Registered Capital Commitments against the Five Year Injection Schedule
Foreign investors must inject subscribed capital within five years under PRC Company Law Article 47 or execute capital reductions to avoid statutory fines
Article 252
Meaning
Statutory liability for liquidation committee members arises when a failure to perform duties results in financial damage to the company or its creditors. Under the 2023 revision of the PRC Company Law, article 252 establishes that these individuals bear personal responsibility for losses incurred during the winding-up process. The provision targets negligence and intentional misconduct during asset valuation or debt satisfaction.
Legal Obligation
Liquidators face direct claims from shareholders or external claimants when they fail to protect the residual value of the firm. While earlier versions of the law lacked specific punitive depth for administrative errors, article 252 creates a clear path for civil litigation against committee members who mismanage the liquidation. The liability extends to both internal directors and external professional advisors appointed to the committee.
Creditor Protection
Financial claimants use this article to recover funds lost through the unauthorized disposal of company assets or the preferential treatment of certain debts. Because article 252 permits creditors to bypass the corporate veil of the entity in liquidation, the mechanism acts as a deterrent against the siphoning of capital before final dissolution. The provision ensures that those managing the exit remain accountable to the priority of claims.
This accountability holds even if the committee has already filed its final report with the market regulator, provided the damage occurred during their tenure. The statute of limitations for such claims is governed by the general civil code, yet the specific evidence is drawn from the liquidation records and audit reports.
Exculpatory Defense
Members of the committee may avoid liability by demonstrating they acted with due diligence and followed all statutory procedures. Courts examine the meeting minutes and the professional advice sought during the process to determine if the standard of care was met. Documentation serves to prove that the committee followed the sequence of debt repayment required by law.