Research On Protection Of Creditor’s Interest Under Subscription Capital System

Protection of company creditors has been the major study in the corporate law. Under the concept of capital credit, registered capital functions not only as the safeguards for company’s operation capacity but also for debt repayment ability of company to creditor. However, it is not reasonable to simply consider registered capital determines economic strength of the enterprise. As the company’s operation continues, its assets will change. So it is the company’s assets rather than the initial registered capital that determines its ability to pay the debt. Company Law Amendment canceled minimum registered capital and transferred registered capital contributed system into subscribed system, getting rid of the blind trust on capital credit.The reform of company capital system abolishes the minimal capital limit and subscribed capital system replaces paid-up capital system. That is to say, the paid-up capital is not the premise of starting a company any more.This reform aims to guarantee the autonomy rights and efficiency in the market. However,considering the low credit level, the abolition of minimal capital system can adversely influence the creditors’ interests.Based on the reform of registered capital system, this paper analyzes the development route of minimal capital limit in home and abroad and positive influence of registered capital system reform on promoting market efficiency. After a deep analysis of possible risks caused by this reform and shortcomings in China’s laws and regulations, this paper concludes several pieces of advice on how to strengthen the protection of creditors.The first part incorporates an analysis of the trend of abolishing the minimal capital limit, both in home and abroad. and the meaning of subscription capital system and significance of company capital reform.The second part analyzes the reason why creditors should be protected under subscription capital system. The analysis is based on jurisprudence and reality to discusses the potential impact on company’s creditors under subscription capital system.The third part involves the Sino-US comparison about how to secure creditors’ interests. Firstly, the writer describes some flaws and shortcoming about protecting creditors in China’s Corporate Laws and administrative rules. Secondly, superior mechanisms about protecting creditors in American are described to provide reference for China.The forth part, based on the current systems in China, the paper provides four suggestions of bettering mechanism of creditors’ protection in China.