Financial & Banking Administration Services
12 YEARS OF EXPERIENCE AND THE LARGEST IN CHINA
Financial & Banking
Yingke Global has expertise in providing a range of other financial services, including:
- Assistance in Opening a Local Chinese Bank Account (required for establishing a company in China)
- Advice on Bank Financing in Accordance with Company’s Financial Requirements
- Compiling Financial Statements and Associated Documentation for Loan Applications
- Acting as Custodian of Official Seals and Chops
- Assistance with Declaration & Reporting of Foreign Currency
Below are the most common types of accounts opened in China
There are a number of RMB and FCY account types available to FIEs incorporated in China, including but not limited to the following accounts:
|Foreign currency account types||Inflow||Outflows||Comments|
|Capital Account (most preferable to have as a Bank)||To receive capital injections and capital increases||Payments for current items and approved capital-items||In principle only one account can be opened with a bank located in the same city as the company, which requires SAFE approval|
|Settlement Account||Collections for current items foreign currency||Payments for current items and approved capital-items||SAFE approval not required|
|Foreign Debt Special Account||To receive loan proceeds from overseas||As specified in the loan agreement, but can’t be reused to repay RMB loans||Foreign Debt registration and approval by SAFE required|
|RMB account types||Inflow||Outflows||Comments|
|Basic Account||To receive RMB to then make payroll & cash withdrawals||Cash can be withdrawn. Salary and bonus payments can only be used from the basic account.||Only one basic account can be opened irrespective of the number of banks used.|
|General Account||To receive RMB collections||All kinds of RMB payments except for cash drawing||Multiple accounts can be opened|
Here we look at some of the most commonly used chops.
The company chop contains the registered name of the company and the seal must be approved by the Public Security Bureau. An important incorporation procedure, a foreign-invested enterprise must produce this chop once the company has been registered with the Administration of Industry and Commerce. This chop is required when any important document is signed and the chop can provide legal authority when opening a bank account or altering the name or business scope of the company.
The financial chop is used for issuing checks and other finance-related paperwork. Banks require companies to provide their financial chop for filing when opening an account and such filings will be needed for authentication during future transactions. Companies will often keep their financial and company chops separate.
Many companies will use a separate contract chop when signing contracts with their employees. While having a contract chop is not a statutory requirement, when used for contacts, it has the equivalent legal affect as the company chop.
The customs chop is used for customs declarations on import and export goods.
The invoice chop is used for issuing official tax receipts.
Chops: the Chinese equivalent of the signature
In China, the company chop is the main means of legally authorizing documentation. This little red stamp or seal plays a powerful role in Chinese business. It is obligated for every company registered in China and has to be registered with the Public Security Bureau (PSB).
The power and risks of chops
A company chop holds the same legal power as the CEO’s signature and unauthorized and inappropriate use of it may cause legal problems for the company. We have seen cases where Chinese general managers have blackmailed foreign owners by effectively taking their company chop hostage, telling them: “the controller of the chop is the controller of the company — good luck without it.”
Who can chop and who can sign?
With all these different chops and signatures it can become unclear if the contract you have is technically signed correctly and legally binding. There are some general guideline on who can sign and who can chop. Each Chinese company has only one “legal representative”, and the company’s business license states who this is. Any agreement signed by the legal representative is binding, whether or not a chop is attached. Any agreement with the company chop is also binding, regardless of who signed on behalf of the company. It is advisable is to have your agreement both signed by the legal representative and chopped with the company chop.