What are the rules for the company to increase or decrease its capital?

Legal analysis: The resolution to increase or decrease the capital of the shareholders' meeting of a limited liability company must be passed by shareholders representing more than two thirds of the voting rights. Violation of the above conditions and procedures for capital increase and capital decrease will lead to the invalidation or cancellation of the company's capital increase. When a company reduces its capital, it must prepare a balance sheet and a list of assets, and notify and announce its creditors. When the company increases its capital, shareholders have the priority to subscribe for the capital contribution in proportion to the paid-in capital contribution.

Legal basis: People's Republic of China (PRC) Company Law.

Article 43 The resolutions of the shareholders' meeting to amend the Articles of Association, increase or decrease the registered capital, and the resolutions of the company's merger, division, dissolution or change of corporate form must be adopted by shareholders representing more than two thirds of the voting rights.

Article 177 When a company needs to reduce its registered capital, it must prepare a balance sheet and a list of assets. The company shall notify the creditors within ten days from the date of making the resolution to reduce the registered capital, and make an announcement in the newspaper within thirty days. Creditors have the right to require the company to pay off debts or provide corresponding guarantees within 30 days from the date of receiving the notice, or within 45 days from the date of announcement if they have not received the notice.

Article 178 When a limited liability company increases its registered capital, the contribution of the newly-increased capital subscribed by shareholders shall be implemented in accordance with the relevant provisions of this Law on the contribution of limited liability companies. When a joint stock limited company issues new shares to increase its registered capital, shareholders shall subscribe for new shares in accordance with the relevant provisions of this Law on the establishment of a joint stock limited company and the payment of shares.