2. Principle of capital preservation: Capital preservation is one of the basic principles of modern limited liability enterprise system, and enterprises cannot erode capital in distribution. The distribution of profit is the distribution of capital appreciation in operation, not the return of capital. According to this principle, under normal circumstances, if an enterprise has uncompensated losses, it should make up the losses first and then make other distributions.
3. The principle of fully protecting the interests of creditors: the interests of creditors are in accordance with the order of taking risks and the provisions of the contract. Before making profit distribution, an enterprise must pay off all due creditor's rights and debts, otherwise it cannot make profit distribution. At the same time, after profit distribution, enterprises should also maintain a certain solvency to avoid financial crisis endangering the survival of enterprises.
4. Multi-party and long-term and short-term interest principle: the interest mechanism is the core of the restriction mechanism, and whether the interest distribution is reasonable is the key to whether the interest mechanism can continue to play its role in the end. Profit distribution involves the interests of investors, operators, employees and other aspects, and enterprises must take into account and maintain stable profit distribution as much as possible.
Legal basis: Article 166 of the Company Law of People's Republic of China (PRC), when distributing the after-tax profits of the current year, the company shall withdraw 10% of the profits 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statutory common reserve fund of the company is more than 50% of the registered capital of the company, it may not be withdrawn.
If the statutory reserve fund of the company is insufficient to make up for the losses of the previous year, the profits of the current year shall be used to make up for the losses before the statutory reserve fund is withdrawn in accordance with the provisions of the preceding paragraph.
After the company withdraws the statutory reserve fund from the after-tax profits, it may also withdraw the reserve fund from the after-tax profits upon the resolution of the shareholders' meeting or general meeting.
After-tax profits of the company after making up losses and drawing provident fund shall be distributed by the limited liability company in accordance with the provisions of Article 34 of this Law; A joint stock limited company shall distribute shares according to the proportion of shares held by shareholders, except that the articles of association of a joint stock limited company stipulate that shares shall not be distributed according to the proportion of shares held.
If the shareholders' meeting, shareholders' general meeting or the board of directors violates the provisions of the preceding paragraph and distributes profits to shareholders before the company makes up losses and withdraws the statutory reserve fund, the shareholders must return the profits distributed in violation of the provisions to the company.
The company's shares held by the company shall not be distributed.