Registered Capital After the 2024 Company Law: The Five-Year Clock
China Field Notes · by Daona · 13 min read
Registered capital used to be a number you wrote on a form and paid "within the term of the company". Since July 2024 it is a promise with a deadline, a public record and personal consequences. Choose it the way you would choose a loan amount — not the way you would choose a font size.
When foreign founders set up their first Chinese company (Issue 05), one field causes more debate than any other: registered capital (注册资本). Headquarters wants a round number. The local service provider suggests something "that looks serious". Someone remembers a previous company had ¥10 million on its licence and nobody ever paid it in.
That last memory is the dangerous one. Under the revised Company Law (公司法), in force since 1 July 2024, subscribed capital in a limited liability company must be paid in within five years, every contribution is public, and shareholders can be required to pay early if the company cannot pay its debts. Existing companies with longer schedules must adjust by 30 June 2027 — about eight months from now.
Article 47 provides that capital subscribed by the shareholders of a limited liability company (有限责任公司) must be paid in full within five years of establishment, as the articles of association specify. A WFOE is, in law, a limited liability company, so the rule applies in exactly the same way.
· Still no general minimum. Minimums survive only where specific laws set them — banking, insurance, securities and certain licensed services such as labour dispatch, which needs at least ¥2 million under the Labor Contract Law.
· Five years is a ceiling, not a target. Any schedule within five years is fine, including payment on incorporation.
· Capital increases restart a clock. New subscriptions after July 2024 must be paid within five years of registering the change.
For joint stock companies (股份有限公司), promoters must pay for their subscribed shares in full before establishment.
What counts as a contribution
Cash, or non-monetary assets that can be valued in money and lawfully transferred: physical assets, IP, land use rights and — explicitly since 2024 — equity and creditor's rights. Non-monetary assets must be appraised and not overvalued. Under Article 50, if a contribution made at establishment is worth significantly less than stated, the contributor makes up the difference and the other founders are jointly liable. For most foreign investors, the practical answer is cash.
The State Council's Provisions on Implementing the Registered Capital Registration Administration System under the Company Law took effect on 1 July 2024; SAMR's implementing measures followed on 10 February 2025:
| Registered before 30 June 2024 | Rule | Deadline |
|---|---|---|
| LLC, remaining period over 5 years from 1 July 2027 | Shorten to within 5 years; record in articles | Adjust by 30 June 2027; pay by 30 June 2032 |
| LLC, within 5 years, or fully paid | No adjustment | As scheduled |
| Joint stock company | Promoters pay in full | By 30 June 2027 |
If your WFOE was set up before July 2024 with a 20- or 30-year contribution period, you almost certainly need to act before 30 June 2027. Companies that fail to adjust are ordered to correct; if they still do not, their record is annotated and disclosed on the National Enterprise Credit Information Publicity System (国家企业信用信息公示系统, "GSXT") — which customers, banks and partners check (Issue 07). A narrow exception for national or major public interests rarely applies to foreign-invested companies.
Abnormal capital may be reviewed
The registration authority may examine "significantly abnormal" contribution periods or capital, looking at business scope, operations, shareholders' financial capacity, main projects and asset scale, and require adjustment. Commentary on SAMR's measures cites periods over 30 years or capital over ¥10 billion as examples. A two-person WFOE with ¥50 million of capital is not in that league — but it is the kind of mismatch that invites questions.
A limited liability company must disclose on GSXT each shareholder's subscribed amount, paid-in amount, form and date of contribution, and any change within 20 working days (Article 11 of the SAMR measures). False or missing disclosure is punishable under the Company Law and the enterprise information disclosure rules.
Anyone can now see both columns. A company that subscribed ¥20 million and has paid in ¥200,000 in its fourth year tells a story you may not want told.
| Article | In short | Why it matters |
|---|---|---|
| 49 | Late payer must pay in full and compensate losses | Late payment is a breach |
| 51 | Board must verify contributions; company issues a written call; responsible directors liable for losses | Your China directors carry personal exposure |
| 52 | After a call with ≥60 days' grace, board may forfeit unpaid equity; transfer or cancel within 6 months | In a JV, unpaid shares can be lost |
| 53 | No withdrawal of capital; shareholders and directors liable | No "inject and lend back" |
| 54 | If the company cannot pay debts due, company or creditor may require unpaid capital early | The schedule gives no protection in trouble |
| 88 | Transferee of not-yet-due equity must pay; transferor secondarily liable | Selling doesn't end exposure |
Article 54 turns registered capital into real money. If the subsidiary owes a landlord, supplier or former employee and cannot pay, the unpaid portion becomes a pool creditors can reach. A ¥10 million subscription with ¥1 million paid is, in effect, a ¥9 million guarantee by the parent.
