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China Passes Amendment to Company Law

China Passes Amendment to Company Law


On October 25, 2013, the Standing Committee of the National People’s Congress of the People’s Republic of China passed an amendment to the P.R.C. Company Law (the “Amendment?. The Amendment, which was adopted after three readings and will take effect on 1 March 2014, replaces the current system of paid-up capital by the system of subscribed capital registration.


The Amendment mainly focused on the following three areas:


(1) The system of paid-up capital registration will be replaced by the system of subscribed capital registration to lower the cost of starting new companies. The promoters of new companies will agree among themselves on the amount of capital subscription and the form and time limit of capital contribution and will be responsible for the authenticity and legality of the payment of capital contribution.


(2) Requirements for the registration of registered capital will be eased. Unless otherwise specified by laws and regulations, the minimum registered capital requirements of RMB30,000 for limited liability companies, RMB100,000 for one-person limited liability companies and Rmb5 million for joint-stock companies with limited liability will be scrapped. There will no longer be any restrictions on the ratio of initial capital contribution made by promoters at the establishment of the company or the time limit for capital contribution. Fully paid-up capital will no longer be a requirement for business registration.


(3) The registration particulars and registration documents will be simplified. Once after the amended Company Law comes into force, the amount of subscribed capital and paid up capital of a limited liability company will no longer be registrable items. In addition, the company is not required to engage a public accounting firm to issue a capital verification regarding the contribution of capital by its shareholders.


The Amendment substantially lowers the entry requirements for registration of companies in China. It is expected that the Amendment will promote domestic investment and encourage the setting up of companies.


Original text of the Amendment or


Click to here to download the PDF format of this article and the original text of the Amendment.



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