Registered Capital against Paid up Reality in a Chinese Venture
PRC Company Law reforms mandate full paid-in capital settlement within five years, exposing unpaid registered equity to creditor acceleration and forfeiture.
PRC Company Law Article 47
Meaning
Statutory capital contribution caps establish maximum permissible timeframes for shareholders of limited liability companies to fully pay their subscribed equity capital. Positioned within Chinese corporate legislation, PRC company law article 47 mandates that all subscribed capital commitments in limited liability entities must be fully paid within five years from company establishment. The rule restricts excessive subscription periods that previously allowed decades of unpaid capital commitments.
Corporate charters cannot extend capital contribution timelines beyond this statutory five-year ceiling.
Five-Year Ceiling
Subscription schedules written into articles of association must align with statutory five-year maturity windows. Shareholders in new corporate ventures must sequence payment installments to complete full funding before the five-year deadline expires. Existing companies formed under prior laws face transitional provisions requiring adjustment of original contribution schedules.
Failure to align schedules with statutory ceilings leads to administrative corrections and registration rejections.
Corporate Transition
Existing corporate entities must adjust articles of association to bring long-term capital schedules into compliance with new legal limits. Regulatory guidance directs firms with extended contribution schedules to reduce total capital or accelerate shareholder payments.
Capital Restructuring
Failure to meet subscription caps forces equity holders to restructure corporate equity or face share forfeiture. Shareholders unable to complete capital contributions within five years must reduce registered capital or transfer unpaid equity to solvent investors. Company directors carry explicit duty to oversee capital adjustment compliance under supervisory guidelines.
The rule protects commercial markets by ensuring registered capital figures reflect real financial backing.