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Comparative Study On The Withdrawal Of Capital Contribution Under China Law And South Korea Law

Posted on:2012-12-18Degree:MasterType:Thesis
Country:ChinaCandidate:D B CuiFull Text:PDF
GTID:2166330335957224Subject:Civil and Commercial Law
Abstract/Summary:PDF Full Text Request
In order to maintain the capital adequacy principle, a system of fully paid capital has been established under the Commercial Law. But in practice, investors of many companies conduct the withdrawal of capital contribution to avoid the minimum registered capital requirement or the business risk.On the establishment of new company or the issuance of new shares, in order to protect the creditors, the company's capital should be financed through cash and in-kind payment. This is because the company's capital provides material security to the creditors of company. In practice, however, many investors recover their investment through the withdrawal of capital contributing. Because there is a normal behavior of payment before the withdrawal of capital contributing, it is difficult to determine the illegal withdrawal from its appearance. The typical scenario is that investors borrow from others and input the fund to a particular custodian bank account. After the completion of company registration, they withdraw the money and then repay their own debt. This type of acts will affect the company's normal business activities so that the law should impose proper control.The problem of Disguised Paid-in Acts in South Korea appears about 30 years ago. So the identification and processing of these acts in law or practice are basically mature. In 2003, in order to solve the problems of withdrawal of capital contribution exposed in the GEM, South Korea's Procurator ate set up a special financial investigations unit in charge to closely observe and strictly control the company's acts of withdrawal of capital contribution and the behavior of providing money to assist such acts. The current Commercial Law and other legislations of South Korean clearly stipulate the civil liability, administrative penalties and criminal penalties for withdrawal of capital contribution.These problems appeared in China later than South Korea. Before the issuance of a "Provisions of the Supreme People's Court on Several Issues Concerning the Application of the PRC Company Law (III)", the regulations on the issue of withdrawal of capital contribution are relatively vague. The introduction of new "judicial interpretation (III)" has provided some requirements on the identification standards and civil liability of withdrawal of capital contribution. We are still expecting more specific and effective provisions on this important issue.This article will discuss the concept, the identification standard, the legal consequences of withdrawal of capital contribution through a comparative study of the legal provisions and judicial practice solutions between China Law and Korea Law. Efforts will be made to provide certain advice on the legislation and justice practice in China.
Keywords/Search Tags:Disguised Paid-in Acts, Withdrawal of Capital Contribution, Principle of Capital Adequacy, Civil Liability, Convertible Bonds
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