Research On Improper Company Capital Reduction

The regulation of the current law on the reduction of capital is not perfect,and there are many disputes in the judicial practice due to the improper reduction of capital.However,the current theory and practice are lack of a clear understanding of the company’s improper capital reduction.In view of this,it is very important to clarify the understanding of the company’s improper capital reduction and explore the regulatory path of the company’s improper capital reduction.In addition to the introduction and conclusion,this paper is divided into four chapters:Chapter one,"improper capital reduction and its identification".Capital reduction of the company refers to the act that the company makes a capital reduction resolution in accordance with legal procedures during its existence and reduces its registered capital in accordance with the capital reduction resolution.According to different standards,capital reduction of the company can be divided into: year-on-year capital reduction and capital reduction of different proportions;substantial capital reduction and capital reduction in form;capital reduction exempted from the obligation of capital contribution,capital reduction refunded and capital reduction made up for losses.This paper clearly defines "improper capital reduction" as "the behavior that the company reduces capital in violation of the legal capital reduction procedure or legal capital reduction conditions,thus causing the interests of stakeholders to be damaged".The basis of judgment is mainly divided into formal elements and substantive elements,which are the legal basis,mainly articles 41,43,103,177 and 179 of the company law;the substantive elements are whether the company’s capital reduction infringes the legitimate rights and interests of stakeholders.There are two main forms: the company violates the capital reduction resolution procedure to infringe the interests of shareholders,the company violates the capital reduction notice procedure or violates the registration procedure to infringe the rights and interests of creditors.Chapter two,"the effect of the company’s improper capital reduction".When the company reduces its capital improperly,the majority shareholders often use the principle of "capital majority decision" to make capital reduction decisions in different ways,which damages the small and medium-sized shareholders’ right to know and participate in business decision-making;at the same time,in the case of substantial capital reduction,due to the weakening of the company’s solvency and external guarantee ability,the interests of creditors are vulnerable to infringement.For the judgment of the effectiveness of the company’s improper capital reduction,there are differences in the judgment results of each court,mainly including four judgment opinions: first,the capital reduction is effective;second,the capital reduction is invalid;third,the capital reduction is not effective against the creditors;fourth,it is not recognized.Scholars hold different attitudes towards this,including the theory of invalidity and the theory of relative invalidity.Based on the protection of the interests of creditors and the relevant systems of foreign countries,this paper holds that the improper capital reduction of a company will be invalid due to the violation of article 177 of the company law.Chapter three,"the legal regulation and practical problems of the company’s improper capital reduction".There are three defects in the legal regulation of improper capital reduction.First of all,the current law does not clearly distinguish the types of capital reduction of companies,which leads to contradictions in the judgments of courts around the country.Secondly,after the reform of capital subscription system,the reasons for capital reduction and the loose conditions of capital reduction make the capital reduction of the company have great randomness.Finally,due to the imperfection of the decision-making procedure and notice procedure in the company law,the majority shareholders often use the principle of "capital majority decision" to damage the interests of small and medium-sized shareholders in practice;because the company fails to fully and properly perform the notice obligation of capital reduction,the disputes with creditors are also increasing day by day.In judicial practice,the protection measures for the interests of creditors are extremely scarce.When the creditor raises an objection,although the law stipulates that the company has the obligation to pay off or guarantee,it is not uncommon for the company to evade the obligation in disguise,which makes the company’s obligation to pay off and the obligation to guarantee at this time virtually exist.However,the current law does not specify the subject and the way of bearing the responsibility for the improper reduction of capital,and the court also conflicts with each other in the application of the judgment basis.At the same time,when the industrial and commercial administrative department reviews the company’s capital reduction registration items,due to the lack of specific review standards,the review of capital reduction registration is excessive.Chapter four,"the regulatory path of the company’s improper capital reduction".In order to deal with the above-mentioned difficulties,first of all,legislation should clearly distinguish between capital reduction in substance and capital reduction in form,and stipulate the two situations of capital surplus and operating loss as the reasons for capital reduction.Secondly,we should improve the procedures of capital reduction,incorporate different ratios of capital reduction into special resolutions of the company,and establish the principle of "unanimous decision" to protect the legitimate rights and interests of small shareholders.Moreover,in the procedure of notice and announcement,in principle,the company must perform the obligation of notice and announcement;only when it is difficult to notify the creditors,it can only adopt the way of announcement,at this time,of course,there are more strict standards for the newspapers and platforms of announcement;in legislation,it should also be clear that "contingent creditors" belong to the scope of known creditors,and the known time point should be the company’s capital reduction change registration Before recording.In the process of capital reduction registration,the specific standards and contents of formal examination should also be standardized.Finally,strengthen the protection mechanism of creditors’ interests.The main measures include the introduction of "the right to stop the claim of capital reduction objection" and the improvement of the company’s payment and guarantee mechanism;in terms of the liability consequences,shareholders should bear the supplementary liability for compensation to creditors within the scope of capital reduction.The possible innovation of this paper is to define the improper capital reduction of the company in combination with judicial practice,to demonstrate the effect of the improper capital reduction of the company on the basis of analyzing the different views of scholars on the effectiveness of the company’s capital reduction,and to explore the purpose of the relevant legal provisions on the company’s capital reduction.In view of the defects and deficiencies of the current law regulating the company’s improper capital reduction,this paper puts forward perfect solutions.The disadvantage of this paper is that it is difficult to provide a specific minimum standard due to the lack of data support when setting the conditions of capital reduction.At the same time,in terms of the consequences of the company’s improper capital reduction,the directors’ responsibility should be further discussed.