1、 What is intellectual property paid in capital?

Because the law supports shareholders to use intellectual property to contribute capital, this means that shareholders can use intellectual property to pay in the registered capital of the company.

Because actual payment is the shareholder's obligation to contribute capital.

So, intellectual property must be in the name of shareholders and evaluated before it can be transferred to the company.

This process is the actual payment of capital.

In February 2014, the country implemented the registered capital contribution system, effectively reducing the market access threshold. However, subscribed capital does not mean that actual capital cannot be paid, and actual capital has not exited the stage of history. The risk of a company not having paid in capital is that in the event of a debt dispute that cannot be repaid, the company may be declared bankrupt or dissolved by creditors, and the shareholders' capital contribution obligations will also be accelerated.

Many companies still agree on the share and deadline of the actual capital contribution made by the company's shareholders (initiators) at the beginning of their establishment. Actual capital contribution is not only a way to showcase their strength to the outside world, but also a threshold for many companies to bid. For example, when a construction company bids for a project, the bidding documents specify the capital threshold for actual capital contribution.

2、 The specific process of paid in intellectual property capital

Step 1: Determine the company's articles of association

Shareholders jointly sign the company's articles of association, agreeing on the amount and method of their respective contributions.

Step 2: Apply for pre-approval of the company name

The first step in actual payment is to apply for pre-approval of the company name. The applicant (or their authorized agent) shall submit an application to the registration authority, specifying the company name, business scope, and other information. This step is to ensure the legality and uniqueness of the company name.

Step 3: Asset Evaluation

In order to avoid the legal risk of false investment, the first priority is to evaluate the value of the intellectual property, which must be conducted by a professional asset appraisal company and not overvalued or undervalued.

If shareholders contribute intellectual property, the value of the intellectual property shall be determined by the evaluation made at the time of contribution, and shareholders shall not be liable for any subsequent depreciation caused by market changes or other objective factors. Unless the evaluation agency is suspected of false evaluation or the parties have agreed otherwise, the investor shall bear corresponding legal responsibilities.

Step 4: Ownership Change

Transfer the relevant rights (ownership, right of use, etc.) of intellectual property from the shareholders to the name of the established company, and go through the transfer registration procedures at the China National Intellectual Property Administration according to its requirements.

Step 5: Verification of Registered Capital

Based on the asset appraisal report that has been issued, conduct a verification of registered capital contributions, and have accounting firms, audit firms, and other qualified institutions issue a verification report that can prove the authenticity of the funds.

Step 6: Publicity, Registration, and Filing

After the shareholders have completed the paid in capital, the company shall complete the disclosure of the paid in capital on the enterprise credit information disclosure system website within 20 working days and change the company's articles of association. The company shall register the change with the Market Supervision Administration by recording the paid in situation in the articles of association.

Step 7: Apply for deferred tax payment

Although deferred taxation cannot reduce the taxable amount, the postponement of the tax period can allow taxpayers to use this amount without paying interest.

According to Article 3, Paragraph 1 of the "Notice on Improving the Income Tax Policies Related to Equity Incentives and Technology Investment" issued by the Ministry of Finance and the State Administration of Taxation, "If an enterprise or individual invests in a domestic resident enterprise with technological achievements and all the consideration paid by the invested enterprise is stocks (rights), the enterprise or individual may choose to continue to implement the current relevant tax policies or choose to apply the deferred tax preferential policies. If the enterprise or individual chooses to apply the deferred tax policy for technology achievement investment and investment, after filing with the competent tax authority, the investment and investment can be temporarily exempt from tax for the current period, and is allowed to be deferred until the transfer of equity. The income tax shall be calculated and paid based on the difference between the equity transfer income minus the original value of the technological achievements and reasonable taxes

Step 8: The reviewing authority reviews the application materials and issues a business license

The reviewing authority will conduct a detailed examination of the intellectual property payment materials submitted by the applicant to ensure that the application complies with legal and regulatory requirements. If the review is approved, the reviewing authority will issue a review opinion. After approval, the registration authority will issue a business license, marking the completion of the enterprise's actual payment. The applicant shall obtain the business license within the prescribed time and pay the relevant fees on time.

Step 9: Handle other registration procedures

In the process of actual payment, if there is a change in intellectual property ownership or expansion of business scope, enterprises need to promptly handle the registration procedures for intellectual property changes.

3、 Paid in capital for intellectual property rightsRequired Materials

1. Patent certificates, patent registration books, trademark registration certificates, transfer contracts related to intangible asset investments, handover certificates, etc. In addition, it is necessary to fill out an intangible asset verification checklist, including name, valid status, pricing, etc., which should be consistent with the contract, agreement, and articles of association.

2. If the transfer procedures of intellectual property rights have not been completed, the "Property Transfer Form for Investment" needs to be filled out, signed by the proposed enterprise and its investors, promising to complete the relevant property transfer procedures within the prescribed time limit.

3. We need to provide an evaluation report issued by an asset appraisal institution, as well as confirmation documents from investors regarding the valuation of assets.

4. According to the type of enterprise and actual payment situation, copies of the business license, company articles of association and resolutions of the shareholders' meeting, copies of the company's financial statements for the past three years, and copies of the ID cards of shareholders and legal persons are also required.

