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
Capital Acceleration Call
Meaning
Demands for the immediate payment of subscribed registered capital occur when an enterprise lacks the liquidity to satisfy its matured debts. While the 2023 Company Law permits a five-year window for capital contributions, a capital acceleration call overrides this timeline to protect creditors during financial distress. Shareholders must provide the funds regardless of the payment dates specified in the articles of association.
Liquidity Trigger
Insolvency proceedings or a clear inability to pay debts as they fall due activates the right of the company or its creditors to demand early contribution. The capital acceleration call ensures that the nominal wealth of the entity becomes available for distribution to claimants. Courts generally support these calls when the alternative is the total collapse of the business without a path to recovery.
Shareholder Risk
Investors who have committed to high registered capital figures but deferred payment face sudden cash flow demands under this mechanism. Because the capital acceleration call is a statutory right, the shareholder cannot use the company’s internal delays as a defense against payment. Failure to respond to the call leads to the personal assets of the shareholder being targeted for the company’s liabilities up to the unpaid amount.
The 2023 legal update clarified that this obligation remains even if the shareholder transfers their equity to a third party before the payment deadline has arrived.
Procedural Execution
Liquidators or bankruptcy administrators issue the formal demand notice as part of the asset collection phase. If the shareholder disputes the capital acceleration call, the administrator seeks a court order to enforce the contribution and may freeze the shareholder’s other interests in China. The demand remains valid until the total subscribed capital is fully paid into the company bank account.