[Company Law] Capital Contribution Deadlines and More
2024. 8. 16
The State Council recently issued the “Regulations on the Implementation of the Registration Capital Registration Management System of the ‘Company Law of the People’s Republic of China’,” further clarifying and detailing the relevant provisions of the new “Company Law.”
According to the “Regulations,” for companies registered and established by June 30, 2024, if they are limited liability companies (LLCs) with remaining subscribed capital contribution deadlines exceeding five years from July 1, 2027, they must adjust these deadlines to within five years by June 30, 2027, and record this in the company’s articles of association. Shareholders must fully pay the subscribed capital within the adjusted deadlines. For joint-stock companies (JSCs), the initiators must fully pay the subscribed shares by June 30, 2027.
Additionally, if there are obvious abnormalities in the company’s capital contribution deadlines or registered capital, the company registration authority can review and judge based on the company’s business scope, operating conditions, shareholders’ capital contribution capabilities, main business, asset scale, etc. If it is determined that there is a violation of the principles of truthfulness and reasonableness, the authority can promptly require adjustments in accordance with the law.
Furthermore, if a company adjusts the shareholders’ subscribed and actual paid capital amounts, contribution methods, or deadlines, or if the initiators adjust the number of subscribed shares, the company must disclose this information to the public through the National Enterprise Credit Information Publicity System within 20 business days from the date the relevant information arises.
Companies are also required to actively respond to policy requirements and better adapt to market changes and regulatory demands by proactively adjusting and improving their registered capital management mechanisms.
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Provisions of the State Council on Implementation of the Registered Capital Management System under the Company Law of the People's Republic of China
Article 1 The present Provisions are enacted in accordance with the Company Law of the People's Republic of China (hereinafter referred to as the Company Law in short), in order to companies' registered capital management, regulate the fulfillment of the obligation of capital contribution by shareholders according to law, maintain the safety of market transactions and optimize the business environment.
Article 2 For a company registered for incorporation before June 30, 2024, if the remaining capital contribution period of a limited liability company exceeds five years as from July 1, 2027, the company shall adjust the remaining capital contribution period to five years by June 30, 2027, and record the same in its articles of association. The shareholders shall fully pay the amount of capital contributions they subscribe for within the adjusted capital contribution period. The promoters of a joint stock limited company shall make full payment for the shares they subscribe for by June 30, 2027.
Where the production or operation of a company involves State interests or major public interests, and the relevant competent department of the State Council or the provincial people's government concerned gives an opinion, the market regulatory authority of the State Council may approve to make capital contributions within the original capital contribution period.
Article 3 Where the capital contribution period or the registered capital of a company is obviously abnormal, the company registration authority may, in light of the company's business scope, business status, as well as the shareholders' capital contribution capability, main business items, asset scale, etc. study and make judgment. The company registration authority may lawfully require the company to make adjustments in a timely manner if it is found to be contrary to the principle of authenticity and reasonableness.
Article 4 The adjustments by a company to the amount of capital contributions subscribed for or actually paid up by the shareholders, the form or period of capital contribution, or the number of shares subscribed for by the promoters shall be made public within 20 working days as of the generation of the relevant information through the National Enterprise Credit Information Publicity System.
The company shall ensure the authenticity, accuracy and completeness of the information publicized under the provisions of the preceding paragraph.
Article 5 The company registration authority shall supervise and inspect the conditions on the capital contributions subscribed for and actually paid up that have been made public by companies by means of random selection of the objects to be inspected by the law enforcement officers randomly selected.
The company registration authority shall strengthen the information exchange and sharing with the relevant authorities, carry out classified supervision in light of the credit risks of companies, and intensify the comprehensive application of the classification results of credit risks.
Article 6 Any company that fails to adjust its capital contribution period or registered capital according to the present Provisions will be ordered by the company registration authority to make correction. In case of failure to make correction within the prescribed time limit, the company registration authority shall make special notes in the National Enterprise Credit Information Publicity System and make public the same.
Article 7 Where a company is revoked of its business license, is ordered to close down or is cancelled, or is included into the list of companies with abnormal operations as it cannot be reached at its domicile or business premises, and its capital contribution period and registered capital do not comply with the present Provisions and are unable to be adjusted, the company registration authority shall manage it separately, make special notes in the National Enterprise Credit Information Publicity System and make public the same.
Article 8 Where a company fails to apply to the company registration authority for deregistration of the company within 3 years as of the day when its business license is revoked, the company is ordered to close down or to be dissolved, the company registration authority may make an announcement of the company's deregistration through the National Enterprise Credit Information Publicity System for a period of not less than 60 days.
If the relevant authorities, the creditors or any other interested party raises objections to the company registration authority during the period of announcement, the deregistration procedures shall be terminated. In the absence of any objection upon expiry of the announcement period, the company registration authorities may deregister the company, and make special notes in the National Enterprise Credit Information Publicity System.
Article 9 Any shareholder or any promoter of a company who fails to pay the amount of capital contribution or share capital subscribed in accordance with the present Provisions or any company that fails to disclose the relevant information according to law will be punished in accordance with the relevant provisions of the Company Law and the Provisional Regulation on the Publicity of Enterprise Information.
Article 10 The company registration authority shall strengthen its guidance for companies on their adjustments to capital contribution period and registered capital, develop a specific operational guide, optimize the handling procedures, improve the efficiency of registration and enhance the level of facilitation for registration.
Article 11 The market regulatory body of the State Council shall, according to the present Provisions, formulate the specific measures for implementing the management of capital registration of companies.
Article 12 A listed company shall set up an audit committee under the board of directors in its articles of association and shall set forth the composition and powers of the audit committee according to the Company Law and the provisions of the State Council.
Article 13 The present Provisions shall come into force as of the date of promulgation.
Source: Chinese Government Website