Study On The Rule Of Creditor's Protection In The Capital Reduction

Based on the limited responsibility system,the liability of shareholders shall be limited to the amount of its capital contribution or the number of its subscribed shares,but the risk of management failure will be transferred to creditors.The shareholders transfer property by means of capital reduction,which brings out the result that shareholders can be liquidated before creditors,and break the balance between shareholders and creditors.With the deepening of the reform of China's capital system,the function of capital guarantee is weakened and the original structure of protection of creditors in the capital reduction system is shaken.Article177 of the company law formally draws on German legislation on capital reduction.it takes the information disclosure mechanism in protecting creditors,however,the regulation is too simple,and the law doesn't distinguish between substantial capital reduction and insubstantial capital reduction,and there is no method about capital reduction.Given the above,the interests of creditors are vulnerable.The model about the damage of creditors' interests has formed,including the effect problem of resolution about capital reduction,notice procedures for capital reduction,the lack of guarantee or repayment procedures,and the lack of measures about illegal capital reduction.The model about the damage of creditors' interests has formed,including the effect problem of resolution about capital reduction,notice procedures for capital reduction,the lack of guarantee or repayment procedures,and the lack of measures about illegal capital reduction.Compared with China's legislation on capital reduction,the foreign legislation is more mature.There are three mode about the protection of creditors,German is a representative of strict creditor protection mode,which aims to protect the interest of creditors,but it sacrifices the efficiency.the second mode is solvency testing,it claims What creditors really concern is solvency instead of the registered capital.There is no need to restrict the pay to shareholders if company have solvency.This practice reflects the company's pursuit of capital reduction efficiency.The third is compromised mode,including the strict process by judicial intervention and the mechanism of statement of solvency.This mode will lead to rent-seeking of judicial power easily because of discretion.The statement of solvency remits the pressure of the strict process,meanwhile,its provisions are detailed.This approach makes sense and is worth learning.By analyzing the insufficient of legislation of capital reduction to creditors and studyingthe arrangements for the protection of creditors by the extraterritorial capital reduction legislation,the mode we choose should follow the guiding ideology that is in line with the basic national conditions,considering the cost and taking both safety and efficiency into consideration.We should distinguish the type of company in capital reduction,consider not only the particularities of listed companies and non-listed public companies,but also the commonalities between limited liability companies and other non-public stock-limited companies.We should also remain the model of information disclosure,and introduce the mechanism of solvency statement.Here's the approach:take the revised mode of the information disclosure in public listed and unlisted public companies based on distinguishing substantial capital reduction and insubstantial capital reduction;perfect the process of notice and Creditors' objection;clear the effective time of the behavior of capital reduction;draw on the practice that it will be labeled “Reduced capital”when companies reduce capital in order to hint the risk of transaction;set the obligation when creditors miss the notification without fault in order to weaken the stockholders' opportunism behavior.Simultaneously,limited liability companies and other non-public stock-limited companies shall be given more options so that they can choose mode between the information disclosure and solvency statement depending on their needs.we should intensify directors and business executives liability when we use solvency statement.