The Protection Of Creditors Under The Subscribed Capital System

China implements the company's registered capital subscription system,allowing shareholders to establish a company without having to actually pay the capital,thus significantly reducing the financial threshold for company establishment,and helping to achieve the objective of encouraging business start-up by establishing appropriate laws and policies.In a situation where the capital system is not relatively constrained,the risk of shareholders' investment is reduced to a certain extent,and can be controlled within the scope of the actually paid-in assets.The registered capital subscription system is conducive to maintaining shareholders' rights and interests.However,due to the lack of a certain amount of paid-in capital security for corporate operating assets,the creditors may face a predicament that their creditor's rights cannot be recovered because the shareholders don't actually pay the capital.If it is impossible to build a complete supplementary supporting system around the registered capital subscription system to realize the balance of interests between the company's shareholders and creditors,a capital subscription system that has defects will not only increase the risks and responsibilities of the creditors,but also adversely affect the continuous operation of the companies that adopt the capital subscription system.Since China's existing capital subscription system does not have a supporting legal protection arrangement established accordingly for the protection of creditors,the creditors will not get effective remedies if the company's shareholders fail to fulfill the relevant capital contribution obligations.Under this institutional presupposition and creditor's risk prediction,creditors will adopt a more cautious approach when dealing with companies that implement the capital subscription system,thereby increasing transaction costs between the company and its creditors and reducing the trading opportunities.Ultimately,this will affect the development of the market economy.Therefore,the company's registered capital subscription system should take into account the interests of both the shareholders and the creditors.The rights of creditors and shareholders should be equally protected by laws.This article will elaborate the issue of protection of the creditors under the subscription capital system from 4 parts.Part ?.This article elaborates the concept,content and value of subscription capital system,including the legislation mode of subscription capital system,corporate efficiency,expansion of shareholders' rights and asset credit,etc.Registered capital,also called issued capital,refers to the total amount of the capital stock that issued by the company to shareholders actually,i.e.total amount of the capital stock subscribed by shareholders in cash or in kind and other means.Subscribed capital is a concept corresponding to paid-up capital.Subscribed capital refers to the commitment made by shareholders to subscribed shares and corresponding subscribed shares have not been paid in cash or in kind;paid-up capital refers to the cash or kind corresponding to the subscribed shares paid by shareholders to the company at the time of subscription of shares.In the country where legal capital system is implemented,the capital specified in articles of association shall be paid in full amount in a lump sum.To this end,issued capital generally is equal to registered capital.But when required by laws or articles of association,after complete subscription of capitals by shareholders in full amount,capital stock can be paid in installments.In the country where authorized capital system is implemented,generally registered capital is not required to be issued in full amount.To this end,issued capital can be less than registered capital.In Part ?,this article compares the methods to protect corporate creditors in different countries,and the focus is on the legislation related to it in the U.S,Germany and the U.K respectively.In this area,the U.S mainly focuses on the trust obligation and solvency,Germany on the spirit of legislation,ban of investment in the form of actual assets and limitation of reserved funds,and U.K on prior protection of creditors in the stipulations in the system of forced disclosure as well as substantial increase of the boards' liabilities.Based on the analysis of the advantages and disadvantages of the registered capital system in China and foreign countries,some constructive recommendations to improve the law policies are given.In Part ?,this article looks back on the status quo of the protection of creditors under the subscribed capital system,and points out some weaknesses or faults of it based on the analysis of the specific mechanisms in the subscribed capital system.The rationality and progressiveness of the subscribed capital system should be recognized,while the problem of failure to protect the creditors under it should also be identified.The Corporate Law is of great importance to the protection of creditors,for it can facilitate the transaction between companies and their creditors and help to improve corporate operational efficiency and safeguard the capital operation.Nevertheless,it is a reality that there is no mechanism in the Corporate Law to protect the creditors,and this should be addressed by the lawmakers.Under the current corporate system,possible impairments in the interests of the creditors include: asset credit deficiency,lack of system guarantee for creditors to recover their debts and serious harm of the creditors' interests induced by the uncertainty of subscriptions.These potential risks have a great influence on the creditor's interests,and undermine the credit level of the entire market economy.As a result,the Corporate Law should be amended to pay attention to and strengthen the protection of the creditors' interests upon the urgent call of the creditors.In Part ?,a possible solution is suggested to address the series of problems on the protection of creditors under the subscribed capital system as described in Part III,Including expanding the application of corporate asset credit system,institution of the openness and transparency system of corporate information,and so on,with a view to protecting the corporate creditor's interests,enhancing the creditor's confidence on the market and securing the regular operation of the market economy.