Registered capital is the amount of capital contributions subscribed by all shareholders or the total share capital subscribed by all promoters as registered with the company registration authority. It serves as the basis for the company's debt liability and the core obligation of shareholders to make capital contributions.
The 2013 revision of the Company Law established a full subscription system, abolishing the minimum registered capital requirements and the restriction on initial contribution ratios, significantly lowering the threshold for company formation. On December 29, 2023, the Standing Committee of the 14th National People's Congress adopted the revised Company Law of the People's Republic of China (the "New Company Law"), which took effect on July 1, 2024. To address problems arising from the subscription system in practice (e.g., excessively long contribution periods, exaggerated capital amounts, shell companies), the New Company Law changed the full subscription system to a term-limited subscription system, imposing statutory deadlines for shareholders to make contributions. The core adjustments of the New Company Law are: (1) shareholders of a limited liability company must fully pay up their subscribed capital within five years after the company's establishment; (2) promoters of a joint stock limited company must fully pay for the shares they subscribe before the company is incorporated; (3) the basic framework of the subscription registration system is retained, but the statutory contribution period achieves a balance between deregulation and supervision.
(A) Newly Established Companies
- Limited Liability Company: Shareholders shall fully pay their subscribed capital contributions within five years after the company's establishment, as stipulated in the company's articles of association.
- Joint Stock Limited Company: Promoters must fully pay for the shares they subscribe before the company is incorporated (i.e., a paid-in capital system).
The above applies to companies established on or after July 1, 2024.
(B) Increase of Registered Capital
For a limited liability company increasing its registered capital, shareholders shall pay the newly subscribed capital contributions within five years from the date of registration of the capital increase, as provided in the articles of association. For a joint stock limited company increasing its registered capital, the company shall complete the registration of the capital increase after the shareholders have fully paid for the newly subscribed shares.
(C) Existing Companies (Established Before July 1, 2024)
Existing companies whose contribution periods exceed the statutory deadlines must make adjustments during a three-year transition period. The transition period runs from July 1, 2024 to June 30, 2027.
- Limited Liability Company: If the remaining contribution period as of July 1, 2027 exceeds five years, the company must, by June 30, 2027, adjust the remaining contribution period to five years or less and record the adjustment in its articles of association. Shareholders shall fully pay their contributions within the adjusted period. If the remaining contribution period as of July 1, 2027 does not exceed five years, no adjustment is required.
- Joint Stock Limited Company: Promoters must fully pay for the shares they subscribe by June 30, 2027.
- Exception: If the company's business involves national or major public interests, and a competent central government department or a provincial people's government submits a proposal, the State Administration for Market Regulation may permit the company to maintain its original contribution period.
(D) Adjustment for Manifestly Abnormal Contribution Periods
If a company's contribution period or registered capital is manifestly abnormal, the company registration authority may, based on an assessment of the company's business scope, operational status, the shareholders' ability to contribute, core projects, asset size, etc., and upon finding a violation of the principles of authenticity and reasonableness, require the company to make timely adjustments.
Companies should determine their registered capital reasonably based on their scale of operations, industry characteristics, and business needs, avoiding excessive pressure from an inflated registered capital or loss of business credibility from an overly low registered capital.
General Companies: The minimum registered capital requirement for limited liability companies has been abolished. Shareholders may agree on the total contribution amount, but it must be reasonable and consistent with industry practice.
Special Industries: Where laws, administrative regulations, or State Council decisions impose specific minimum registered capital requirements for certain industries, those requirements prevail. Industries involving financial security or public interests, including but not limited to banking, insurance, securities, financing guarantee, and labor dispatch, still maintain a paid-in capital system and minimum capital thresholds.
Shareholders may contribute capital in currency or in non-monetary property that can be valued in currency and transferred according to law, such as physical objects, intellectual property, land use rights, equity, or claims. However, property prohibited by law or administrative regulations from being used as capital contribution is excluded.
