Does the registered capital of a registered Chinese enterprise need to be actually paid in?

2020/11/21

Although there are various optimization policies on the registration of Chinese enterprises to facilitate the establishment of new Chinese enterprises quickly and effectively, if you are a first-time entrepreneur and do not have a basic understanding of the key issues of Chinese enterprises, you will only find that there are more things to do later if you register Chinese enterprises in a hurry according to the procedures.

What about the registered capital?

Registered capital is also called legal capital, it is the amount of capital contribution that all shareholder or initiator subscribe or subscribe as stipulated in articles of association of Chinese enterprise makes enterprise, register in Chinese enterprise register authority lawfully. If you think it's a mouthful, you can simply interpret it as the assets owned by Chinese companies at the very beginning of their establishment.

For example, with a registered capital of 10 million RMB, it can be generally considered that the Chinese company had 10 million RMB of assets on its books when it was first set up.

The significance of registered capital to Chinese enterprises

Many people in the registration of Chinese enterprises, do not understand what the use of registered capital, registration is basically not too much. It must be wrong to think so.

The size of registered capital, to a certain extent, affects the willingness and trust of business cooperation. Everyone is more willing to cooperate with Chinese enterprises with large registered capital. Why? The reason is simple.

The new China Enterprise Law provides that the shareholders of a Chinese enterprise with limited liabilities shall be liable to the Chinese enterprise to the extent of their subscribed capital contributions, and the shareholders of a Chinese enterprise with limited shares shall be liable to the Chinese enterprise to the extent of their subscribed shares. That is, the size of the registered capital determines the financial strength of the Chinese enterprise and its ability to bear civil liabilities abroad.

How much is the best registered capital for Chinese enterprises?

Just think, if a Chinese enterprise has only 100,000 RMB registered capital, do you trust it to do a 10 million RMB project? Is it natural to be afraid of the Chinese enterprises to roll away the money? Even if it doesn't, what if the project screws up? The family has the registered capital of 100 thousand only, compensate you at most 100 thousand, did you lose big?

After the new Chinese Enterprise Law came out, it did abolish the minimum registered capital and the proportion of initial capital contribution. However, this only lowered the threshold of opening Chinese enterprises, but did not reduce the importance of registered capital for Chinese enterprises. To be more direct, under the subscription system, your paid-in capital may not be the same as your paid-in capital, but your responsibility remains the same. If your subscribed capital is 10 million, no matter whether your paid-in capital is 1 RMB or 100 RMB, once the Chinese enterprise goes bankrupt, you will also have to assume 10 million RMB of debt.

Something about the flight of funds

Although we have talked about the importance of registered capital, the reality is that after the injection of registered capital, the major shareholders have the opportunity to transfer their money again, leaving an empty shell of the Chinese enterprise, which we call the withdrawal of registered capital. It's quite common in real life.

But the withdrawal of registered capital is a civil liability, if found, will ask for compensation; Second, it may involve criminal responsibility. The higher the amount of registered capital, the more serious the legal consequences will be. According to relevant regulations of China's Enterprise Law, it is still illegal to withdraw registered capital, and if found by China's enterprise registration authorities, they will be fined.

From this point of view, the registered capital always has the risk of withdrawal, but the registered capital amount is large, the legal liability of shareholders is greater, the risk of withdrawal will be relatively small.

Therefore, the bigger the registered capital is not the better when Chinese enterprises are registered, the first-time entrepreneurs should act according to their own personal conditions. The above contents hope to help you, if you have any questions about the registered capital of Shenzhen Chinese enterprises, please feel free to contact us.