Summary and positive significance of Company Law amendments

Amendments to the existing Company Law were considered and approved at the Sixth Meeting of the 12th Session of the National People’s Congress Standing Committee, on 28 December 2013. The amended Company Law officially came into force from 1 March 2014. Although the amendments only cover 12 provisions of the Company Law, they are related to a major reform of the company registration regime.

Q: What are the major amendments to the Company Law?

A: Major modifications were made to the registration system for registered capital in the following three aspects:

1. The paid-up registered capital registration system was revised to a subscription registration system.

   The “paid-in capital” requirement was removed from the amended Company Law, which means a shareholder/sponsor is no longer required to actually contribute capital during the establishment of a limited liability company or a joint stock company. The compulsory requirements were also abolished for a shareholder/sponsor to pay up the registered capital within two years after a company is founded – within five years in case of an investment company – and the initial capital contribution is no less than 20% of the registered capital, and for the full capital contribution for a one-person limited liability company to be made on a lump-sum basis. Unless laws, administrative regulations and the State Council’s decisions provide otherwise, the shareholders/sponsors of a company can agree among themselves in the articles of association on the amount of, and deadline for, subscribed capital contribution.

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