Ordinary reduction (Art. 224)
Shareholder resolution, balance sheet and asset inventory. Notify creditors within 10 days and announce within 30 days in a newspaper or on GSXT. Creditors may demand repayment or security — within 30 days of notice, or 45 days of the announcement if they received none. Then register the change.
Simplified reduction to cover losses (Art. 225)
If losses remain after using the statutory and capital reserves, capital can be reduced to cover them without individual creditor notice, but with an announcement within 30 days. Nothing may be distributed to shareholders, and contribution obligations are not released.
Re-scheduling
Subscribed or paid-in capital, contribution method or period can be changed through a GSXT announcement; if no creditor objects, the change is registered. For a pre-2024 company whose only problem is schedule length, this may be enough.
A reduction without proper notice and announcement can be treated as unlawful withdrawal of capital. Use a licensed law firm or registration agent and keep the evidence.
· FDI registration. After the licence is issued, the company completes foreign direct investment registration with its bank, acting under the State Administration of Foreign Exchange (国家外汇管理局).
· Capital account. The company opens a foreign-currency capital account (外汇资本金账户); the parent remits capital from abroad and the bank records it as a contribution.
· Conversion and use. Capital can be converted into renminbi and spent on genuine operating needs within the business scope. Banks check supporting documents; uses prohibited by law and most securities investment are restricted.
· Evidence. Paid-in amounts must match bank records and GSXT. A capital verification report is no longer generally required, but auditors check paid-in capital every year.
Pay from the subscribing shareholder only. Money from a sister company, a director's account or a third party triggers bank queries and may not count. And capital is not a current account: getting money out later means dividends (Issue 15), service fees or a formal reduction.
A European design-software company sets up a five-person WFOE in Shanghai. First local customers in month 7; cash-positive in month 19.
| Item | Calculation | Amount |
|---|---|---|
| Months 1–6, full burn | ¥180,000 × 6 | ¥1,080,000 |
| Months 7–18, net burn | ¥90,000 × 12 | ¥1,080,000 |
| Fit-out, deposits, equipment | ¥300,000 | |
| Buffer, 3 months full burn | ¥180,000 × 3 | ¥540,000 |
| Cash needed | ¥3,000,000 |
Registered capital of ¥3 million, paid in tranches that track the plan:
| Tranche | When | Amount | Cumulative |
|---|---|---|---|
| 1 | Within 3 months | ¥1,500,000 | ¥1,500,000 |
| 2 | Month 9 | ¥1,000,000 | ¥2,500,000 |
| 3 | Month 18 | ¥500,000 | ¥3,000,000 |
Illustrative. Does not refer to any real company.
Compare the alternative: ¥10 million "for credibility" with the same ¥3 million paid. That leaves ¥7 million subscribed but unpaid. In a bad year, Article 54 lets a creditor ask for it early. In a good year, the parent must still pay the full ¥10 million within five years — or run a creditor process to reduce it. If the plan changes, increase capital later: an increase is a routine filing; a reduction is a creditor process.
Size capital to cash needs, not to image. Banks, landlords and customers increasingly read the paid-in column.
Check the exceptions. If a licensed activity in your scope has a statutory minimum, confirm it in writing before filing.
Match the schedule to the plan. Tranches tied to the business plan are easier to fund and defend than a lump sum in year five.
Pre-2024 companies: act now, not in June 2027. Registration offices will be busy at the end — and the adjustment is a chance to reduce an unrealistic figure.
Brief your China directors. Under Article 51 they must verify contributions and issue calls.
"Nobody actually pays registered capital in." Not any more. Five years, and the paid-in amount is public.
"Our exposure is whatever we have paid in." Your exposure is what you have subscribed.
"We can sell the company to get out of it." The transferor remains secondarily liable (Art. 88).
"Higher capital helps with permits and bank accounts." Real operations matter more; an unfundable number creates a bigger problem.
"Reducing capital is just a form." It needs creditor notice and announcement. Done wrongly, it is a withdrawal of capital.
Your checklist
☐ Build a 24-month cash plan before choosing registered capital
☐ Check whether any licence in your scope has a statutory minimum
☐ Set a tranche schedule in the articles, all within five years
☐ Remit only from the subscribing shareholder, into the capital account
☐ Disclose each payment on GSXT within 20 working days
☐ Brief China directors on their duty to verify and call
☐ Pre-2024 company: if your period runs past 30 June 2032, adjust by 30 June 2027
☐ Capital too high: choose re-scheduling, ordinary or simplified reduction
☐ Reply SETUP for our Entity Setup Checklist
Rules as of October 2026. This column provides general information, not legal advice. Company registration is handled by the market regulation authorities and foreign exchange matters by banks under SAFE rules; legal opinions and filings should be handled by licensed professionals. Government fees and licensed firms' fees are settled by the client at cost.
China Field Notes · by Daona