A Study On The Contribution Of Goodwill

Whether goodwill constitutes a form of contribution has fallen into the sphere of corporate capital institution. The Company Law of People's Republic of China revised in 2005 provides that a shareholder may make capital contributions in the form of currency, or alternatively may make capital contributions with such valuated non-currency property as physical items, intellectual property rights, and land use rights, but expressly excluding other forms of contributions, such as goodwill. Goodwill turns out to be an important existing form of social wealth. By excluding goodwill from the forms of contributions, plenty of social wealth cannot be transferred to corporate capital, which proves a waste of resources. Contribution in the form of goodwill is capable of inspiring investors to establish corporations, satisfying the trend of corporate competition and development, no matter viewed from the theoretical points or foreign practices. However, due to the abstract of goodwill and the unstable value hereof, this form of contribution tends to infringe the stability of corporate capital and the security of creditors. Therefore, the author maintains relevant legal issues on goodwill contribution with a comprehensive and systematical analysis. Excluding the introduction, this paper is divided into five parts as follows:PartⅠdefines goodwill. This part discusses the definition of goodwill vis-à-vis other relevant concepts from the perspectives of jurisprudence and accounting measurement, thus to secure a conclusion of the definition hereof.PartⅡdelves into the attitude of existing company law towards goodwill contribution. The existing law characterizes corporate capital as an instrument of warrant, which can reasonably justify the logic of legislature to exclude goodwill from the coverage of contributions. Although this exclusion can ensure the expectation of legislators to maintain transaction security, the author holds that this limitation of contributions is detriment to the warrant function of corporate capital.PartⅢargues that goodwill contribution is justifiable. This part justifies goodwill contribution from perspectives of business operation, corporate autonomy and the basic values of commercial laws. Seen from business operation, goodwill is propitious to the development of modern corporations, rendering them competitive amid the industry, achieving extensive influences and good reputation for aforesaid corporations. Viewed from corporate autonomy, whether capital contributions cover goodwill shall be decided by stockholders autonomously. Judged from the basic values of commercial law, goodwill contribution is in accord with the efficiency value of commercial laws.PartⅣscrutinizes the feasibility of goodwill contribution. What justifies the contribution of goodwill cannot substitute for feasibility hereof. This part explores the feasibility of goodwill contribution by analyzing corporate theories and criteria of quantitative contribution and introducing relevant practices. From the angle of corporate theories, contribution of goodwill belongs to physical contribution. Analyzing goodwill contribution by adopting the competent requirements of subject matter of contribution in academic circle, the author holds that goodwill is subject to the requirements mentioned, thus capable of being deemed as a proper form of contribution. From the angle of the criteria of quantitative contribution, the author introduces some quantitative evaluation means and practices of management science on goodwill to further our knowledge and to broaden our horizons. From the empirical angle, the author quotes legal provisions in Germanic and American legislature, which can definitely be utilized by our legislature.Finally, partⅤcontributes to the construction of goodwill contribution institution. This part approaches the construction of the said institution from such aspects as goodwill appraisement, performance, liability and guarantee of stakeholders. Appraisement of goodwill contribution is necessary to the value hereof, which lies in the heart of the goodwill contribution institution; the content of performance of goodwill contribution mainly covers subject of contribution, object of contribution, transfer and ratio of investment; the content of liability institution begins with reinforcement of civil liability of appraiser, then augmentation of liability imposed on the subject of contribution, and finally that of board of directors; contribution in the form of goodwill concerns the interests of corporate stakeholders, whose interests should be protected by laws under proper institution.