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Legal Highlights

Reform on Registered Capital System Relaxes Market Access

2013.11.11

On November 7, 2013, State Administration for Industry and Commerce of the People’s Republic of China (SAIC) announced at a press conference that China has reformed the business registration system. Zhang Mao, director of SAIC also explained the basic principle and content of the reform. The reform was initiated by an executive meeting of State Council on October 25, in which Premier Li Keqiang led the work on pushing forward the reform of company registered capital registration. The major proposed changes including the following five aspects:

  • The minimum registered capital requirements to be removed. Under the current law, the minimum registered capital for a limited liability company is 30,000 Yuan, the one-person limited liability company is 100,000 Yuan and the minimum registered capital of corporation limited is 5,000,000 Yuan. However, the reform will lift such requirements for a new start-up company.

  • No required schedule and proportion for the paid-in capital. The paid-in capital registration system will change to registration system. Shareholders of a new company shall decide by themselves the amount, method and time frame of the payment of registered capital. Meanwhile, paid-in capital would no longer be a required registration item

  • Company's annual inspection to be cancelled. The current business inspection system will be replaced by annual reporting system. Such reports will be uploaded on Internet and available to any individual or enterprise to inquiry. The purpose is to improve the transparency of information and fairness of the supervision and management.

  • Registration address requirement to be relaxed. The reform also proposes less restriction on companies' registration addresses but the implementing details are subject to local regulation at the local government level.

  • Promote the construction of enterprise credit system. The reform proposes to publish the registration, annual report, qualification and credit of the enterprises. The electronic business license will be of the same effect as the hard copy business license. Any enterprise violating laws or regulations will be listed in a credit blacklist.