What are the company's capital reduction rules?
Capital reduction refers to the behavior of enterprises to reduce capital in order to make up losses and adjust capital. Enterprises need to hold a shareholders' meeting to reduce their capital.
Special approval. Enterprises reduce capital for several reasons:
(1) Pay off accumulated debts in one lump sum. Due to the accumulation of operating losses for many years, even in the next few years, the profits of enterprises can not be made up. In this case, it is necessary to reduce capital to make up for the accumulated losses.
(2) Adjust excess capital. The company needs huge funds at first, but after it is on the right track, there may be excess funds, so it also needs to reduce capital.
(3) Pay more dividends. Since dividends are distributed according to the profit of capital, reducing capital can increase dividends. At the same time, you can also talk to? Pay off accumulated debts in one lump sum? Combine, eliminate losses and resume dividends as soon as possible.
(4) Company merger. This is usually done when the company's assets are balanced.
(5) separation part. When some departments in the company are separated and independent, assets are also separated, which is also a kind of capital reduction for enterprises. There are two types of capital reduction: formal capital reduction and substantial capital reduction. The formal capital reduction means that the capital is reduced only in the account book, and the company's property is not reduced. For example, the company repurchases a certain proportion of tradable shares, reduces the denomination, and returns a sum of money to shareholders. Capital reduction that needs to make up for losses due to poor operating conditions is a substantial capital reduction, and most of the capital reductions belong to this situation.
The increase or decrease of company capital is the normal state in the process of company capital operation. Capital reduction and capital increase correspond to the contraction and expansion of the company, both of which are unavoidable business realities of the company. Compared with the company's capital increase, the conflict of interests among controlling shareholders, minority shareholders and external creditors caused by capital reduction is more intense. According to the Anglo-American Company Law and the principle of corporate finance, capital reduction is regarded as? Enterprise reorganization or fundamental structural change? The sub-problem under the project, the capital reduction rule comes down to the sub-rule under the principle of company capital maintenance. The company's capital reduction is a commercial demand; Creditors face capital reduction, causing security concerns; Shareholders try to reduce their own capital in order to withdraw or realize their capital; Legislators are faced with the problem of how to weigh the interests of company participants when designing capital reduction rules.
Provisions on Capital Increase and Capital Reduction of the Company
1. The company needs to go through the following procedures to reduce its capital: When the 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. The registered capital of the company after capital reduction shall not be lower than the statutory minimum.
Two. The capital increase of a company needs to go through the following procedures: When a limited liability company increases its registered capital, the shareholders shall subscribe for the capital contribution of the newly-increased capital in accordance with the relevant provisions of this Law on the establishment of a limited liability company. 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.
Three. Where a company is merged or divided and its registered items change, it shall register the change with the company registration authority according to law; If the company is dissolved, it shall go through the cancellation of registration according to law; Where a new company is established, it shall be registered in accordance with the law. Where a company increases or decreases its registered capital, it shall register the change with the company registration authority according to law.
Company capital reduction procedure
The resolutions of the shareholders' meeting to increase or decrease capital and the corresponding amendments to the Articles of Association must be passed by shareholders representing more than two thirds of the voting rights. At the same time, for capital reduction, the registered capital of the company after capital reduction shall not be lower than the statutory minimum.
(1) The company must prepare a balance sheet and an inventory of assets.
(2) Notify creditors and make an announcement. The company shall notify the creditors within 10 days from the date of making the capital reduction resolution, and make an announcement in the newspaper at least three times within 30 days.
(3) Debt settlement or guarantee. 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 90 days from the date of the first announcement if they have not received the notice.
(4) Go through the registration formalities for capital increase or capital decrease. From the date of registration, the capital increase or reduction will take effect.
Conditions and procedures for reducing registered capital
According to the principle of constant capital, the company's capital is not allowed to be reduced. China law allows capital reduction, but certain conditions need to be specified:
1. The original company had too much capital, resulting in excess capital. If the capital remains unchanged, it will lead to the idleness and waste of capital in the company and increase the burden of dividends.
2. The company suffered serious losses, and the gap between total capital and actual assets was too large. The company's capital has lost its due legal significance to prove the company's credit status.
The process of reducing the registered capital of a company
The shareholders' meeting shall make a resolution to reduce capital and amend the Articles of Association accordingly, which must be approved by shareholders representing more than two thirds of the voting rights. At the same time, for capital reduction, the registered capital of the company after capital reduction shall not be lower than the statutory minimum.
1. The resolution of the shareholders' meeting is as follows:
1) registered capital of the company after capital reduction.
2) Arrangement of shareholders' rights and interests and creditors' interests after capital reduction.
3) Matters related to the revision of the Articles of Association.
4) Changes in shareholder's capital contribution and its proportion, etc.
2. The company must prepare a balance sheet and a list of assets.
3. Notify or announce creditors. The company shall notify the creditors within 10 days from the date of making the capital reduction resolution, and make an announcement in the newspaper at least three times within 30 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 90 days from the date of the first announcement if they have not received the notice.
4. Go through the registration formalities for capital reduction. From the date of registration, the capital reduction will take effect.
The above are the details of the company's capital reduction I provided for you. I hope you will like it!
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