Company Law of People’s Republic of China (2013 Amendment)
The new amendment to the Company Law comes into force on 1 March 2014. The amendment has lowered the company establishment requirements and reformed the company capital registration regime. We list the major changes from the previous 2005 version.
(1) The paid-up capital system is replaced with subscribed capital system
Shareholders can decide on the amount, timing and method of the capital they would like to inject to the company. Paid-up capital amount is not required to show on the business licence.
(2) There is no requirement on the minimum amount of the paid-up capital
Under the Company Law 2005 version, there is requirement on the minimum registration capital:
- RMB30000 for limited liability companies;
- RMB100000 minimum for single shareholder companies; and
- RMB5 million minimum for joint stock companies.
These requirements are now abolished by the Amendment.
(3) There is no minimum cash capital requirement
Under the Company Law 2005 version, at least 30 percent of the registered capital contribution is required to be made in cash. This requirement is abolished by the Amendment.
(4) No requirement for the capital verification
The Amendment has simplified registration procedures by cancelling the requirement of a capital verification report.
However, in practice, the bank may still require the company to submit the capital verification report for transfer the capital from capital account to the basic account.
