| In December 28, 2013, the Standing Committee of the National People’s Congress adopted a decision to modify the Company Law(2005). As many as 10 articles related to the company capital in 12 amended articles, suggesting that the modification of the reform on capital system greatly relaxed the strict control of the company capital system. The modification includes the cancelation of the requirement of minimum registered capital, the proportion of initial contributions from shareholders(promoters) in the formation of the company, the ratio of monetary contribution and the cancelation the verification requirements. That means the subscribed capital adopted partly by Chinese registered capital system of the company, is now completely implemented. Most of scholars agree that in order to better adapt to the requirement of market economy, we should modify the traditional Chinese company, but the complete adoption of subscribed capital system is controversial. What is subscribed capital system? Does it change the nature of the company capital system from statutory capital system to authorized capital system? From practical view, subscribed capital system does not coordinate well with the current company law system. There comes a series of legal issues as company bylaws agreement issue, shareholders’ obligation issue, shareholders’ rights issue, company registration and the annual report publication system. It is necessary to study on the above issues related to the subscribed capital system, starting with the discussion of problem as the nature of the subscribed capital and the analysis of the current company law provisions.PART I reviews the legislation history of the subscribed capital system. With the fierce global competition, nations as France, Germany, etc., who used to adopt statutory capital system, began to have their improvement on capital system for the strong competition from the nations who adopted authorize capital system. Influenced by nations like Germany, Chinese Company Law(1993) used to implement the paid-in capital system in a very strict way, but the strict paid-in capital system was harshly criticized when facing of the rapid development of market economy. Company Law(2005) reduced the minimum registered capital requirement and began to partly adopted the subscribed capital system, allowing installment payment for the registered capital of the. Company Law(2013) officially changed the company registered capital into complete subscribed capital system. From above, it’s conclusive that the background of the reform of Chinese company capital system is the liberated trend for the capital constraint in worldwide scope.PART II is about the study on the properties of subscribed capital system. There are three modes of the company capital system in worldwide range: the statutory capital system, the authorized capital system and the eclectic capital system. Some scholars believe that the subscribed capital system has changed the traditional statutory capital system, but discussing from the characteristics of statutory capital system and the debt nature of subscribed capital system, we can conclude that implementation of the subscribed capital system is still within the framework of the system and does not change the system property. 1) Subscribed capital system is in accordance with the statutory capital system under the doctrine of capital determination, in which the amount of registered capital is determined from the establishment of the company. 2) Under the subscribed capital system, shareholders shall subscribe the capital amount in once, which is accordance with the statutory capital system capital characteristics. 3) The minimum amount of registered capital requirement is not indispensable for the statutory capital system. 4) The increase of registered capital must follow strict procedures. From the debt nature of the subscribed capital system, the subscription means the shareholders promise to make repayment for the company in subscribed amount, which should regard as company asset in the form of future debt. Therefore, it should be recognized that the current subscribed capital system still belongs to the category of statutory capital system.PART III is about the company bylaw agreement issue under the subscription capital system. Company Law(2013) canceled the requirement of minimum registered capital, the proportion of initial contributions from shareholders(promoters) in the establishment of the company and the ratio of monetary contribution, which expanded the scope of the company bylaw, bringing a series of problems in practice. First is the paid-in amount issue. Under the subscribed capital system, shareholders shall be responsible for the company’s registered capital no matter subscribed part or paid-in part, but the loosen of regulation with no corresponding system deregulation brings a lot of problems. Therefore the company registration shall reasonably guide the applicant and shall disclose the information to urge investors to fulfill the promise. Second is the time limit for registered capital injection. Long term for subscribed capital provides a perfect excuse for shareholders to not fulfill the obligation. But as a debt, the "contractual obligations" shall be possible to perform; therefore the time limit for subscribed capital shall be reasonably restricted. Third, the capital contribution form issue. Investors shall be free to determine the capital contribution form as long as they don’t violate the principle of authenticity.PART IV is about shareholders’ obligation of capital contribution. Under subscribed capital system, the compulsory requirements the for shareholders to make capital contribution is greatly relaxed, which also led to a lot of problems, such as: the breach issue of the obligation of capital contribution for shareholders, the responsibility mechanism for shareholders, the acceleration issue of unexpired contribution and equity transfer issue for not paid shareholders who fail to make contribution.First, is the liability issue for shareholders who violate the capital contribution obligation. The infringed victim of the violation is the company, other shareholders and creditors. According to different victims, the shareholders who fail to make contribution should bear different responsibilities. 