Recently, the Communist Party of China decided to implement the new “Company Law” on July 1, 2024, requiring registered capital to be paid in for five years, triggering a wave of capital reductions by companies across the country. The picture shows an industrial park in Houjie, Dongguan City, Guangdong Province. (Noel Celis/AFP)
[The Epoch Times, January 13, 2024](Interview and report by Ning Xin, reporter from the Epoch Times Special Topics Department) The Chinese Communist Party will implement the new “Company Law” on July 1 this year, requiring registered capital to be paid in for five years. This immediately triggered companies across the mainland to reduce their registered capital. Industry insiders revealed that more than 40,000 companies in Shenzhen alone have reduced their capital in the past half month, with capital reduced to at least 10,000 yuan. They believe this reflects China’s economic downturn. .
The Communist Party of China passed the newly revised “Company Law” on December 28 last year, and it came into effect on July 1 this year.
The biggest change in the new “Company Law” is that the limited liability company subscription registration system has been modified, clarifying that the capital contribution amount subscribed by all shareholders must be paid in full by shareholders in accordance with the provisions of the company’s articles of association within 5 years from the date of the company’s establishment; at the same time, the new For companies that have been registered and established before the implementation of the Company Law, if the capital contribution period exceeds the period stipulated in this Law, unless otherwise provided by laws, administrative regulations or the State Council of the Communist Party of China, it shall be gradually adjusted to within the period stipulated in this Law.
Although the Company Law of the Communist Party of China has been revised many times, the revised Company Law in 2013 changed the company’s registered capital from an installment payment system to a subscription system, canceled the minimum registered capital limit, and did not stipulate a legal period for shareholders to contribute capital. This ultimately leads to blind subscriptions, sky-high subscriptions, excessively long terms, etc. For example, some companies with investment periods exceeding 50 years and investment amounts reaching hundreds of billions have registered with “zero yuan of actual capital” to obtain a legal business license, and then used high registered capital as a “cover” to deceive investors into investing. The situation of the money running away.
The new five-year payment requirement has triggered a wave of capital reductions by companies across China, and financial companies that provide capital reduction services have encountered business opportunities. Xiao Hua (pseudonym), a staff member of a financial company in Shenzhen, Guangdong, revealed in an interview with an Epoch Times reporter on January 11, “We only do business in Shenzhen, and there are more than ten or twenty companies operating every day. After the latest company law was announced, “There are currently more than 40,000 companies in Shenzhen that have reduced their capital.” She said that because full payment is now required, if not, you will face a fine of 50,000 to 200,000 yuan.
Epoch Times reporters found on the commercial entity credit supervision publicity platform of the Shenzhen Municipal Administration for Market Regulation that a large number of limited companies publish capital reduction announcements every day. For example: On January 12, Moce Financial Management (Shenzhen) Co., Ltd. announced that it planned to The registered capital has been reduced from RMB 1 million (approximately US$140,000) to RMB 10,000 (approximately US$1,400); Shenzhen Zehai Construction Labor Service Co., Ltd. plans to reduce the registered capital from RMB 48 million (approximately US$6.75 million) ) was reduced to RMB 30,000 (approximately US$4,200); Shenzhen Kangjia Industrial Co., Ltd. reduced its registered capital from RMB 10 million (approximately US$1.4 million) to RMB 50,000 (approximately US$7,000).
On the Approximately 280,000 US dollars), other limited companies have reduced from 5 million yuan (approximately 700,000 US dollars) to 100,000 yuan (approximately 14,000 US dollars), 30,000 yuan (approximately 4,200 US dollars). , the capital reduction of all limited companies is very large.
Xiao Hua said that currently the registered capital can only be reduced to a minimum of 10,000 yuan. “Now the capital reduction is very large, and you can see it yourself. The minimum is 10,000 yuan. The situation of each enterprise is different, but basically the registered capital is reduced to 10,000 yuan.” Most of them have funds of about 10,000 yuan to 100,000 yuan.”
Her company’s service fee for each capital reduction is RMB 800. She said that the service fee for capital reduction in Guangzhou is higher, RMB 1,500. Because Guangzhou has strict censorship, the fee is relatively high, but their company principle only provides services to companies in Shenzhen. Serve.
She also revealed that the capital reduction procedure is cumbersome and requires 45 days of public announcement, but the capital increase is very simple, and it does not matter if the registered capital of 10,000 yuan does not go through capital verification because the amount is small. The capital verification is mainly for 100,000 yuan, hundreds of thousands yuan, or Enterprise with several million yuan (registered capital).
As for the current wave of capital reduction, Xiao Hua believes that it is a reflection of China’s economic downturn. People have no money in their hands and cannot make actual payments, so they have taken this step of capital reduction.
Li Hengqing, an economist living in the United States, also agreed with this. Business owners are now more cautious. China’s economy is declining and business owners lack confidence in the future, so they would rather announce a capital reduction.
He said: “In China, capital verification is not so serious. Everyone is willing to fill in more information, especially for small companies (with a high amount of registered capital). When they go to get a loan, they want it to look good. For example, if your registered capital is 10 million, the loan People think you can definitely pay back one million, so from this perspective, some people are willing to make their registered capital appear larger.”
“In China, it used to be very difficult to obtain loans, especially for private enterprises. But it is different now. During the great economic recession, especially in 2023, banks are asking for corporate loans, but people are not borrowing money. At this time, there is no need to get loans like in the past. Being arrogant and pretending to be fat actually means that we are not confident about the economy as a whole. We are not optimistic about the future of the Chinese economy as a whole. We have many negative emotions, so now we would rather reduce our registered capital as soon as possible, just in case.”
After three years of epidemic control by the CCP, a wave of business closures, coupled with the collapse of China’s real estate industry in 2023, triggered a series of industry shocks, including the banking industry. The Chinese people describe 2023 as “too difficult.”
The prospects for 2024 are even more bleak. On January 8, Eurasia Group, the world’s largest political risk consulting firm headquartered in the United States, released the “Top Risks” report facing the world in 2024. The report lists “the failure of China’s economy to recover” as one of the top ten risks this year.
The report said that foreign investors have withdrawn, Moody’s outlook has been lowered, real estate purchases have stalled, the stock market has plummeted, as well as China’s unfavorable demographic structure, weakening labor cost advantages, high debt (especially at the local level), reliance on state investment for growth, and Western ” Efforts to reduce risks will further weaken China’s hopes for economic recovery. At the same time, Xi Jinping’s concentration of power and security-over-growth approach will not only affect the confidence of consumers, businesses and investors, but also make the regime slower to respond to economic and financial vulnerabilities, which will exacerbate the Chinese economy. of downturn.
Editor in charge: Lian Shuhua
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2024-01-13 08:24:19
