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First and foremost, let us discuss the new rules for registered capital. For Limited Liability Companies, a registered capital system with a time limit is now in place. This means that shareholders must pay their registered capital contribution in full within five years from the company’s establishment date, as per the company charter. If there is an increase in capital, the contribution must be paid in full within five years from the date of the capital increase application. On the other hand, Joint Stock Companies follow a paid-in capital system. Newly established Joint Stock Companies must pay their capital in full before registration, and any increase in capital must also be paid in full.
Now, you might wonder, who does this affect? Starting from July 1, the requirement to pay registered capital in full within five years applies specifically to Limited Liability Companies. For Joint Stock Companies, promoters and subscribers must pay in full before the inaugural meeting and then apply for registration afterward. It’s important to note that the new “Company Law” does not apply to non-company legal entities, partnership enterprises, sole proprietorships, individual industrial and commercial households, or farmers’ professional cooperatives. These entities must still comply with the relevant laws and regulations.
What about companies established before June 30? Yes, the new registered capital regulations also apply to companies established before June 30. These companies have a three-year transition period, until June 30, 2027, to adjust their registered capital deadlines. For Limited Liability Companies, this means they must adjust their capital contribution deadlines to within five years from the date of adjustment. For Joint Stock Companies, they must pay in full for the registered shares within the transition period.
After shareholders have paid their capital contributions, what procedures must a Limited Liability Company follow? Once the capital contributions are paid, a Limited Liability Company must accurately disclose the paid-in capital, the method of contribution, and the contribution date through the National Enterprise Credit Information Publicity System. There is no need to submit any proof of actual payment to the registration authority.
Moving on to company shareholders and governance structure, can an investor establish a company with only one shareholder? The answer is yes. The new “Company Law” removes the previous restrictions on one-person Limited Liability Companies. It allows a natural person to invest in and establish multiple “one-shareholder companies.” Additionally, a company established by a natural person can further invest in and establish a “one-shareholder company.” Non-legal entity organizations, such as partnership enterprises and sole proprietorships, are also permitted to invest in and establish a “one-shareholder company.”
Who can serve as the legal representative of a company? A director or manager who executes company affairs can serve as the legal representative. According to the company charter, any director (except external directors and independent directors) can be appointed as the legal representative.
Finally, let’s talk about legal responsibility. How will the registration authority handle a company that fails to disclose relevant information or discloses it inaccurately? If a company does not comply with the disclosure requirements, the registration authority will order the company to make corrections and may impose a fine ranging from 10,000 to 50,000 yuan. In severe cases, fines can range from 50,000 to 200,000 yuan. Directly responsible managers and other directly responsible personnel may also be fined between 10,000 and 100,000 yuan.
And what about companies that falsely report their registered capital? The registration authority will revoke the registration in accordance with laws and administrative regulations. The company will be ordered to correct the false report and fined between 5% and 15% of the falsely reported amount. In severe cases, the business license will be revoked, and directly responsible managers and other directly responsible personnel will be fined between 30,000 and 300,000 yuan.