Research On The Legal Relief System Of The Company's Capital Reduction Of The Procedural Defects

Article 177 of the Company Law of the People's Republic of China stipulates the procedures that a company shall perform when it reduces capital.The procedural defects of the company's capital reduction occurs when the company do not perform these procedures by law.The company's capital reduction will weaken the company's solvency and have an negative impact on creditors' interests.In view of the fact that the Company Law of the People's Republic of China have not stipulate how to compensate the creditors whose interests have been damaged perfectly,this article aims to analyze the main issues of Chinese legal relief system and propose suggestions on the legal relief system of the company's capital reduction of the procedural defects.The first section of the article mainly introduces the current legislative situation,judicial situation and main issues of the legal relief system of the company's capital reduction of the procedural defects.This section try to define the concept of the procedural defects of the company's capital reduction,and conclude the main issues in the legal relief system of the procedural defects of the company's capital reduction: the first issue is the behavior of the procedural defects of the company's capital reduction is valid or invalid;the second issue is the creditors do not have the legal right to claim for suspending company's capital reduction;the law does not stipulate the legal responsibility after the procedural defects of the company's capital reduction occurs.The second section of the article analyzes the main issues in the legal relief system of the company's capital reduction of the procedural defects.Regarding the validity of the company's capital reduction of the procedural defects,this section analyzes it from the perspective of whether it is a mandatory provision and the perspective of economic analysis of law based on the current theoretical discussion of the validity of the company's capital reduction of the procedural defects.Regarding the shareholder's responsibility for the procedural defects of the company's capital reduction,this section explains that the jurisprudential basis for the shareholder's responsibility for the procedural defects of the company's capital reduction is the principle of capital maintenance.This section also analyzes the shareholder's obligations in capital reduction,the principle of shareholder's liability is strict responsibility principle,the scope of responsibility and the period of responsibility.Regarding the responsibility of directors and senior executives for the procedural defects of the company's capital reduction,this section explains the jurisprudential basis for it is diligent obligations,and summarizes the directors and senior executives' obligations in voting the shareholders meeting resolution and during execution of the shareholders meeting resolution.The third section of the article analyzes the creditors protection system of different capital reduction mode of foreign countries,and proposes the route of the regulation of the legal relief system of the procedural defects of the company's capital reduction in China.In the creditors protection system under the information disclosure capital reduction model represented by Japan,Japan's creditor protection model for company capital reduction mainly has the following three aspects: first,it entitles the creditors to request the company to suspend the capital reduction;second,it entitles the creditors the right to file a lawsuit to claim the behavior of the procedural defects of the company's capital reduction is invalid;third,it states the responsibilities of company directors and senior executives clearly.Under the capital reduction model of the solvency standard represented by the United States,the creditors protection system mainly stipulates the responsibilities of directors and senior executives.They should ensure that the company's assets can discharge the debts after the capital reduction.Under the compromise model of judicial intervention,mainly represented by the United Kingdom,there are two models.In the capital reduction model which need approved by the court,the creditors is entitled to file a request to suspend the capital reduction;in the method of the solvency,the obligation to ensure the authenticity of the solvency is imposed on the directors and senior executives to protect the rights of creditors.This section specifies that China's legal relief system of the procedural defects of the company's capital reduction should stipulate the validity of behavior the procedural defects of the company's capital reduction firstly,which is a prerequisite for subsequent discussion on the legal relief of creditors' rights;second,the creditors' right for requesting the capital reduction to be suspended should be introduced;in the end,the responsibility mechanism in the capital defect reduction should be clarified.The fourth section of the article proposes suggestions on legal relief system of the procedural defects of the company's capital reduction: first,the validity of the procedural defects of the company's capital reduction should be assured;second,the creditors' right for requesting the capital reduction to be suspended should be introduced;third,the shareholder responsibility mechanism should be clarified: the shareholders should undertake the responsibility on the principle of strict liability,and the scope of shareholder's responsibility for the reduction of capital for defects should be within the scope of the reduced subscription capital.In addition,the time limit for the shareholder's responsibility for the procedural defects of the company's capital reduction should be the subscription limit agreed in the articles of the company.Fourth,the responsibilities of directors and senior executive should be stipulated,and they undertake creditors' debts when the company and shareholders are insolvency on the principle of fault liability.