The new Company Law will come into force on July 1, 2024
The registered capital is "solid", and the business environment is more optimized.
Reporter Wang Junling.
The company is the most important market entity. The newly revised Company Law of the People's Republic of China (the "New Company Law") will come into force on 1 July this year.
Many enterprises have noticed one of the major changes: the new Company Law has improved the subscription registration system for limited liability companies, clarifying that the amount of capital contribution subscribed by all shareholders shall be paid in full by shareholders within five years from the date of establishment of the company in accordance with the provisions of the company's articles of association, and at the same time, the amount of capital contribution, the method of capital contribution, information publicity and other aspects have been clearly regulated.
What are the impacts of the registered capital? What do all parties in the market think? In response to related topics, the reporter conducted an interview.
Say "no" to arbitrarily setting the registered capital
Beijing Lingpao International is a foreign trade export company in the footwear industry, with customers in the United Kingdom, France, Denmark, Australia, Canada and other places. In recent years, the company's Chelsea rain boots and other products for customers have sold well overseas. "The healthy development of enterprises depends on being down-to-earth. The new "Company Law" has improved the subscription registration system, which will help enterprises focus on their main business and stimulate the vitality of entrepreneurship. Talking about the new "Company Law", General Manager Xia Di expressed his approval.
Why does the new Company Law need to amend the subscription registration system for enterprise registration?
According to the relevant person in charge of the State Administration for Market Regulation, since the revision of the "Company Law" in 2013, the state has fully implemented the registered capital subscription registration system, which has effectively solved the outstanding problems such as the high threshold of market access funds under the paid-in registration system, which restricts entrepreneurship and innovation, idle registered capital, and false capital contribution verification. The registered capital subscription registration system has relaxed market access restrictions, improved the efficiency of shareholders' capital use, reduced the transaction cost of capital registration, strengthened the main responsibility of the company, and played an active role in promoting the modernization of corporate governance, consolidating the micro foundation of economic development, and optimizing the business environment. At the same time, in practice, there are also prominent problems such as blind subscription, sky-high subscription, and excessively long term, and some companies have even made capital contributions for more than 50 years and hundreds of billions of yuan, which violates the principle of authenticity and is contrary to objective common sense.
On the one hand, the above problems have blurred the role of registered capital in indicating the company's capital credit, increased the cost of judging and evaluating market transaction credit, and led to the phenomenon that the company's actual capital contribution for many years is 'zero'On the other hand, at the level of the legal system, the legal constraints on the capital contribution of the company's shareholders are weakened, which objectively affects the authenticity and effectiveness of the investment and increases the probability of creditor's rights and equity disputes. The person in charge said.
Zhou Xin, a partner at King & Wood Mallesons, said in an interview with this reporter that for enterprises, registered capital is the most basic and intuitive information on the company's strength, and it should be "real". In practice, some do not set the amount of registered capital and the term of capital contribution based on the actual situation of their production and operation, some lack professional knowledge and set the registered capital at will, and a small number of enterprises have the subjective intention of deliberately exaggerating the company's strength. These are the shortcomings of the system that the new Company Law needs to make up.
Promoting the 'solidification' of registered capital is conducive to the establishment of an honest image and the improvement of business reputationIt is beneficial for entrepreneurs to plan their own business behavior realistically and really use their energy to start a business; It is beneficial for other market entities to more intuitively judge the credit status of counterparties and make scientific and reasonable business decisions. Zhou Xin said.
The new Company Law also restricts the illegal acts of companies in the field of subscription registration. For example, the new Company Law clearly stipulates that "if a company obtains the establishment registration of a company by falsely declaring the registered capital, submitting false materials or using other fraudulent means to conceal important facts, the company registration authority shall revoke it in accordance with the provisions of laws and administrative regulations", and "if the promoters and shareholders of the company withdraw their capital contributions after the establishment of the company, the company registration authority shall order them to make corrections and impose a fine of not less than 5% but not more than 15% of the amount of capital contributions withdrawn".
More than 10,000 enterprises have reduced their registered capital.
The new Company Law will come into force on July 1, 2024, but the clear direction it conveys has made many enterprises take the initiative to correct the problems in terms of registered capital. According to the data provided by Qichacha, from December 29, 2023 to January 16, 2024, there will be more than 120,000 enterprises completed the reduction of registered capital.
Promoting a more honest and orderly business environment has made the new Company Law highly praised by Chinese and foreign enterprises.
Shao Haoqing, chairman of Hans Hill (Shanghai), said that the registered capital of the enterprise is an important basis for the authenticity of market operation and an important reference for the evaluation of partners. In the process of developing business in China, SYR Hans Hill will conduct a multi-dimensional evaluation of the partner's past growth history, existing product quality, service support ability and project execution reliability to ensure that the "best partner" is found.
