discussion on legal issues of corporation ’ s capital decrease sun bo wuhan university jiaying...
TRANSCRIPT
Discussion on Legal Issues Discussion on Legal Issues of Corporation’s Capital Dof Corporation’s Capital D
ecreaseecreaseSun Bo
Wuhan University Jiaying College
1. Introduction1. Introduction Practice of Practice of Codes of CorporationCodes of Corporation has made has made
a capital mythologya capital mythology
Contradiction of Chinese Contradiction of Chinese Codes of CorporationCodes of Corporation
2. Legislative condition 2. Legislative condition too loosetoo loose
Actual capital decreaseActual capital decrease Nominal capital decreaseNominal capital decrease Whether to reduce the capital and how are mostly Whether to reduce the capital and how are mostly
up to company’s free willup to company’s free will It may cause the right to be abused in practice It may cause the right to be abused in practice
because legislation appears excessively tolerantbecause legislation appears excessively tolerant As will harm creditors or shareholders’ interestAs will harm creditors or shareholders’ interest
3. Substantial conditions 3. Substantial conditions of capital decreaseof capital decrease
Legal cause of must capital decreaseLegal cause of must capital decrease Regulations of specific capital decrease modeRegulations of specific capital decrease mode Protection of shareholders’ interest during Protection of shareholders’ interest during
capital decreasecapital decrease Legal liabilityLegal liability
3.1 Legal cause of must 3.1 Legal cause of must capital decreasecapital decrease
Codes of Corporation
French Spanish Chinese
Net assets <1/2 total registered
capital
Loss > 1/3 of its total registered capital
This state lasts more than two years
Blank
3.2 Regulations of specific 3.2 Regulations of specific capital decrease modecapital decrease mode
To decrease total amount of shares To decrease the face value per share To decrease both, etc. Specified condition correspondent with certain
specific mode
3.3 Protection of shareholders’ interest 3.3 Protection of shareholders’ interest during capital decreaseduring capital decrease
Shareholders’ equality principle may lead to actual inequality
3.4 Legal liability3.4 Legal liability
Senior executives’ behavior is the common cause of substantial capital decrease
Chinese Codes of Corporation blurs Definitude advised
4. Actual practice 4. Actual practice too tighttoo tight
Too much operational cost Rigidification of shareholders’ equality principle Capital decrease procedure is severe Creditor's interests got protected, but how about
shareholders’ (especially minority shareholders) interests?
5. Transformation of capital 5. Transformation of capital decreasedecrease
Withdraw and release & escape
No chance and mechanism to withdraw leads to unfair result
Buy back and mortgage
Capital issue system and profit distribution system
(To be conciliating, got revised )
6. Co-partnership companies’ capit6. Co-partnership companies’ capital decreaseal decrease
Unwise to forbid capital decrease
7. Conclusion7. Conclusion
Stipulate legal capital decrease reasons Specify modes in particular conditions Respect to principle of shareholders’ will
autonomy To define directors’ & managers’ liabilities To strengthen maneuverability Attention to transformation Taboo of Co-partnership companies’ capital de
crease?