A Study On The Solvency Model Of Capital Outflow Supervision

This article is mainly based on the cross perspective of law and accounting to study two modes of capital outflow regulation-capital maintenance mode and solvency mode.The regulation of capital outflows is a summary of the legal rules of the company law on capital transactions between various companies and shareholders that have similar effects to dividend distribution,such as dividend distribution,share repurchase,and capital reduction.The reason why it is necessary to restrict capital outflows is to protect the interests of creditors.If the company’s capital outflows are not regulated,once the company goes bankrupt or falls into financial crisis,Creditors may not be able to realize their claims,so protecting creditors is extremely important.In this regard,any rational national law has made detailed provisions on the regulation of corporate capital.The first chapter of this article compares the origin,content,and respective criticisms of the capital maintenance model and the solvency model.The capital maintenance model is a product of the statutory capital system of the company law in the 19 th century,and is a principle with a long history.However,in recent years,there have been many criticisms of the capital maintenance model.It mainly focuses on the role of capital maintenance mode in protecting creditors,as well as the regulatory cost and economic efficiency of capital maintenance mode.The Model Company Law of the United States,revised in 1980,established a solvency model.This model mainly consists of two tests,"Equitable Solvency Test" and "Balance Sheet Test".Due to the different laws in various states of the United States,California and Delaware have their own models.The second chapter of this article mainly compares the accounting differences behind the capital maintenance model and the solvency model.Firstly,it describes the importance of accounting system for the company’s capital system.Financial accounting is inherently consistent with the capital system of the company law,which controls capital contributions and restricts profit distribution.Then,from the perspective of the impact of the legal system on accounting,the impact of tax laws on accounting,and the impact of report users on accounting,it is concluded that the differences in the accounting basis under the two models are the most core differences in the two distinct accounting concepts of "prudence" and "true and fair",which will directly affect the financial statement data and further affect the distributable amount,This also leads to the core point of this article: The true and fair oriented international accounting standards that match the solvency model are not applicable to the calculation of distributable amounts.However,as China’s accounting standards gradually converge with international accounting standards,the effectiveness of the capital maintenance model will inevitably be affected.Therefore,we should consider how to achieve coordination between financial accounting and corporate capital regulations.The third chapter of this article introduces how the EU and the UK,which also adopt the capital maintenance model in corporate capital regulation,handle and respond to the inconsistency between financial accounting and corporate capital regulation brought about by the introduction of the concept of true and fair under the convergence of international accounting standards.The European Union has chosen the retained capital maintenance model in the trend of reform,but German scholars are concerned that with the continuous impact of international accounting standards,traditional accounting practices are difficult to sustain,which may shake the foundation of the statutory capital system.The UK has created a unique "capital maintenance+profit adjustment" model to eliminate the impact of unrealized gains and losses on the distributable amount under the "true and fair view".However,this set of rules is complex and costly,and it may be difficult for China to learn from them.The fourth chapter of this article discusses the mode choice of capital outflow regulation in China,which is to retain the capital maintenance mode or shift to the solvency mode? This article holds a cautious attitude towards turning to the solvency model.From the perspective of the value orientation of the company law itself and the protection of creditors outside of China’s company law,if we simply introduce the solvency model,we may obtain a model that is most powerless to protect creditors.Based on the logic of retaining the capital maintenance model,this article proposes suggestions for enhancing the coordination between financial accounting and corporate profit distribution rules,as well as improving China’s corporate capital outflow regulation rules.In terms of coordination,the impact of unrealized income can be eliminated when calculating the distributable amount;In addition,we can draw on the concept of broad distribution under the solvency model to uniformly regulate transactions involving capital outflows.