How the new company law influence the WFOE?
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With new China company law anounced, the foreign investors who hold or going to format WFOE in China cares a lot about how it will influence their business in China. The most important change they are intrested is about the registered capital pay up. The new China company law did require all the China companies pay up the registered capital no matter for newly regisgered or old companies in all over the country.
For newly registered WFOE registered after July 1st, 2024 it is easy to undertand the new law that regisered capital need to be paid up within five years since registration. The complicated part is for WFOEs regisered before July 1st, 2024. What are the rules for old companies? There are three more years extention period for old companies. For example, if the company was regisered in June 30, 2024. The deadline to pay up the capital will be on June 30, 2032.
For quite a lot foreign investors when they start their business in China at the very begining, they set up the registered capital with a quite big amount. And it will be hard for them to pay up all the capital. In this case you can choose to reduct the registered capital into the minimum amount to RMB30000 to RMB100000. That will be much easier to follow the new rules. After the government office accept your application of registered capital reduction, you can pay up the registered capital before deadline.
And also there are some of the clients choose to close their WFOE directly. It is acceptable for government to close your company directly without paying up the capital or reduct the registered capital before the deadline. The most important thing for this option is to not miss the deadline, or the registered capital will have to be paid up in any case. For the paid up capital it can be used for company daily management drefinately. For example to buy office equipment or paying salary to employees.
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