Creditor Protection In Corporate Distribution

There are two types of corporate allocation models around the world:capital maintenance model and solvency test model.The capital maintenance model constructs a complete set of corporate allocation restriction methods with "capital inviolability and return"as the core,but this method has the defect of ignoring the content structure of the balance sheet under the accounting language,especially the lack of attention to asset liquidity,and there are deviations and contradictions with the accounting concept,which ultimately makes it difficult to achieve the purpose of protecting creditors.The solvency test model is based on three tests:equity test,balance sheet test,and unreasonably small asset test,which requires that the company’s distribution must not lead to the inability to pay the company’s debts in the future,and the power and freedom to judge whether the distribution is appropriate are entrusted to the company’s board of directors,which is more direct to the vital interests of creditors.However,since the solvency test model completely relies on the judgment of directors,it also has the shortcomings of subjective tendency of test results and difficulty in judicial intervention.The difference between the two models can be summarized as the difference between the evaluation standard and the regulatory concept,and the capital maintenance model takes capital and surplus as the evaluation standard,and judges the appropriateness of the distribution result by whether the allocation infringes on the capital-related accounting indicators.The solvency test model takes assets and liabilities as the evaluation criteria,and evaluates the appropriateness of the distribution results based on whether the relevant assets can pay the debts at the maturity date of the debt.The capital maintenance model adheres to the concept of prior regulation and delineates the bottom line of distribution in advance in the manner of mandatory provisions of law,reflecting regulatory thinking;The solvency test model adheres to the concept of ex post regulation,empowers the board of directors to freely delineate the bottom line of distribution,and limits illegal distribution behavior by pursuing directors for improper distribution after the fact.Due to the lack of independence of the governance of China’s board of directors and the lack of relevant supporting legal mechanisms,it is not appropriate for China to completely replace the capital maintenance model with the solvency test model,and it is more feasible to introduce a compromise.First,while retaining the relevant rules of the existing capital maintenance model,the solvency test is used as a catch-all rule for corporate distribution,testing all behaviors that economically substantially lead to the distribution of the company to shareholders;Second,improve the allocation rules related to the capital maintenance model,so that the restrictive rules of corporate allocation focus more on the company’s actual debt solvency;Third,build a distribution authority and responsibility mechanism centered on the board of directors to realize the integration of the company’s distribution of power and responsibility.