1. The original company had too much capital and excessive formal capital. If the capital remains unchanged, it will lead to the idleness and waste of capital in the company, which is not conducive to the efficiency of capital and increases 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, and shareholders have not been rewarded due to the company's losses for years.
The company's capital reduction shall comply with legal procedures:
1, resolution of the shareholders' meeting.
The contents of the resolution include: ① the registered capital of the company after capital reduction; ② Arrangement of shareholders' interests and creditors' interests after capital reduction; ③ Matters related to the revision of the Articles of Association; (4) Changes in the capital contribution of shareholders and their proportions, etc. When making a resolution on capital reduction, the company should pay attention to the fact that the registered capital of the company after capital reduction shall not be lower than the statutory minimum;
2. Prepare balance sheet and property list.
3. Notify or announce creditors.
The company shall notify the creditors within 10 days from the date of making the resolution to reduce the registered capital, 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. Change registration.
The specific ways of capital reduction include: ① reducing the total capital contribution and changing the original capital contribution ratio; ② Reduce the capital contribution of each shareholder without changing the proportion of capital contribution. In practice, the above two ways of reducing capital can be mixed.
Legal basis: Article 177th of the Company Law of People's Republic of China (PRC). 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.