Adhering to Updated Registered Capital Regulations in China’s Revised Company Law

On July 1, 2024, China implemented new rules for registered capital registration management system under the Company Law, ensuring timely capital contribution, adjusting investment periods, and optimizing registration services. Companies established before the law amendment have three years to comply with the new regulations.

UPDATE (July 1, 2024): On June 7, 2024, the draft Provisions on the Registered Capital Registration Management System of the PRC Company Law were adopted during an executive meeting of the State Council. In implementing the registered capital management system, the meeting emphasized the need to adjust investment periods for existing companies, ensure shareholders fulfill their capital contribution obligations and optimize registration services. On July 1, 2024, the official document was released on the State Council website.

At the end of 2023, China’s legislature adopted an amendment to the Company Law, which introduced new regulations on the term of payment for subscribed capital, as well as requirements to publicly disclose the amount of registered capital.

In order to accommodate companies that are established before the amended Company Law comes into effect and have subscribed capital payment terms exceeding the five-year time limit, companies will be granted three years to adjust the contribution period to meet this requirement.

To provide guidance and ensure the implementation of the new rules within the deadline, on June 7, 2024, the State Council also approved the Provisions on the Registered Capital Registration Management System (the “management provisions”). The management provisions also came into force on July 1, 2024.

The final version of the management provisions differs somewhat from the previous draft version released in March (2024), having removed a number of requirements for information disclosure, as well as eligibility requirements for companies to reduce their registered capital.

Below we outline the requirements stipulated in the final version of the management provisions.

This article is republished from China Briefing. Read the rest of the original article.

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