The revised Company Law mandates that shareholders of limited liability companies (LLCs) must fulfill their capital subscription obligations within five years from the date of the company’s formation. This law is scheduled to be enacted on July 1, 2024. Consequently, any LLCs founded after this date will be obliged to adhere to the new subscribed capital regulations. For LLCs established prior to the implementation of the revised Company Law and whose capital contribution schedules extend beyond the stipulated five-year limit, a transitional phase will be implemented. This phase is designed to allow these pre-existing companies to incrementally adjust their capital payment schedules to comply with the new mandate.
Adjustment Measures for the Contribution Period of Existing Companies：
- Companies established before July 1, 2024, can, during a three-year transition period (from July 1, 2024, to June 30, 2027), change their subscription period to within five years, with the capital contribution to be completed by June 30, 2032, at the latest;
- For limited liability companies, if the remaining subscribed contribution period is less than five years by July 1, 2027, there is no need to adjust the contribution period further;
- Joint-stock companies can fulfill the payment of their subscribed shares before June 30, 2027.
Therefore, existing company shareholders need to review the company’s registered capital thoroughly：
- If it cannot be fully paid within five years, they should timely initiate a capital reduction procedure to decrease the registered capital;
- If it is confirmed that the registered capital cannot be paid by the due date and another company is interested in the acquisition, consider transferring ownership through a change in equity;
- If the company has no actual business operations, it can proceed with its dissolution.
Should you have any questions about company registration, registered capital, company deregistration, etc. Please contact our expert team for further discussion.
Integra Group is a fully licensed asia-focused accounting, taxation, and business advisory firm – with dedicated offices in Shanghai, Beijing, Singapore and Taipei. We’ve helped companies ranging from Fortune 500 companies to small to medium sized businesses establish and grow their presence in Asia.
