by Richard Hoffmann<\/p>\n
There are a lot of aspects one has to consider, when setting up a WFOE in China.\u00a0Choosing a\u00a0board of directors or better\u00a0an Executive Director? A Board of Supervisors or only one? And what would be their duties? In this article we would like to give you some answers to these questions.<\/p>\n
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Management Structure:<\/strong><\/p>\n In general, there are two management structures applicable for WFOEs in China. The first one is a Board of Directors leading the company. The Board of Directors shall consist of at least three directors. One of them has to be the Chairman. The other possibility is a WFOE with only one Executive Director. This option is normally chosen if a company only has very few Shareholders (or only one Shareholder) or just a small business scale. The Executive Director has the same responsibilities as the Board of Directors. Having one of these two options is obligatory for the WFOE in China and the result of this question determines who decides all major managing issues concerning the company.<\/p>\n The Shareholders however, are the highest authority of a WFOE and they have the right to make fundamental decisions in relation to all major issues of the WFOE.<\/p>\n It is also the shareholders, who appoint the board of managing Directors or the Executive Director. The Board of managing Directors or the Executive Director are indebted to the Shareholders will, are therefore obliged to execute their resolutions and furthermore to give report to them.<\/p>\n \u00a0<\/strong><\/p>\n Legislative period of the Directors or the Executive Director:<\/strong><\/p>\n The mandate for the Directors or the Executive Director shall not exceed three years. However they can be re-appointed.<\/p>\n \u00a0<\/strong><\/p>\n Board of Directors\/<\/strong> Executive Director\u00b4s Responsibilities:<\/strong><\/p>\n The Board of managing Directors or the Executive Director are indebted to the Shareholders and shall execute the following functions:<\/p>\n Board of Supervisors \/ Supervisor<\/strong><\/p>\n The WFOE shall establish a Board of Supervisors consisting of not less than three members. However, WFOEs of a smaller scale with a small number of shareholders are allowed to only appoint one to two Supervisors instead of a Board of Supervisors.<\/p>\n The mandate of a Supervisor should be three years with the possibility of re-appointment. No Director or member of the Senior Management of the company may concurrently serve as a Supervisor.<\/p>\n The Board of Supervisors or the Supervisor(s) of a company should have the following functions and responsibilities:<\/p>\n\n