Statutory reserve fund, that is, statutory surplus reserve fund, is a part of the funds that the company must withdraw according to law when distributing the after-tax profits of the current year. Specifically, the company needs to withdraw about 10% from the after-tax profits as the statutory reserve fund. When the accumulated amount of the provident fund reaches more than 50% of the registered capital of the company, the company may stop drawing. The main purposes of statutory provident fund include making up the company's losses, expanding the scale of production and operation or increasing the company's capital. When the reserve fund is converted into share capital, it must be guaranteed that the balance of the statutory reserve fund after the conversion is not less than 25% of the registered capital.
Composition of statutory provident fund:
1. Statutory surplus reserve fund: part of the funds drawn from the net profit by the enterprise according to law;
2. Arbitrary surplus reserve fund: after the enterprise withdraws the statutory surplus reserve fund, it will withdraw the supplementary reserve fund according to the articles of association or the resolution of the shareholders' meeting;
3. Capital accumulation fund: including the accumulation fund formed by non-operating income such as equity premium and asset appraisal appreciation;
4. Converting surplus reserve fund into share capital: the enterprise converts surplus reserve fund into share capital to increase the registered capital of the company;
5. Restrictions on the use of provident fund: it is usually used to make up the losses of enterprises, expand production and operation or increase registered capital.
To sum up, the statutory reserve fund, that is, the statutory surplus reserve fund, is the fund that the company withdraws from the after-tax profit according to law, usually accounting for 65,438+00%, to ensure the financial stability of the company, and its purpose covers making up losses, expanding business or increasing capital. When the accumulated amount exceeds 50% of the registered capital, the withdrawal can be stopped, but the balance must be guaranteed not to be less than 25% of the registered capital when the share capital is transferred.
Legal basis:
Company Law of the People's Republic of China
Article 166
When the company distributes the after-tax profit of the current year, it shall withdraw 10% of the profit and include it in the company's statutory reserve fund. If the accumulated amount of the statutory common reserve fund of the company is more than 50% of the registered capital of the company, it may not be withdrawn.