The Issues Of Equity Contribution And Solutions

The amendment of "Corporate Law" in 2005 provides a legal basis for equity contribution. The"Registration and Administration of equity contribution"published in 2009 offers norms for equity contribution in practical. However, compared with other forms of contribution, equity contribution has the risks and drawbacks which can not be avoided. Our state must work out supplementary provisions to perfect the equity contribution system on the basis of the nature of equity. This thesis focuses on the characteristics of equity, analyzes the problem in practice, and then advance proposals related to the improvement and regulation.This article is about 24,000 words, divided into four parts.In partâ… , the author introduces the practice of equity contribution, analyzes the problem on the basis of the characteristics of equity contribution . First analyzes the characteristics of instability in equity value of the company would weaken the protection of shareholders and creditors. Then analyzes the defects may arise in the process of equity contribution. Finally, analyzes the contribution of equity may cause cross-shareholdings, false increased capital and monopoly.In partâ…¡,the author throws out suggestions for perfect the equity contribution system mainly discussed form three areas. First, in the building of equity capital verification system, after analyzing existing assessment system, the author produces the conclusions that"assessment report can provide a base for equity value decided. the parties may consult to determine the number of currency represented by equity"; then, advances the steps and scope of equity contribution in the full interpretation of"Registration and Administration of equity contribution"; finally, suggests regular assessment system after referring to legislation in other countries. Second, in the development of equity trusteeship management, the author elaborates the advantages of equity trusteeship management, and then suggests the method and procedure in the process of equity trusteeship management combined with the requirement of equity contribution"clear equity, full rights and functions".Third ,the author suggests restrict cross-shareholdings and re-investment on account of false increased capital and"bubble economy"which may caused by equity contribution.In partâ…¢,the author raises the equity contribution disclosure system because the equity contribution will weaken the protection of creditors of the company. The author elaborates the content and form of disclosure system, suggests adjust the company's financial reporting as notable change in equity value, and adds a recommendation related to the transaction's right to learn the truth.In partâ…£,the author orders the related issues that equity contribution may arise, elaborates five different cases to discuss the impact of the effectiveness of the equity contribution, then suggested different responsibility to each situation.