Registered capital refers to the capital to be paid by the shareholders or promoters of a company. The minimum amount of registered capital mandated to be registered was eliminated in 2014, except where required by law, rules and regulations. The Circular of the State Council on Issuing the Reform Proposals for the Registered Capital Registration System stipulates the following basics for registered capital registration:
- Amount of registered capital should be decided between the shareholders or promoters of the company.
- Capital contribution, methods, terms and other related items are agreed between the shareholders or promoters of the company and recorded in the Articles of Association.
- Total capital contributed and subscribed by each shareholder or promoter shall be registered with the China Administrations for Industry and Commerce.
Any amendments to the registered capital shall be made by the resolution of shareholders with an amendment to the AoA and then formalities to adjust the registered capital with the Administration of Industry and Commerce are required to be carried out. Establishing the basics of the registered capital registration is extremely important from the onset, as it could lead to complications later in the corporate lifecycle, especially at the development and expansion stage.
Originally published 9 April 2019
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