Study On Creditor’s Protection Under Subscription Capital Rules

Subscription Capital Rules has been established in Company Law amended in 2013. There are no minimum capital requirements in the new company law. A company will be set up as long as shareholders have subscribed the capital. Shareholders are entitled to decide how and when to actually pay the capital. Although scholars have studied much in company capital rules, the company law’s reform in 2013 is pushed by authorities. Therefore, it’s not well prepared for Subscription Capital Rules, especially for creditors’ protection.This paper aims to find a way to protect creditors under Subscription Capital Rules, emphasizing the issue that shareholders should actually contribute the investment. There are two situations we will be confronted. One situation is that the company cannot pay its debts while the date for shareholders to pay their capital is not due. The other one is that shareholders misuse their rights to decide the time to pay their capital, and piercing the corporate veil is necessary to protect creditors.There are three chapters in this paper. Chapter one introduces the meanings of the concepts “capital” and “registered capital”. First explain the meaning of capital in economy and politic fields, then explain what’s capital in law field, and identify what the capital discussed in this paper is. Then analyze the characters of Legal Capital Rules, Authorized Capital Rules and Comprised Capital Rules, and introduce their relationships with creditors’ protection.Chapter two analyses Subscription Capital Rules. First, introduce provisions of Subscription Capital Rules in company law and identify the meaning of Subscription Capital Rules. Second, identify the nature of Subscription Capital Rules based on the compare among different capital rules. Third, discuss the rationality and inadequacy of Subscription Capital Rules.Chapter three discuses shareholders’ obligation of contribution before the due date. First, introduce the difficult situation caused by undue obligation of contribution of shareholders. Second, discuss should we require shareholders contribute the investment in advance. Third, discuss the way to set rules for shareholders’ obligation of contribution to be deemed to be due, and offer a proposal. Fourth, discuss how to apply the rules set above, and discuss the requirements under which creditors could advocate shareholders’ secondary liabilities.