What Is Legal Capital?

Legal capital is also called fixed capital and nominal capital. Capital determined by the law of the host country or the company's board of directors as the par value or establishment value of the share capital. This part of the capital is the material guarantee for obtaining the legal person status of the company and is part of the company's net assets. The use of statutory capital is subject to restrictions in the Company Law of the country in which it is located. The establishment of any company organization must first have a certain amount of capital as the basis, which is usually clearly stipulated in the company laws of various countries and is therefore called legal capital. It is generally established by the way stocks are issued. ^[1]

Legal capital

Paid-up capital refers to the capital actually invested by the investor in accordance with the articles of association of the enterprise or the contract or agreement.

In other words, the minimum capital for setting up a company must be above the statutory capital, that is, the paid-in capital must be greater than the statutory capital.

Minimum

According to Article 26 of the Company Law of the People's Republic of China ^[2] , the minimum amount of registered capital of a limited liability company is RMB 30,000. Where laws and administrative regulations have high requirements on the minimum amount of registered capital of a limited liability company, such provisions shall prevail.

Article 59 of the "Company Law" makes special provisions on the registered capital of a one-person limited liability company. The minimum registered capital of a one-person limited liability company is RMB 100,000. The shareholders shall pay the capital contribution stipulated in the articles of association of the company in full in one payment.