Reflect On Improvements Of Chinese Company Capital System

Corporation, the most classic form of business associations, which plays an important role now in the modern society. Through registration, corporations acquire legal personality and whose shareholders’liability is limited to their investment. I study how company law reforms, particularly the reduction and abolition of minimum capital requirements, in current Chinese jurisdictions affect the decision of entrepreneurs to incorporate by means of various corporate forms. Last year, in 2014, there was a revolution making the better use of corporation. The legal capital regime was abolished by the 2014 revolution, causing much attention, praise, even worry from domestic circles. Critics of legal capital have referred to foreign corporation law as an example of a more efficient approach. In this paper, I conduct a comparative analysis of Chinese corporate law and its functional equivalents under other law from aboard. Using a difference-in-difference approach, I record a strong impact in both respects, especially if the minimum capital requirement was reduced. There are several principal conclusions:first, the abolition of minimum legal capital will do harm to the rights of creditors even potential creditors, consumers and the employers but benefit the shareholders. Second, the conflict in the capital system couldn’t be eliminated by the revolution. Disclosure requirements, revising bankruptcy law,enhancing piercing the corporate veil and introducing directors disqualification will be proposed supplements to the revolution.