Recently, a Shanghai company invested more than 10 million yuan in domain name as its registered capital. It occupied 70% of the company's equity and became the first company in Shanghai to invest in domain name rights. Although it is not uncommon for its Internet domain name to be used as a company's equity investment, because some intellectual property investment has been affirmed as early as the 1994 "Company Law", what attracted people's attention in this case was that the assessed value of its website domain name was as high as It is more than 10 million yuan. After the capital increase, the company's intellectual property investment ratio accounts for 69.8% of the company's registered capital, nearly 70%. This is unprecedented even in Shanghai, the most economically developed city in China. Today, this article will discuss the relevant provisions of Chinese law on intellectual property investment and Internet domain name shares. 1. ?0?2?0?2?0?2 Relevant provisions on intellectual property investment methods. As an important intangible capital in modern scientifically developing society, intellectual property rights have been used as investment as early as in the Company Law of 1994. According to the corresponding regulations, "Shareholders can make capital contributions in currency, or they can also make capital contributions in kind, industrial property rights, non-patented technology, and land use rights." However, the amount of capital contribution in the form of industrial property rights and non-patented technology shall not exceed 20% of the company's registered capital. The Company Law of 2006 slightly modified this article, “Shareholders can make capital contributions in currency, or in kind, intellectual property rights, land use rights and other non-monetary properties that can be valued in currency and transferred in accordance with the law; however, Except for property that cannot be used as capital contribution according to laws and administrative regulations.” However, the amount of non-monetary contribution shall not be less than 30% of the company’s registered capital. The "Intellectual Property Investment and Stock Registration Measures" (Shanghai Gongshang Note (2006) No. 246) issued by the Shanghai Administration for Industry and Commerce clearly stipulates that the maximum proportion of intellectual property pricing for capital contributions can reach 70% of the company's registered capital. . The above provisions indicate: 1. According to the current "Company Law", not all intellectual property rights can be used as capital contributions. Only intellectual property rights that can be valued in currency and can be transferred in accordance with the law can be used as capital contributions. 2. The shareholder who invests in the intellectual property rights should be the owner with the legal right to transfer the intellectual property rights, and the investor of the intellectual property rights should handle the transfer of property in accordance with the law. If the transfer procedures are not completed, the investor should pay the company in full and pay the full amount on time. Shareholders who have paid the full amount of capital shall bear liability for breach of contract. 3. Non-monetary property used as capital contribution must be evaluated and verified, and the property must not be overvalued or undervalued. 4. The maximum proportion of intellectual property investment is 70% of the registered capital. 2. ?0?2?0?2?0?2 Limitation on the proportion of investment in intellectual property rights In the above case, the Changning Branch of Industry and Commerce approved its application for capital increase, and the registered capital increased to 16.66 million yuan, of which 11.63 million yuan was invested in domain name rights, and knowledge The equity investment ratio actually reached 69.8, almost close to 70. In fact, as early as the 1994 Company Law, it was stipulated that the amount of intellectual property that can be used as capital contribution shall not exceed 20% of the company's registered capital. However, the Company Law revised in 2006 changed the proportion of non-monetary capital contribution to It has been increased by 3.5 times, which indirectly stipulates that the maximum amount of non-monetary investment such as intellectual property rights can reach 70% of the company's registered capital. 3. ?0?2?0?2?0?2 The certainty of website domain name investment The registered capital of the company should be certain, but the nature of the intellectual property itself, such as ownership issues, "overvaluation" or "devaluation" will all affect the company Certainty of registered capital. In the above case, a website domain name with an estimated value of more than 10 million was used as investment, which posed great risks to the company. First of all, the ownership of the website domain name lies in the root password. Therefore, if the root password is stolen or transferred by shareholders, the company will bear the risk of insufficient registered capital. In addition, the website domain name may be "overvalued" or "depreciated", which will lead to the company's registered capital being insufficient. According to the current "Company Law", after the establishment of the company, the non-monetary property invested by the company is regarded as non-monetary property. If the actual price is significantly lower than the price specified in the company's articles of association, the sponsor who delivered the capital contribution shall make up the difference; other sponsors shall bear joint and several liability.

Therefore, how to bring potential harm to social interests, mainly the legitimate rights and interests of company creditors, due to the easily transferable nature of domain name investment should be the next consideration for the Chinese government department responsible for company registration. The author of this article: Chen Danhong is a paralegal at Shanghai Dabang Law Firm and holds a Master of Laws degree from the Chinese University of Hong Kong.