Definition of terms The statutory provident fund refers to the provident fund that the company must withdraw according to the law.

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it is a mandatory reserve for the company to maintain its share capital scale, meet the requirements of capital supervision and provide funds for future investment. According to the Company Law of the People's Republic of China and relevant laws and regulations, the company must withdraw a certain proportion of the statutory reserve fund from its after-tax profits. The specific extraction ratio varies according to the registered capital and after-tax profit of the company.

generally speaking, the withdrawal ratio ranges from 1% to 5% of the after-tax profit. If the after-tax profit of the company is less than 5% of the registered capital, it can be exempted from drawing the statutory reserve fund.

The statutory provident fund is mainly used to improve the capital adequacy ratio and stability of the company, and it can also provide financial support for future investments. When a company needs to increase its registered capital or expand its business scale, it can use the statutory reserve fund to increase its share capital. In addition, if the company loses money or needs to make up for the previous annual losses, it can also use the statutory provident fund to supplement the working capital.

because the statutory reserve fund is the reserve that the company must withdraw, it is also called "mandatory reserve". This compulsory reserve can ensure that the company has sufficient financial support in its future development, thus improving its ability to resist risks. For investors, paying attention to the company's statutory provident fund can also help them better understand the company's financial situation and investment value.

It should be noted that if the company fails to withdraw the statutory reserve fund according to the law or uses the statutory reserve fund for illegal purposes, it will be subject to corresponding legal sanctions. Therefore, the company should withdraw and use the statutory provident fund in strict accordance with the law to ensure its legal compliance.

in a word, the statutory reserve fund is a mandatory reserve for the company to maintain the capital stock scale, meet the capital supervision requirements and provide funds for future investments. It is an important part of the company's financial situation, which is of great significance to investors and regulators.