People Republic of China – New regulation on implementing registered capital management system of Company Law

On the 7th of June 2024, the State Council of China passed a set of regulations on implementing the registered capital management system of Company Law. These regulations come into effect on the 1st of July 2024 and apply to all companies registered in China.

These regulations clarify relevant arrangements during the transitional period of adjusting the time limit for shareholders to pay in their subscribed capital at existing companies.

Companies must now report any changes or adjustments in registered capital to the authorities within 20 working days.

For existing companies, if shareholders haven’t paid their capital in full and the remaining period exceeds five years from the 1^st of July 2027, the Company must shorten the remaining period to less than five years by the 30th of June 2027 and complete the payment within the adjusted timeline.

The risk of non-compliance

• Companies not adjusting the payment period as required will be ordered to correct their practices.
• Persistent non-compliance will result in special marks and public disclosure in the National Enterprise Credit Information Publicity System.