Meaning
Official auditing procedure executed by a licensed independent accounting firm in China confirms that a newly established corporate entity has received the full amount of capital committed by its shareholders. This registered capital verification produces a formal report that must be submitted to the local administration for market regulation to finalize corporate licensing. The requirement ensures that the foreign or domestic investors have fulfilled their statutory capitalization promises and is completed once the official bank transfer receipts are audited.
Compliance Procedure
Auditors inspect the designated foreign exchange capital account of the new enterprise to verify the origin and amount of the transferred funds. This inspection involves matching bank statements, cash receipts, and foreign currency conversion records. The procedure is mandatory to prove that the capital injection matches the company’s registry.
Audit Consequence
Successful audit reports allow the company to obtain its final business license and begin normal commercial operations. This document also serves as a necessary prerequisite for opening secondary operating bank accounts. Without the report, the company cannot receive local business approvals.
Regulatory Exception
Recent company law amendments have introduced more flexible capitalization schedules for specific sectors, reducing the immediate need for verification during initial registration. However, specific highly regulated industries still require immediate verification to guarantee financial stability. This mandatory check prevents undercapitalized businesses from operating.
