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PRC State Council issued a plan for reform of registered capital registration system


19 February 2014
On February 7, 2014, China’s State Council issued the Plan for Reform of Registered Capital Registration System (the “Reform Plan”). The purpose of the Reform Plan is to realize the Amendments to the PRC Company Law, as approved by the Standing Committee of the PRC National People's Congress on December 28, 2013 (the Amendments to the PRC Company Law will be implemented as from March 1, 2014). The Reform Plan requires that all the relevant administrative regulations shall accordingly be amended.
Based on the Reform Plan, the administration over company establishment will be substantially eased. Except for 27 kinds of companies specifically listed (such as stock companies established by way of share offer, banks, trust companies, financial companies, insurance companies, etc.), the registered capital subscription system will be adopted. Namely, to set up a company, it will be sufficient if the company’s registered capital is subscribed by its shareholders (sponsors), while the actual contribution to the registered capital will no longer be required; accordingly, the paid up registered capital will no longer be specified in the business license of the company, and company registration authority will no longer require the shareholders to submit the capital contribution verification report.
According to the Reform Plan, a company will no longer be required to have a minimum registered capital (except as otherwise specially required by laws, regulations, or State Council decisions); and the minimum percentage of the registered capital contributed in cash will also no longer be required.
According to the Reform Plan, the companies will no longer be subject to the annual combined examination and review by governmental authorities. Instead, the companies will be required to file and publish their annual reports through the market entity credit information publication system. The Reform Plan also promotes to use the electronic business license and promotes to carry out the electronic registration administration.
Generally, the Reform Plan has adopted the principle of less control over market access while conducting strict supervision afterwards.

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Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

 

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