Legal basis: Article 99 of the Company Law of People's Republic of China (PRC). When a limited liability company is approved to be changed into a joint stock limited company according to law, the total amount of converted shares shall be equal to the net assets of the company.
That is, the net asset value of a limited liability company audited by an accounting firm with securities practice qualification on the audit benchmark date is the changed share capital of the joint-stock company. Because at a certain point, the net assets of a limited liability company will not be an integer, and generally the integer will be converted into equity. There are two solutions to zero. One is to distribute zero to shareholders and keep it in the books as a liability to shareholders. The other is to include zero in the capital reserve fund.