- Non-monetary contributions must be appraised and verified, without overvaluation or undervaluation. Such contributions require valuation by a legally established appraisal firm. If the actual value is significantly lower than the subscribed amount, the shareholder is liable to make up the shortfall.
- Shareholders shall fully and timely pay their subscribed capital contributions as stipulated in the company's articles of association. For currency contributions, the amount must be deposited into the company's bank account; for non-monetary contributions, the transfer of property rights must be completed according to law.
- If the actual value of a non-monetary contribution is significantly lower than the value stated in the articles of association, the shareholder making that contribution shall make up the difference, and the other shareholders at the time of incorporation bear joint and several liability.
- Shareholders are liable to the company only to the extent of their subscribed capital contributions, and the company is liable for its debts with all of its assets.
- A shareholder who fails to make timely and full capital contribution shall not only pay the full contribution to the company, but also bear liability for any loss caused to the company, and be liable for breach of contract to the shareholders who made timely and full contributions.
- After a limited liability company is established, the board of directors has the duty to verify and call for shareholders' contributions. If the board fails to perform this duty in a timely manner, causing loss to the company, the directors responsible shall be liable for compensation.
- If a shareholder fails to make the required contribution, the company has the right to issue a written demand letter. The demand letter may specify a grace period for making the contribution, which shall not be less than sixty days from the date the company issues the demand letter. If the shareholder still fails to make the contribution after the grace period expires, the company may, upon a board resolution, issue a notice of forfeiture. From the date the notice is issued, the shareholder forfeits the equity corresponding to the unpaid contribution.
Article 54 of the New Company Law provides: "If a company is unable to pay its due debts, the company or any creditor with a due claim may demand that a shareholder who has subscribed but has not yet reached the contribution deadline make an accelerated contribution." This rule strengthens the protection of creditors' interests under the registered capital subscription system and effectively prevents shareholders from using long contribution periods to evade debt repayment obligations.
- When a company adjusts its shareholders' subscribed and paid-in capital amounts, contribution methods, contribution periods, or adjusts the number of shares subscribed by promoters, it shall disclose such information to the public through the National Enterprise Credit Information Publicity System within 20 working days after the information arises, and ensure that the disclosed information is true, accurate, and complete.
- The company registration authority conducts inspections on the disclosed subscription and payment information by randomly selecting inspection targets and randomly assigning inspectors, and implements differentiated supervision based on the company's credit risk profile.
- If a company fails to adjust its contribution period or registered capital in accordance with the Provisions of the State Council on the Implementation of the Registered Capital Registration Administration System for the Company Law, the company registration authority shall order it to rectify; if rectification is not made within the prescribed period, the authority shall make a special annotation on the National Enterprise Credit Information Publicity System and publicize it to the public.
- If a company has its business license revoked, is ordered to close, or is dissolved, or is included in the operating abnormality list because it cannot be contacted through its registered address or business premises, and its contribution period or registered capital fails to comply with the regulations and cannot be adjusted, the company registration authority shall manage it separately, make a special annotation on the National Enterprise Credit Information Publicity System, and publicize it to the public.
- If a shareholder or promoter fails to pay the subscribed capital contribution or share payment as required, or if the company fails to disclose relevant information according to law, penalties shall be imposed in accordance with the Company Law and the Regulations on Enterprise Information Publicity.
Pursuant to the Foreign Investment Law and its implementing regulations, from January 1, 2020, the forms of organization, organizational structures, and activities of foreign-invested enterprises uniformly follow the Company Law and the Partnership Enterprise Law. Foreign-invested enterprises established under the former Sino-Foreign Equity Joint Venture Law, Wholly Foreign-Owned Enterprise Law, and Sino-Foreign Cooperative Joint Venture Law were required to complete adjustments to their forms of organization and organizational structures within a five-year transition period (ending December 31, 2024). The term-limited subscription requirements of the New Company Law apply equally to foreign-invested enterprises.
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