Legislation roundup: PRC Company Law, environmental protection and M&A accounting
January 28, 2014 | BY
clpstaff &clp articles &The second amendment to the PRC Company Law removes registered capital requirements. The Ministry of Environmental Protection has categorised environmental credit ratings and the Ministry of Finance has clarified the accounting treatment for mergers.
Company Law
PRC Company Law (2013 Revision)
中华人民共和国公司法 (2013修正)
The new Company Law abolishes the provision that requires the shareholders (sponsors) of a company to fully pay in their capital contributions within two years of the date of establishment of the company and companies with an investment nature to pay in their capital contributions in full within five years. It abolishes the minimum registered capital requirement of Rmb30,000 for limited liability companies and no longer places restrictions on the initial capital contribution percentage of the shareholders (sponsors) at the time of the establishment of the company; and no longer places restrictions on the percentage of the capital contributions of the shareholders (sponsors) that is to be made in cash.
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Further reading
Environmental protection
Ministry of Environmental Protection, National Development and Reform Commission, People's Bank of China and China Banking Regulatory Commission, Measures for Assessment of the Environmental Credit of Enterprises (Trial Implementation)
环保部、国家发改委、人民银行、银监会企业环境信用评价办法（试行）
Pursuant to the Measures, the environmental credit rating of enterprises is divided into four grades, environmental protection integrity enterprise, fine environmental protection enterprise, environmental protection warning enterprise and poor environmental protection enterprise. The assessment norms mainly include pollution prevention and treatment, ecological protection, environmental supervision, and public monitoring, divided into 21 items falling under those four headings.
See the digest for more details.
Further reading
Accounting
Ministry of Finance, Interpretation of Enterprise Accounting Guidelines No.6
财政部企业会计准则解释第6号
When enterprises subject to the same control merge and the merging party prepares the financial statements, where the merged party was acquired from a third party by the final controller in a past year, the reporting entity arising after the merger should be deemed to have continuously existed as a member of the integration from the time the final controller began to exercise control, and the relevant accounting treatment should be carried out based on the book value of the assets and liabilities (including the goodwill arising from the final controller's acquisition of the merged party) of the merged party as recorded in the final controller's financial statements.
See the digest for more details.
Further reading
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