Research On The Minimum Registered Capital System Of China

The minimum registered capital system for a company is a system given by thecompany law which sets the requirements for a company’s minimum capital forsetting up a company. The original purpose of the system is to protect the rights andinterests of creditors and maintain transaction security. At the beginning, the systemplayed an important role in many aspects such as containing company from beingover-established, prevent the shell companies from flooding the market, and protectthe interests of the creditors, etc. But with the development of economy, the givenfunction of system gradually failed, not only did it fail to reach the originalexpectation of protecting the interests of the creditors, but it has produced variousdrawbacks in practice instead, which seriously hindered the development of our nativecompanies. Comparing legislations in countries and areas throughout the world, wefind that abolishing the minimum registered capital system has become a trend for thedevelopment of the system of companies. However, the new company law in Chinahas not been thoroughly changed in this aspect, and it retains the minimum registeredcapital system by just reducing the limit of the minimum registered capital. Thisconservative approach in our country can’t actually change the present situation, andworse, it will not be helpful to improve the competitiveness of our country in theworld. This conservative approach is out of the consideration that it can not onlyprotect creditors, safeguard the security of transactions, which is helpful for thegovernment to have intervention in economy but that it is based on the pathdependence of the system existing in our country’s development.However, the currentsituation of the company actually has not been fundamentally changed, and theminimum registered capital system is still hindering the development of companies,which, as a result,has increased the difficulty of entrepreneurship and does no goodto stimulate China’s economic vitality and enhance our competitiveness in the world.With the economic development and legal environment in our country, capitalsystem of our country is easing, and the minimum registered capital system reform isjust right an important reflection of this. With a reference to the legislative trends ofcompany system in major developed countries and regions, it is fully possible for our country to get rid of the path dependence on minimum registered capital system.Therefore, China should be bold to abandon the minimum registered capital systemand improve other supporting systems such as notary system, distribution of surplusto the company regulation, perfecting the personality denial system, perfecting theinformation disclosure system and so on to better protect creditors and maintaintransaction security and promote economic development eventually.