Know More
No Roller Coaster
Follow us to grow with confidence!
If you are a company's director or supervisor, what is your legal risk hidden regarding capital contribution? Under the implementation of China's new Company Law, you can no longer treat shareholder capital contributions as solely the shareholders' own matter. You may also bear personal responsibility.
Capital contribution oversight:
Under the Company Law, once a company is established, the board of directors is required to verify that shareholders have made their capital contributions in full and on time as stipulated in the company's articles of association.
If a shareholder fails to do so, the company must issue a formal written demand letter to that shareholder requiring payment.
Failure to act carries personal liability: If the board fails to perform this verification and demand duty in a timely manner, and the company suffers losses as a result, any director who is responsible for such failure shall be personally liable to compensate the company for the losses caused.
withdrawnal of capital oversight:
Shareholders are strictly prohibited from withdrawing their contributed capital after the company is formed.
If a shareholder does so, they must return the withdrawn capital. Moreover, if the company incurs losses as a result, any director, supervisor, or senior officer who bears responsibility for such withdrawal shall be jointly and severally liable with the shareholder.
Key Takeaway:
Do not treat capital contribution obligations as merely a matter between shareholders and the company.
As a director, supervisor, or senior officer:
1. Verify that contributions are made on time and in full;
2. Take prompt action to demand payment if a contribution is overdue;
3. Prevent and detect any improper withdrawal of capital after formation;
4. Understand that failure to fulfill these duties can result in personal financial liability — including joint and several liability for the full amount of improperly withdrawn capital.
These obligations are not formalities. Active oversight is required, and the legal exposure for neglect is direct and significant.
|
Set up in 2009
Focus on Tax& Accoounting
+86 189 1629 8482
wcx@ruanyinchina.com
|