We have participated in the China International Import Expo for 6 consecutive years, and we have fully felt the charm of China's economy and super-large market. The promulgation of the new Company Law has given important strengthening measures in the field of subscription registration, which is conducive to creating an honest and orderly business environment. This is a positive signal for the majority of Chinese and foreign enterprises. Shao Haoqing told this reporter.
In the view of Ma Hui, deputy general manager of Ningxia Juneng Robot Co., Ltd., in the process of finding partners, the registered capital is an important factor in judging whether the other party is "reliable". The new Company Law improves the registered capital subscription system for enterprises, blocks false and malicious competition by market entities from the legal level, and creates a fair, just and open business environment and an honest and trustworthy market environment.
Ma Hui said that a high-quality business environment is the basic condition for the high-quality development of enterprises. In 2024, Juneng Robotics will take the positive changes brought about by the implementation of the new "Company Law" as an opportunity to continue to deepen its cultivation in the field of intelligent manufacturing system solutions, continuously expand and innovate new technologies for the integration of digital intelligence, and grow together with more honest, pragmatic and innovative enterprises. "We will also give full play to the advantages of the industrial chain and work with more partners to collaborate on innovation and development. ”
Cao Lixia, general counsel of Sany Group, said that "bag companies" and "shell companies" often have a high risk of commercial fraud, which seriously affects the enthusiasm of formal market entities to carry out business cooperation. The new Company Law is conducive to strengthening the ability of commercial transaction partners to bear responsibility, ensuring the transaction security of commercial entities, reducing the abuse of the corporate subscription system by corporate shareholders to evade corporate debts, and enhancing the authenticity and effectiveness of investment, releasing important positive signals to the market.
For us, the promulgation of the new Company Law will allow Sany to obtain more extensive, safe and efficient business cooperation opportunities and reduce the risk of accounts receivable. Cao Lixia told this reporter that Sany will pay more attention to the payment of registered capital, deadlines, default events and other aspects of partners, and guide the healthy development of the industry's leading chain enterprises while continuing to provide higher quality products for global customers.
Energizing and staying safe.
Market players are the main participants in economic activities, the main providers of employment opportunities, and the main promoters of technological progress. According to data from the State Administration for Market Regulation, the number of companies in China increased from 13.03 million in 2014 to 48.39 million at the end of November 2023, an increase of 27 times, of which 99% belong to small and micro enterprises.
Now, the introduction of the new Company Law has increased the confidence of entrepreneurs. Mr. Shen, a post-80s entrepreneur from Hefei, Anhui Province, runs a bidding company. In his view, the registered capital will bring certain financial pressure to the establishment of a new company, but the new "Company Law" has improved the subscription registration system and optimized the business environment from the institutional perspective. "In my several entrepreneurial experiences, I have been in contact with various registered capital companies. In my experience, the new Company Law takes into account both stimulating the vitality of business entities and ensuring the safety of transactions, and forms a stronger protection for those who start businesses in a practical way. He said.
At the same time, the new Company Law has also boosted the development expectations of foreign companies in China. Liu Sirui, a global partner of Dorsey Law Firm and managing partner in Beijing, told this reporter that the capital payment systems adopted by various countries are diverse, which are closely related to factors such as the market environment of each country, the development history of the corporate system, and the tradition of corporate governance. Judging from the practice of some developed countries, the registered capital can effectively regulate the market order, enhance market mutual trust, and correspondingly reduce the damage to the interests of creditors.
Revise and improve the registered capital subscription system, which will help expand the right to know and choose of commercial entities, and provide strong support for relevant units to carry out due diligence and promote commercial projects. In the future, Dorsey will give full play to the golden signboard of the century-old store and the advantages of the cross-border service team, and actively serve more foreign investors to invest, start a business, develop a business and develop a business in China. Liu Sirui said.
It is worth noting that the relevant authorities have also provided a corresponding transition period for the entry into force and implementation of the new Company Law.
The relevant person in charge of the State Administration for Market Regulation said that in order to avoid the inconsistency of the legal system of registered capital applied to new companies and existing companies, strengthen the uniformity of the application of law, and at the same time reduce the impact on the vast majority of normal operating stock companies, and fully consider the types of business entities, industry fields and other complex situations, the relevant departments will study the establishment of a certain number of years and a relatively sufficient transition period for the stock companies, and adjust the capital contribution period of the stock companies to the new "Company Law" in a step-by-step, steady and orderly manner in accordance with the requirements of the new "Company Law" within the prescribed period.
Zhou Xin suggested that, on the one hand, the stock company should make reasonable planning in combination with its own actual situation, standardize the capital subscription behavior and make reasonable adjustments to its own capital structure by amending the articles of association, paid-in capital contribution, registering capital reduction, shortening the capital contribution period, etc. On the other hand, a newly established company should start from its actual production and operation needs, comprehensively consider the company's development positioning, business model, financing amount, etc., and reasonably plan the term and amount of capital contribution to reduce legal risks. (People's ** Overseas Edition).