Improvement Of The Capital Reserve Restriction Rules In The Company Law

The capital reserve restriction rules in the Company Law are part of the principle of capital maintenance.Therefore,these rules should also be designed from the perspective of the function of capital system and capital maintenance principle.Under the background of the change of the function of the capital system,the function of the capital reserve restriction rules has also changed,which makes the rationality of imposing mandatory rules on the capital reserve be questioned.This paper discusses the capital reserve restriction rules in the Company Law,tries to anatomize its defects,and proposes specific suggestions.Removing the introduction and conclusion,this article is divided into the following four parts:The first part,the function of the capital reserve restriction rules in the Company Law.The traditional functions of the company’s capital system include protecting the interests of creditors,safeguarding national and social interests,and maintaining market order.These features also affect the capital reserve restriction rules.With the company law gradually removing many mandatory rules,and the changes in the function of the company’s capital system,the function of the capital reserve restriction rules to protect creditors has also been questioned,and the function of safeguarding national and social interests and maintaining market order has gradually weakened.In this context,the rationality of regulating the use of capital reserve by mandatory rules has been questioned.Therefore,relaxing the restrictions on the use of capital reserves and making the company’s capital structure more flexible have become the development trend of the capital reserve restriction rules.The second part is the investigation of the regulation method of the capital reserve restriction rules in the Company Law.The regulation of the use of capital reserve in the Company Law includes both static and dynamic.Among them,static regulation is that the law directly imposes restrictions on the use of the company’s balance sheet account,mainly focusing on the static distributable accounts,it is based on ex ante restrictions;and dynamic regulation is directed at the company’s distribution decision,and whether the decision will affect the solvency of the company,it is post-evaluation of these actions.The law is incomplete.It is impossible for the law to create all the rules beforehand.Therefore,the court should be given certain residual lawmaking powers.There is also a problem of high degree of incompleteness in the use of capital accumulation fund.It is difficult to standardize the capital reserve restriction rules.Pre-regulation is not only costly,but also leads to over-regulation.Dynamic post-regulation is more rational in this field.Therefore,replacing static regulation with dynamic regulation is the development direction.The third part is the limitation of the rules of the capital reserve restriction rules in the Company Law.The capital reserve restriction rules have deviations in functional positioning,which excessively reflects the objectives of securities supervision,and also places too much emphasis on restricting the use of capital reserves to protect the interests of creditors.However,this kind of function does not meet the actual needs of China.Under this function,the strict capital reserve restriction rule can not achieve its original functions,but it has caused many problems such as inefficiency,rigid capital structure,and weak creditor protection.In terms of regulation,China’s Company Law capital reserve restriction rules are too dependent on static regulation,trying to achieve its functions with strict static regulation,but neglecting the construction of dynamic regulation,so that the current dynamic regulation is not enough to provide adequate protection for creditors and is not enough to ensure the stability of the company’s operations either.The fourth part is the suggestion for improvement for the capital reserves restriction rules in Company Law.The capital reserves restriction rules should be based on the ideal function and China’s situation,should adhere to the creditor’s interest protection function as well as moderately balance the company’s business freedom.As for the regulation method,both of the static regulation and dynamic regulation should be improved.The static regulation should replace the substantive compulsory with procedural compulsory.The reduction of capital reserves should refer to the applicable capital reduction rules.But the capital reduction should distinguish between substantial capital reduction and formal capital reduction.In the formal capital reduction,the creditor protection procedure is postponed from the time of capital reduction to the time when the company decides to distribute within a certain period of time after the capital reduction.The improvement of dynamic regulation requires systematic supplement,and gradually replaces ex ante mandatory method with ex post evaluation method.