On 1 July 2024, the State Council issued the “Provisions on Implementing the Registration Management System for Registered Capital under the Company Law of the People’s Republic of China” (关于实施<中华人民共和国公司法>注册资本登记管理制度的规定, hereinafter the “Provisions”), which came into force on the date of issuance.
The Company Law (hereinafter the “Law”) was substantially revised in December 2023. According to the revised Law, the company’s registered capital system was changed from a “subscription system” to a “paid-in system” in order to address the problems of “excessive capital subscription periods”, “inflated capital commitments”, and the proliferation of “shell companies” and other problems that disrupt the market order.
Under the paid-in capital requirements, all shareholders of a limited liability company shall pay the full amount of their subscribed capital within five years from the company’s establishment date in accordance with the company’s bylaw. For joint stock limited companies, the promoters shall pay the full amount of their subscribed shares prior to the establishment of the company.
This Provisions aims to implement the requirements of the revised Law for adjusting the capital contribution period for existing companies, providing a three-year transition period.
- For limited liability companies, where the remaining subscription period exceeds five years from 1 July 2027, its remaining subscription period shall be adjusted to within five years before 30 June 2027, and the shareholders shall pay the full amount of their subscribed capital within the adjusted contribution period.
- For joint-stock companies, the promoters shall pay the full amount of their subscribed shares before 30 June 2027.
Photo by Zhu Edward on Unsplash
Contributors: CJO Staff Contributors Team
