1. The order of profit distribution of an enterprise is to make up for the losses of previous years, withdraw the statutory reserve fund, withdraw any surplus reserve fund and distribute it to shareholders. According to relevant laws and regulations, if it is not distributed directly to shareholders in sequence, the shareholders shall return it.
2. Legal basis: Company Law
Article 166
When the company distributes the after-tax profit of the current year, it shall withdraw 10% of the profit 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statutory common reserve fund of the company is more than 50% of the registered capital of the company, it may not be withdrawn.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year, the profits of the current year shall be used to make up for the losses before the statutory reserve fund is withdrawn in accordance with the provisions of the preceding paragraph.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.
Second, what is the company provident fund used for?
1, the company's common reserve fund is used to cover the company's losses.
2. The common reserve fund is used to expand the funds needed for the company's production and operation.
3. The common reserve fund can be transferred to increase the company's capital. When the statutory reserve fund is converted into capital, the retained reserve fund shall not be less than 25% of the registered capital of the company before the transfer. After the reserve fund is converted into share capital, it will be distributed to shareholders according to the proportion of capital contribution or shareholding.
4. The capital reserve fund shall not be used to make up the company's losses. The company's losses shall be deducted from the after-tax profits of previous years to make up for the losses, and the capital reserve fund shall not be directly used to make up for the losses.
It is naturally good that the company can distribute income, which shows that the company has profits. But in practice, it is inevitable that the company will win and lose, and sometimes it is impossible to distribute profits to shareholders. I hope the above content can help you. If you have any other questions, please click the button below or consult a professional lawyer.