29 April, 2014
Amendments to the PRC Company Law that reduce the burden of capital registration for limited liability companies and single-shareholder companies came into effect on March 1, 2014. Under the previous law, newly formed companies had minimum capital requirements of CNY 10,000 and CNY 100,000 respectively, 20% of which generally had to be contributed with three months of issuing the business license. The remainder was to be paid in within 2 years, and each contribution required a capital verification report. The amendments remove these minimum amounts and allow the companies’ shareholders to designate the contribution schedule. Furthermore, the capital verification report is no longer required by the Administration of Industry & Commerce (AIC), though banks and some other government agencies may still demand it.
For further information, please contact:
Karen Dempsey, Partner, Orrick
kdempsey@orrick.com