Outline of Registered Capital Knowledge Points
1. Registered Capital Commitment System:
(1) Definition: Commitment does not equal payment. Shareholders (initiators) should pay capital contributions to the company according to the subscribed capital amount, agreed payment methods, and payment deadlines recorded in the articles of association. If the capital contribution is not paid in full on time, the company and the shareholders (initiators) who have paid in full on time can pursue their breach of contract liability.
(2) Contribution Methods: This can include currency, physical objects, real estate, intellectual property rights, etc. For non-monetary contributions, it is necessary to have an accounting firm appraise their value before contributing them at their actual value.
2. Latest Policies for Existing Companies (New Requirements for Paid-in Registered Capital)
(1) Definition and Characteristics
Refers to companies that were already registered and in existence before the implementation of new laws and regulations (July 1, 2024). These companies need to make corresponding adjustments under the new legal framework to comply with the new legal requirements. The characteristics of existing companies are that they have been operating in the market for some time and have a certain scale of assets and market share.
(2) Impact of the New Company Law on Existing Companies
The revised "Company Law of the People's Republic of China" (hereinafter referred to as the New Company Law) came into effect on July 1, 2024, and made detailed provisions on the paid-in registered capital policy for existing companies. The New Company Law requires investors in limited liability companies to pay in registered capital within 5 years, while joint-stock companies need to pay the full amount of subscribed shares within 3 years after the implementation of the new law.
(3) Transitional Arrangements for Existing Companies
To help existing companies transition smoothly to the new legal requirements, the State Administration for Market Regulation has set a three-year transition period for existing companies, from July 1, 2024 to June 30, 2027. During this period, limited liability companies can adjust the capital contribution deadline to within 5 years, while joint-stock companies need to pay the full amount of capital contributions during the transition period.
(4) Special Regulations and Regulatory Measures
The New Company Law also stipulates that for existing companies with significantly abnormal capital contribution deadlines or registered capital, the company registration authority may require them to make timely adjustments according to law. In addition, the company registration authority will strengthen the mandatory constraints on the public disclosure of company information, improve the transparency and accuracy of company capital contribution information, and promote shareholders' lawful capital contributions through social supervision.
(5) Response Strategies for Existing Companies
Under the New Company Law, existing companies need to adopt a series of response strategies, including adjusting the capital contribution deadline, optimizing the capital reduction process, preparing relevant supporting materials, and ensuring the authenticity and accuracy of the publicly disclosed information. Companies also need to assess the specific impact of the new regulations on their business operations and develop corresponding compliance plans.
Reference:
[1]:https://www.samr.gov.cn/xw/zj/art/2024/art_49d2d2390da64fc7bd5722d20b3665cc.html
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