Statutory Asset Valuation Verification Rules in International Joint Ventures
Statutory asset valuation verification governs non-cash capital contributions in joint ventures through mandatory appraisals and joint shortfall liabilities.
PRC Company Law Article 27
Meaning
Legal provision in the People’s Republic of China defining the types of assets that shareholders may use as capital contributions. Under prc company law article 27, investors can contribute currency or non-monetary properties like land use rights and technology that are transferable. Each contribution must undergo a formal valuation process to confirm its worth.
Asset Eligibility
Only properties that can be appraised in monetary terms and transferred according to law are accepted. This excludes labor services or the reputation of a founder from being used as a prc company law article 27 contribution. The law seeks to protect the interests of creditors by ensuring that the registered capital consists of items that can be liquidated if the business fails.
Valuation Duty
Shareholders are responsible for ensuring that the value assigned to the property is accurate and fair. If the property is overvalued, the shareholder must pay the difference to the company. This obligation prevents the creation of companies with insufficient assets to meet their operating needs or settle their debts.
Verification Process
A professional appraisal firm must issue a report confirming the value of the assets. This report is filed with the company registration authority to finalize the capital injection.