1) For the company, shareholders shall bear capital enrichment responsibility, mainly from the capital maintenance principle. In addition, the shareholders who fail to fulfill the obligation of capital contribution, shall be [punished in accordance with the general rules of relationship between civil law responsibility and liability for compensation. 2) For other shareholders, shareholders shall bear the liability for breach of contract, this is mainly because the deep trust relationship between the shareholders is established on the basis of contract relationship. 3) For the creditor, Provisions of the Supreme People’s Court on Several Issues concerning the Application of the Company Law of the People’s Republic of China(III)(hereinafter referred to as the "Company Law Judicial Explanation(III)”) in 2011 clearly defines the shareholders who fail to make the contribution shall directly bear the supplementary liability for creditors. Though the provision is to protect the interests of creditors, but it does not seem reasonable. The reasons are: it does not comply with the principle of limited liability; its legal basis is debatable; the effectiveness of the provision is unfair for creditors. When the company is insolvent, we should apply to enter into bankruptcy or liquidation procedures to achieve the interests of creditors according to the company law and related laws.Second is about the capital contribution urge mechanism. It should implemented from the following aspects: 1) about the urge subject, the board of directors shall bear the task; 2) about the procedures, company shall inform the shareholders the related issues in written way in advance; 3) about the responsibility protection, company is entitled to limit the shareholders’ rights and to eliminate their qualification if the capital contribution is still not fulfilled after the urge.Third is about the equity transfer of shareholder who hasn’t fulfilled his capital contribution. About the effect of the equity transfer, shareholder who hasn’t fulfilled his capital contribution except the prohibition of the company bylaw for the agreement between shareholders should be respected. About the responsibility issue after the equity transfer, the transferor and the transferee shall bear joint and several liabilities in principle.Last is the acceleration for unexpired contribution obligation. Under the subscribed capital system, creditors are not entitled to demand the shareholders to fulfill the unexpired contribution obligation in advance. The reasons are as follows: 1) according to the system of company law, it is principle for the shareholders to fulfill the obligation of capital contribution in accordance with the company bylaw, and the mandatory acceleration requirement of capital contribution for shareholders is exceptional; 2) creditors claiming for the acceleration of the capital contribution obligation lacks right theory basis, for the shareholders’ behavior is not illegal or even default. The demand of acceleration does not have legitimacy. When the company is insolvent, creditors may protect their own interests through bankruptcy way.PART V is about the rights of shareholders. Under subscribed capital system, the qualification of shareholders to obtain and the full realization of the obligation of capital contribution are uniform. The exercise of the rights of shareholders is different and complex for the obligation of contribution is made in different degree. For the shareholders who haven’t completed the contribution obligation, Are his shareholder rights shall be differential from others who have completed the obligation? For the right to dividends, the new capital subscription rights, the legislation is already suggest to exercise the shareholders’ rights according to the paid-in capital allocation. As for the claim distribution of surplus property and the right to vote should also be in accordance with the actual payment ratio to exercise. But it is not out of law. The distribution of residual property claims in the situation of company liquidation, which means that the shareholders’ obligation to fulfill the subscribed capital contribution is in acceleration. If the shareholder still refuse to complete the obligation within a reasonable period of time after the urge, his behavior has become the defective capital contribution in the delay contribution, should be on the distribution of surplus property right limit. The voting rights according to the subscribed capital exercise may generate unmatched result between the residual claim and the vote right, leading to the irrational expectations of shareholders to exercise the right to vote to decide.PART VI is about the company registration and the annual report publication system. According to the Company Law(2013), company registration registers only registered shareholders subscribed capital in the establishment of the company. Paid-in capital is no longer registered, which has a great impact on the "capital publicity" rule. In the absence of company establishing registration information for paid-in capital is not reasonable. The reasons are as follows: 1) from the function of paid-in capital point of view, paid in capital is more important than subscribed capital, and the paid-in capital is the real decision directly according to whether shareholders can exercise the certain rights; 2) from capital the role of publicity point of view, the paid-in capital without publicity can be determined and changed by company internal decision, which may result in unfair effect for the external. Therefore, we should further improve the company registration procedures by both registering the subscribed capital and paid-in capital. In addition, the annual report publication system can only reflect part condition of the company credit. Therefore comes the suggestion that company registration shall establish a united the company credit information database based on the corporate credit information publicity platform for the public(includes creditors) to inquiry. |
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