The Reform Of Subscribed Capital System And The Legal Protection Of Company Creditors’ Interests

The Company Law of the People’s Republic of China has come into effect on March 1, 2014. The main substance of the amendment is to change the legal capital system to "subscribed capital system", which causes intense discussion by scholars. With this reform, the existing law abolishes the minimum register capital and the actual payment of registered of a limited company when it’s established. It’s no longer mandatory to be subject to capital verification and issuance of a certification by a lawfully-established capital verification agency. Meanwhile, the annual inspection system has been changed into the disclosure of annual report. The extent of the reform of the Company Law is unprecedented, which is another reform after 2005 on capital system. Under the new capital system, the legislative purpose is to stimulate investment in the market, taking the principle of loose market entry but tightened post-entry administration.As one of the core system of Company Law, one of the important functions of the capital system is to assume to protect the interests of creditors to balance the rights and interests of shareholders and creditors. However, as many scholars have called for, the reform is likely to cause the greatest impact of weakening on the protection of the rights and interests of creditors. It’s necessary to understand this reform and pay attention to the legal protection of creditors’ interests to make contributions to the positive effects of this reform.Through a detailed analysis of the reform and the main changes of the subscribed capital system, this thesis analyzes the impacts of the reform, comes up with questions that may arise and the advices of solutions from the perspective of protecting the interests of creditors. Specifically, this thesis consists of three chapters:The first chapter describes the history development of capital system in China. Considering about the extent of this reform, this chapter then introduces the background of this reform and summarizes the main content of the reform and main relevant legislations.The second chapter elaborates the main impacts of subscribed capital system on the protection of creditors in theory and practice. Whereas one of main functions of capital system is to balance the rights and interests of shareholders and creditors, we need to perfect the new capital system especially according to the new situations in practice. The main changes are as followed: canceling the minimum capital, creating the system of subscribed capital, canceling the capital checking of the limited liability company and the annual inspection, creating the system of information disclosure. There may be several issues arising from these changes: the weakening of the guarantee function of registered capital along with the improvement of the autonomy of the registered capital, the certification of capital contribution and the consideration of property credit, the protection of credits when the capital is partly contributed. At last, there may be some new conditions occurring of false capital contribution or the crime of registered capital flight under the new capital system.The third chapter puts forward some legislative suggestions about the capital form on basis of existing law to improve the legal protection of company creditors’ interests. First of all, we should improve the autonomous management of the registered capital. Secondly, by improving the disclosure of information, creditors can consider the risk beforehand and exercise the legal rights to protect their credits. Thirdly, it’s better to improve the relief of rights of creditors though the following systems: the application disregard of corporate personality; the liabilities of directors and other senior managers for their illegal acts, which infringe the rights of creditors; the right to dissent of creditors; the right of subrogation, which involves the nature of shareholder’s investment obligation. At last, the thesis comes up with some advices about new conditions occurring of false capital contribution or the crime of registered capital flight under the new capital system.