5. For specific intellectual property rights, corresponding evaluation materials are also required. For example, copyright assessment requires providing feasibility study reports on copyright, appraisal materials and certificates of copyright achievements, certificates or awards issued by relevant departments, and copies of approval documents from relevant units.

4、 The benefits of paid in intellectual property capital

1. Performance of Strength

After the actual payment, the registered capital of the enterprise can be checked on relevant online platforms such as Tianyancha, Qichacha, and State Grid, which will increase people's trust in the enterprise.

2. Enhance financing capability

After paying in capital, banks will also have more trust in enterprises. When enterprises apply for loans from banks, it will be easier and faster, and it will be easier to lend. The amount that can be applied for will also be larger.

3. Avoiding debt disputes

If the enterprise is involved in debt disputes after actual payment, there is an additional option for compensation. Compensate through intellectual property rights and assume corresponding responsibilities, and the intellectual property portion can be recorded normally.

4. Relieve financial pressure

The use of intellectual property rights for capital increase and actual payment can avoid the financial pressure of shareholders raising large amounts of currency at once, and the operation is flexible. After completing the investment of intangible assets, there is no need to provide funds (in kind) to fulfill the shareholder's paid in obligations.

Note: The proportion of intangible assets (intellectual property) of a company to its registered capital can reach 100%. If you are currently short of cash or unwilling to register all your intangible assets with cash, you can hire an authoritative appraisal agency to conduct a professional evaluation and register them with the industrial and commercial authorities.

5. Enhance bargaining power and protect equity from dilution

When seeking investors and negotiating financing, the bargaining chips increased because the actual payment and capital increase had already been made in advance. It can also avoid the problem of excessive dilution of equity, which ultimately affects control over the company.

6. Reasonably avoid taxes

Once intellectual property is valued and invested, it can become an intangible asset of the company. Intangible assets can be amortized over a period of ten years, significantly reducing expenses during this amortization period.

7. Risk reduction

When the company has debt risk and the shareholders have already paid in, the debt is no longer related to you. If a company is involved in debt disputes, it can have an additional option for compensation and legally assume corresponding social responsibilities using the company's intangible assets.

5、 Precautions for paid in intellectual property capital

1. The investor should have full disposal power

Shareholders should have full disposal rights over non monetary assets used for capital contributions, with clear and flawless ownership. The contribution of other people's property, the contribution of assets with established rights burdens, and the contribution of job-related inventions (works) will all constitute defects in the shareholder's contribution.

2. Capital contribution is ownership, not usage rights

Although according to Article 27 of the Company Law, the right to use patents is also valued for investment, in order to avoid unnecessary troubles such as unclear property rights in the later stage, patent ownership as the investment target is a good solution.

In addition, due to the need for ownership change, it is not possible to make multiple object contributions; In order to enjoy tax incentives for technology investment, there will also be changes in ownership involved here.

3. Conduct necessary asset evaluations

If the intellectual property rights used by shareholders for capital contribution are not truthfully evaluated by professional institutions, the valuation basis of the capital contribution property often arises, and the fairness of the valuation is difficult to distinguish. There is a potential risk that the valuation value of the capital contribution does not match the actual value, leading to defects in the capital contribution. Therefore, intellectual property investment not only requires necessary evaluation, but also demands genuine evaluation.

4. The investment subject is related to the company's business

The technology used for investment should be related to the main business to avoid false investment.

If there is no intellectual property or if it is impossible to apply for intellectual property, one can also seek software copyrights and patents related to the company's business for trading.

5. Investment target

Patent rights, trademark rights, copyright, proprietary technology (patent applications, process flow, technical secrets, secret formulas, formulas, software systems and platforms)

6. Ownership issue

As intangible assets (intellectual property) for investment, they must be assets under the name of the shareholders of the invested company rather than assets under the name of the invested company.

7. Do intellectual property contributions need to be evaluated?

The law clearly stipulates that intangible assets need to be valued and contributed, but it does not specify that they must be.

There are three important criteria for determining the obligation to contribute non monetary assets:

① Investor: shareholder;

② Ownership change: under the name of the investor → under the name of the company;

③ Valuation evaluation: Form tangible evidence.

If there is no legally binding asset appraisal report commissioned by an appraisal agency, once a company has a debt dispute and there is no basis to prove the value of intellectual property, it is easy to be judged as having made false contributions.

If the intangible assets used by shareholders for capital contribution have not been truthfully evaluated by professional institutions, the valuation basis of the capital contribution property often arises, and the fairness of the valuation is difficult to distinguish. There is a potential risk that the valuation value of the capital contribution does not match the actual value, leading to defects in the capital contribution. Therefore, intangible asset investment not only requires necessary evaluation, but also demands genuine evaluation.

8. Can shareholders use their patent usage rights to contribute capital?

The use of patent usage rights as capital affects the valuation value of patents, as the type of property rights of assets constrains and affects the conclusions of asset valuation.

In addition, the investment of patent usage rights cannot enjoy the deferred tax filing preferential policy of the "Notice on Improving the Income Tax Policies Related to Equity Incentives and Technology Investment".

The specific interpretation of the deferred tax policy is that after filing for deferred tax, the payment can be deferred until there is income from the equity transfer. If there is no transfer, it can be indefinitely deferred.

So it is recommended to invest in patent ownership and computer software copyright, and not to use trademarks, as it does not comply with the deferred tax filing policy of Document No. 101 on technology investment, which only has a five-year deferred period.