The Study On Chinese Company Capital Reduction System

Capital plays an extremely important role in the company.The company uses capital as a basis for transactions with other market entities and guarantees the realization of creditors’ interests.Company capital is often in a state of constant change in company operations,and it is very common for companies to reduce capital in accordance with legal regulations.The capital reduction can bring benefits of improving the efficiency of capital use and making up for losses.However,because the capital reduction is bound to affect the company’s credit ability and debt repayment ability,a perfect capital reduction system must be able to protect efficiency,maintain transaction security and the order of the capital market,and ensure that the interests of companies,shareholders,and creditors can be taken into account at the same time.The Company Law reformed the capital formation system in the capital system in 2013,further relaxing the supervision of capital and decreasing the threshold for commercial entities to enter the market.Both the capital formation system and the capital reduction system are important components of the company’s capital system.The reformed capital formation system and the original capital reduction system will inevitably have some separation,resulting in a large difference between the company’s registered capital and actual assets,and the benefits of creditors cannot be guaranteed.After reforming the capital formation system,the law must inevitably reform the capital reduction system to achieve the internal unity of the capital system.After the establishment of the subscription system,the rough and general problems of China ’s capital reduction system have not been solved.The split between the subscription system and the capital reduction system has led to a sharp increase in the number of capital reduction disputes in China.There is no perfect legal basis for judicial authorities to deal with capital reduction disputes,and they even have to deal with those cases by analogy,which makes it impossible to make a standard and unified judgment on capital reduction disputes.As a result,there has been widespread consensus in the academic and practical circles that the Company Law should reform the capital reduction system.This paper selects two typical cases to analyze the existing problems of the capital reduction system,puts forward suggestions for improving the original capital reduction system,and puts forward legislative suggestions on the new situation of the company’s capital reduction under the subscription registration system.The full text is divided into five parts:The first part introduces two typical cases in judicial practice,and leads to the main problems discussed in this paper,like the procedures to be performed by the company for capital reduction,and the effectiveness and responsibilities of illegal capital reduction activities.The second part discusses the basic content of capital reduction.Firstly,this part discusses the concept,type and role of capital reduction.Secondly,this part clarifies the type of system in which China’s current capital system is located,and uses it as a basis to discuss the relationship between the capital reduction system and the capital principles of the civil law system,and discusses how the different capital reduction behavior will affect creditors under the current capital system.The third part discusses the legislative model of the capital reduction system.Firstly,the three major legislative models formed by countries around the world are described in details.Secondly,this part analyzes the advantages and disadvantages of each legislative model and chooses the most suitable legislative model for our capital reduction system on the basis of clarifying the legislative value that the capital reduction system in China should pursue.The fourth part analyzes the requirements of the company’s capital reduction.First of all,this part analyzes the entity requirements for capital reduction,clarifies the reasons why the company can reduce capital and must reduce capital,and sets the range of company’s capital reduction.Secondly,this part discusses how to improve the company’s capital reduction procedures on the basis of the current procedural requirements of the capital reduction system in China.The fifth part discusses the effectiveness and responsibility of illegal capital reduction.Firstly,this part introduces different doctrines about the effectiveness of illegal capital reduction and puts forward the point of view that the author agrees with after comparing with them,and clarifies the effectiveness of illegal capital reduction on the basis of this viewpoint.Secondly,this part clarifies the legal entities and liability relationship among these entities,and clarifies the scope of the liability of the illegal capital reduction activities in different situations in the context of the subscription registered system.