Members of a limited liability company must contribute capital fully and on time to the company, and must be held responsible if they violate the obligation to contribute capital.
Legal grounds:
- Enterprise Law 2020.
We get the following questions:
We intend to open a limited company, as far as I know, I am only responsible for the company’s debts up to the amount of capital I have contributed. But someone said I could be responsible for even bigger debt?
In principle, according to Clause 1, Article 46 of the Enterprise Law 2020, once a member of a limited company has fully and timely contributed capital, he/she is only liable for the company’s debts and other property obligations to the extent of the contributed capital.
However, if there is a breach of the obligation to contribute capital, the member is no longer guaranteed the benefits according to the above principles.
Specifically, based on Clause 4, Article 47 of the Enterprise Law 2020 as follows:
Article 47. Contribution of capital to establish the company and issuance of certificates of capital contribution
4. In case a member has not contributed capital or has not fully contributed the committed capital, the company must register for a change in the charter capital, the proportion of capital contribution of the members equal to the contributed capital within 30 days from the last day on which the contributed capital must be fully contributed as prescribed in Clause 2 of this Article. The members who have not contributed capital or have not fully contributed the committed capital amount shall be responsible in proportion to the committed capital contribution ratio for the financial obligations of the company arising in the time before the date the company registers to change the charter capital and the proportion of the member’s contributed capital.
According to the above provisions:
- If a member does not fully contribute the committed capital, the company shall change the charter capital corresponding to the amount of capital actually contributed;
- If the company incurs debts during the period of insufficient capital contribution, the member who has not yet fulfilled the obligation to contribute capital shall be liable for that debts, and it may be greater than the amount of capital they have committed to contribute. This is the personal responsibility of the member who violates the capital contribution obligation.
