Systematic Reflection on Deepening Reform of the Business Registration System Based on Subscribed Registered Capital*

Abstract

The Third Plenary Session of the 20th Central Committee of the Communist Party of China has proposed "deepening reform of the business registration system based on subscribed registered capital" as a crucial strategic initiative. This reform aims to strengthen corporate credit foundations, enhance transaction security, stimulate business investment, promote high-quality corporate development, and implement the core value system established by the Company Law (2023 Revision). Corporate credit, comprising capital credit, assets credit, and personality credit, serves as the material foundation for high-quality corporate development. However, the current system faces significant challenges due to vulnerabilities in three key areas: capital credit, asset credit, and personality credit. This study proposes a comprehensive framework with several crucial dimensions for reform implementation. First, it is necessary to rationalize shareholders' capital subscription commitments by enhancing the presumptive validity of public disclosure thereof, facilitating a smooth transition to the new five-year maximum subscription period, implementing flexible administrative guidance, and strengthening judicial remedies. Second, it is essential to reinforce the justiciability of shareholders' paidin capital obligations through multiple mechanisms: improving the rule for accelerated maturity of capital contribution obligations, strengthening civil liability of shareholders for defective capital contributions, enhancing the supervisory function of joint and several liabilities among founding shareholders, establishing presumptive rules for fullchain joint and several liability in multi-tier transfers of defectively contributed equity, and enhancing the shareholders' obligations on paid-in capital guarantee for transfer of equities corresponding to subscribed capital but not paid-in capital. Third, it is crucial to enhance transparency in capital subscription and contribution information through four major disclosure channels: business license documentation, articles of association filing, registration authority records, and the National Enterprise Credit Information Publicity System. The nature of corporate registration is a public information service that provides corporate registration information to the public. The disclosure of registered capital information has the effect of presumptive validity of public disclosure. It is recommended to convert all filing information into registration information to achieve a comprehensive integration of corporate registration matters and filing matters and to classify registration information into three categories: absolutely necessary, relatively necessary, and optional registration items.

Keywords: capital, subscribed capital system, paid-in capital system, shareholder's responsibility, corporate registration