Research On The Capital Reduction System Of Chinese Companies Under The Subscribed Capital System

In 2013,the “Company Law” was amended to change the paid-in capital system to the subscribed capital system,relaxing the threshold for the establishment of companies,but related to the capital system there is no modification.As far as China’s company’s capital reduction system is concerned,from the “1999 Company Law” to the current “Company Law”,the legal requirements for capital reduction procedures have basically not changed.Resolutions are made,the company performs the notification and announcement procedures,the creditors raise objections,and the company shall register the change of registered capital.The only change is the deletion of the minimum amount of capital stipulated in article 178,paragraph 3,of the original Company Law in the present act.It can be seen that the company’s capital reduction system in my country still follows 1993 The procedural requirements under the annual paid-in capital system are inconsistent with the background of the current subscribed capital system.To be specific,first of all,under the subscribed capital system,there have already been different situations of formal and substantial capital reduction in reality,and these two situations have been recognized by some scholars and judges in China,and they are quite different,formal capital reduction means that the company wants to achieve the consistency of capital and assets through capital reduction because of operating losses and the interests of established creditors are not damaged.The falsely high registered capital that does not match the company’s actual assets will be adjusted.On the contrary,it can protect the counterparty of the future transaction,but the company’s capital will flow back to the shareholders when the capital is reduced.Whether it is subtracting the subscribed capital of the shareholders or subtracting the paid-in capital of the shareholders,it is equivalent to that the shareholders have priority over the creditors to obtain repayment.This is likely to affect the company’s solvency and damage the interests of creditors.Therefore,the same rule cannot be used to treat these two types of capital reductions.Secondly,China’s current capital reduction regulations follow the requirements of the paid-in capital system,emphasizing that substantive capital reduction should focus on protecting the interests of creditors.However,on the one hand,the system provisions need to be detailed,for example,the legislation does not clearly stipulate the scope of creditors to be notified and shareholders’ responsibilities when substantial reduction of capital damages the interests of creditors,etc.And under the subscribed capital system,there may also be the issue of whether shareholders’ subscribed capital should expedite maturity;on the other hand,the substantive Capital reductions also include year-on-year capital reductions and different ratios of capital reductions.The latter will change the shareholding ratio structure at the beginning of the company,which will harm the interests of small and medium shareholders.However,judicial practice focuses on whether the voting ratio of shareholders needs to be modified when capital reductions are performed at different ratios There are also different points of view.This is the consequence of the lack of legislation,and relevant systems need to be revised and improved in time.Finally,my country’s current legislation does not clearly stipulate the effective time of the company’s capital reduction,nor does it stipulate how the effectiveness of capital reduction resolutions and capital reduction actions should be affirmed,nor does it explain the relationship between the two.The problem has been studied a little,and legislation still needs to be unified and clear.This article takes the company’s capital reduction system under the subscribed capital system as the research topic,combines the problems encountered in our country’s current legislation and justice,examines the foreign company’s capital reduction legislative model,and puts forward perfect legislative suggestions for my country’s current capital reduction system.The body part consists of four chapters.The first chapter is a theoretical analysis of the company’s capital reduction system,discussing the concept of company capital reduction,basic theories and legislative principles.The second chapter starts from the legislative and judicial status of the capital reduction system in our country,and analyzes the problems existing in the current system,including the failure to distinguish between formal and substantive reduction of capital and the procedures,the insufficient protection of the interests of creditors and minority shareholders by substantive reduction of capital,and the lack of effective provisions for the reduction of capital.The third chapter examines the foreign legislative models and representative countries.The representative countries of the creditor protection model are Germany and Japan,the representative country of the solvency model is the United States,and the representative country of the compromise model is the United Kingdom.Legislative experience for reference,such as distinguishing types of capital reduction,designing different procedures,strengthening management responsibilities,and marking “reduction of capital” in the official system to remind creditors.The fourth chapter elaborates the legislative proposals to perfect the system of reducing capital of Chinese companies.Corresponding to the above issues,under the subscribed capital system,our country’s legislation should be guided by the legislative principles,according to capital credit theory,the corporate stakeholders’ theory,and fault liability principle to distinguish different types of company capital reduction.Improve the company’s capital reduction system in China: Firstly,when reducing capital in the form of a company,it should focus on the principle of efficiency,construct a set of efficient and simple capital reduction procedures,and delegate the decision-making power of capital reduction to directors and other professional management.If creditors still doubt the company’s Solvency,then under the subscribed capital system,the legislation should also consider the principle of security.The establishment of a solvency statement and a liability restraint mechanism can enhance creditors’ confidence in the company and ensure transaction security;secondly,the company’s substantial reduction Capital should focus on the pursuit of the principle of safety.On the one hand,a substantial capital reduction is likely to result in the company being unable to repay its external debts.To strengthen the protection of the legitimate interests of external creditors,the legislation should clear the essence of the action of inform the object and subject,establish information disclosure mechanism to replace public announcement,define the scope of debt repayment,the scope and form of guarantee,establish a system to accelerate the maturity of shareholders’ subscribed capital,add types of damage to the interests of creditors type,delete the “order to correct”clause and establish a system of shareholder accountability.On the other hand,in the case of substantial capital reduction at different ratios,legislation should establish a voting mechanism agreed by all shareholders to protect the legitimate interests of minority shareholders.Unanimous agreement and the resolution of all shareholders to implement three specific ways of reducing capital at different ratios.Finally,China’s legislation should increase the effectiveness of capital reduction.On the one hand,it must be clear that the registration authority’s change of registration is a requirement for the company’s capital reduction to take effect;On the other hand,the effectiveness of the capital reduction resolution should be determined according to Article 22 of the“Company Law”,combing with the importance of the company’s formal and substantive capital reductions that need to meet the requirements,distinguish between defects that cannot be corrected and defects that can be corrected,and determine the capital reduction.At the same time,the legislation should clearly state the relationship between the capital reduction resolution and the capital reduction behavior and make the capital reduction resolution effective as the prerequisite and basis for determining the validity of the capital reduction behavior.