for tax registration. Enterprise has to, after obtaining business license, apply for tax registration and obtain a tax registration card. Tax registration authority must not entertain offers of fixed office phone, or they shall even verify the registered address in person and take photographs there. If it is a virtual office, the tax authorities will not issue relevant tax registration certificate.
(2) Troubles arise when the applying for bank accounts. Currently, in China, bankers will exercise caution when dealings in corporate bank accounts opening, they will arrange staff to have site visit and verify the enterprises’ registered address and office address. If virtual office is used, the bank may refuse to open corporate bank account.
(3) For foreign investors set up representative offices in China, foreign-owned companies or the joint venture company will send their staff to Mainland China for working. Thus, they have to apply for work visas. The staff of relevant responsible department for approving visa will go to the enterprise’ address for site reviewing and doing address authenticity, for the case of virtual office, those employees cannot obtain work visas, and it affects the company's business.
Entrepreneurs and foreign investors, before registering companies or representative offices, should consult professional organization, obtain a detailed understanding on the importance of the company's registered address, and the possible adverse effect of using of unapproved registered companies or representative offices as its virtual office address. Think twice before taking action.