Changes To The Company Law - Another Welcome Liberalization

In late December, several changes were made to the Company Law. These changes, taken as a whole, remove requirements regarding the payment and verification of capital contributions. This is a welcome liberalization, and should bring corporate law and practice another step closer to the approach commonly seen in other jurisdictions. Once these changes are rolled out, rules that protect investors and third-party rights, and a market approach to evaluating the credit standing of a particular company, will become more significant.

This Haiwen Alert summarizes the most significant changes.

The specific changes

The changes to the Company Law address various requirements for registered capital, including general minimum registered capital requirements, payment terms and the need for paid-in capital to be verified as paid in by a Chinese qualified accounting firm.