Except for the buybacks used to reward employees, all buybacks stipulated in Article 142 of the Company Law will be accompanied by the cancellation of shares or the transfer in line with market value. In other words, the actual assets required by the capital maintenance principle in the Company Law will be consistent with the registered capital.
But only when it is used to reward employees, the company must buy back some shares (employees subscribe for shares) or even all shares (employees get shares for free), which means that the actual capital of the company is reduced, which does not meet the requirements of the principle of capital maintenance.
In order to solve the problem of the actual reduction of the company's capital, it is necessary to clarify the source of funds to buy back employees-the company's extra funds, and the after-tax profit best conforms to the concept of extra funds. That is to say, in the company's financial statements, only after-tax profits are the extra funds available to the company in this period, and the use of this part of funds does not involve the reduction of the company's capital, which meets the requirements of the company's capital maintenance principle.
Attached is the Company Law of People's Republic of China (PRC).
Article 142 A company may not purchase its own shares. However, except for one of the following circumstances:
(1) Reduce the registered capital of the company.
(2) Merging with other companies holding shares of the Company;
(3) Rewarding shares to employees of the Company;
(4) Shareholders request the company to purchase their shares because they disagree with the resolution of merger or division made by the shareholders' meeting.
Where a company purchases shares of the company due to items (1) to (3) of the preceding paragraph, it shall be decided by the shareholders' meeting. After the company has purchased its shares in accordance with the provisions of the preceding paragraph, it shall be cancelled within 10 days from the date of acquisition in case of the first circumstance; In case of items (2) and (4), it shall be transferred or cancelled within six months.
The company's purchase of its shares in accordance with Item (3) of Paragraph 1 shall not exceed 5% of the total issued shares of the company; The funds used for the acquisition are paid from the after-tax profits of the company; The acquired shares shall be transferred to the employees within one year.
A company may not accept its own shares as the object of pledge.
Extended data:
According to the Company Law of People's Republic of China (PRC)
Article 74 In any of the following circumstances, a shareholder who votes against the resolution of the shareholders' meeting may request the company to purchase its equity at a reasonable price:
The company has not distributed profits to shareholders for five consecutive years, but the company has made profits for five consecutive years and meets the conditions for distributing profits stipulated in this Law;
The merger, division or transfer of the company's main property;
Upon the expiration of the business term stipulated in the Articles of Association or other dissolution reasons stipulated in the Articles of Association, the shareholders' meeting will adopt a resolution to amend the Articles of Association to make the Company survive.
If the shareholders and the company fail to reach an equity purchase agreement within 60 days from the date of adoption of the resolution of the general meeting of shareholders, the shareholders may bring a lawsuit to the people's court within 90 days from the date of adoption of the resolution of the general meeting of shareholders.
Baidu encyclopedia-share repurchase