Further steps under the PRC company registration reform
Since October 2013, the People’s Republic of China (PRC) government has been rolling out a series of company registration reforms in an attempt to set up a more transparent and efficient registration regime. As the first big step, the National People’s Congress passed amendments to the PRC Company Law at the end of 2013, which entered into effect on 1 March 2014. The new company law has substantially changed the registered capital landscape by replacing the paid-up capital system with a subscribed (committed) capital regime. Highlights of the amendments are summarised below.
- A company’s registered capital is based on the capital amount subscribed (committed) by its investors.
- In general, companies are no longer subject to minimum registered capital thresholds. Investors are free to decide the capital amount based on business needs.
- The mandatory capital contribution timelines are removed (including the deadlines for the first instalment, the full payment and any capital increase). Investors may determine the timetable freely.
- The 70 per cent cap on non-currency registered capital has been lifted. Investors are free to decide the proportion among cash and in-kind capital.
- Except for specific industries, capital verification is no longer a mandatory requirement.
- Annual inspection will be replaced by an annual reporting and disclosure system…
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