Registered capital is the number foreign founders most often set carelessly and then have to live with for years. It is not a registration fee, it is not a deposit paid to an authority, and it is not a figure chosen for appearance.
It is a funding commitment. Under the current Company Law, shareholders of a limited liability company generally need to pay their subscribed capital within five years of establishment. That deadline turns the number on the licence into an obligation with a date attached.
This guide explains what registered capital is, how the five-year rule works, how to choose a sensible figure, and what happens if you need to change it later.
What registered capital actually is
Registered capital is the total amount the shareholders subscribe to contribute to the company. It becomes the company's own money and funds its operations. It is not held by a government body and it is not a fee.
Two terms matter:
- Subscribed capital is what the shareholders have committed to contribute.
- Paid-in capital is what has actually been contributed.
The gap between them is a liability the shareholders owe the company. That distinction is the whole point of the current rules.
Most ordinary businesses face no statutory minimum registered capital. Certain regulated industries do have capital requirements, so the activity should be checked rather than assumed.
The five-year payment rule
This is the change that most affects planning.
Under the current Company Law, shareholders of a limited liability company generally must pay their subscribed capital in full within five years of the company's establishment. Transitional arrangements apply to companies established before the current rules took effect, and implementation guidance sets out how existing companies adjust.
The practical consequences:
- A high subscribed figure is a commitment to fund that amount on a defined timetable, not a presentational choice.
- The contribution schedule should be planned against the company's actual funding capacity.
- For a foreign-invested company, contributions from overseas shareholders involve the bank and foreign-exchange procedures, so the mechanics need to be arranged in advance rather than at the deadline.
How to choose the figure
Work from the company's real needs rather than from a benchmark someone quoted.
Start with the operating plan. Estimate what the company needs to fund before it becomes self-supporting: premises, staff, equipment, inventory, licences, professional fees and working capital. Registered capital should comfortably cover that.
Check the industry. Some regulated activities carry capital requirements or expectations. Confirm this for the specific activity before settling on a number.
Consider who will assess it. Banks, landlords, larger customers and tender processes may look at registered capital as one indicator of substance. An unrealistically low figure can create practical friction, particularly for a trading company dealing with larger counterparties.
Then apply the five-year test. Ask whether the shareholders can actually fund the amount within the deadline. If the answer is uncertain, the number is too high.
A useful sanity check: if you would be uncomfortable transferring the full amount to the company within the period, you have chosen a figure for appearance rather than for operations.
How contributions are made
Contributions can generally be made in cash or in kind, subject to the applicable rules on non-cash contributions, which require proper valuation and transfer of the asset.
For a foreign-invested company, cash contributions from overseas shareholders run through the banking and foreign-exchange framework. Foreign direct investment information registration is completed through a bank, and a capital account is normally required to receive shareholder funds. This is why the account structure and the contribution schedule need to be planned together.
Keep the documentation clean. Contributions should be traceable, made by the registered shareholder, and recorded properly in the company's accounts. Funds arriving from a party other than the shareholder create problems that are easier to avoid than to fix.
Changing the amount later
Registered capital can be increased or reduced, and both are formal procedures rather than internal decisions.
Increasing is generally the more straightforward direction, requiring shareholder resolutions, amendment of the articles of association and registration of the change.
Reducing is more involved because it affects creditors. It requires shareholder resolutions and a statutory process that includes creditor protection steps and public notice.
Because reduction is the harder direction, it is better to set a realistic figure at the outset than to set an ambitious one and plan to reduce it.
Common mistakes
- Treating it as a fee. Adding registered capital to a service quote and calling the total "setup cost".
- Copying a competitor's figure. The number should follow your operating plan, not someone else's.
- Choosing a large amount for credibility. Under the five-year rule this is a real obligation.
- Ignoring the contribution mechanics. Discovering at the deadline that the account structure or foreign-exchange procedures were never arranged.
- Contributing from the wrong source. Payments from an entity that is not the registered shareholder.
- Assuming the deadline will not be enforced. Plan on the basis of the rules as written.
Questions to settle before filing
- What does the company need to fund before it can support itself?
- Does the industry carry a capital requirement?
- Can the shareholders fund the subscribed amount within five years?
- What is the contribution schedule, and is it recorded in the articles of association?
- How will the funds physically reach the company, and is the account structure planned?
- Who is contributing, and does that match the registered shareholder exactly?
Related reading
- How to register a WFOE in China
- Open a business bank account in China
- Hainan company registration cost: what drives the price
- Documents needed to register a company in Hainan
Official sources
- Company Law registered-capital implementation guidance
- State Administration of Foreign Exchange
- Guide to business establishment registration of foreign-invested enterprises
Capital rules, transitional arrangements and industry-specific requirements can change. Confirm the current position for the proposed activity before subscribing to an amount.
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