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Q_iconWe are thinking of using the already-contributed capital for business activities. Is it possible to do this even if the registration of incorporation process has not been completed?

A_dark_iconContributed capital already in the designated bank account can be used immediately for business activities.

★ Explanation ★

contributed-capitalThe Article 31, paragraph (1) of Companies Act stipulates that an Incorporator must pay in the entire sum of monies relating to the incorporator’s contribution without delay after subscription for Shares Issued at Incorporation.

Now, when is the company allowed to use that capital? While it is often thought that the capital should not be touched until the company has finished or appears to have finished its incorporation, the use of the capital can be used for business expenses once the company is registered.

Furthermore, there are no provisions that prohibit the use of contributed capital prior to the completion of the incorporation registration process, or stipulates that the balance of the bank account where capital is contributed to should not fall below the capital amount.