Clarification Regarding the Revision on the Company Law 2014

By Richard Sheng, ECOVIS Ruide China

After the discussion and decision on draft revision of the Company Law by the Standing Committee of the National People’s Congress, total twelve clauses has been amended on December 28, 2013. The revision to Company Law of the People’s Republic of China shall come into force as of March 1, 2014.

The revision of the Company Law refers to the below three perspectives：

Firstly, the capital registration method changed from the actual paid-in capital registration to the subscribed capital registration.　　

Except regulated by any other laws, administrative regulations and decisions of the State Council in respect of the actual paid-up registered capital, the shareholder( promoter) is not deemed to make the full payment of the contribution subscribed according to the new Company Law；One-Person Company has no need to pay up the registered capital by one time according to the new Company Law. Under the new Law, the shareholders (promoters) determine the amount of capital contribution subscribed, contribution method and contribution period, which should be stipulated in the Article of Association of the company.

Besides, the minimum amount of the registered capital has been removed.
　　
Except regulated by any other regulations in respect to the minimum amount of the registered capital, the minimum registered capital amount of a Limited Liability Company, an One-Person Company and a Joint Stock Limited Company is not stipulated to be above RMB 30,000, RMB 100,000 and RMB 5,000,000 respectively；The proportion of the capital contribution in the first contribution from the shareholder (promoter) is not regulated any more according to the new Company Law.

Last but not least, the registration procedure and the registration documents are simplified.

The capital amount subscribed by the shareholder and the actual paid-up capital amount are no more a must for the registration of a Liability Limited Company. Also for the capital verification report, it is not necessary any more by the registration according to the new Company Law.

Our observations and suggestions

The latest amendment to the Company Law provides the legal basis and guarantee for the enhancement on the revolution of the registered capital registration. During the next step, the Administration of Industry and Commercial will have a further research on the amendments and issuance of the opinions on the amendments to the relevant administrative measures on the management of the company registration, while build up the marketing based credit information disclosure system as well as further improve the standardization of the registration documents and the management information system.