1. The enterprise development fund refers to the enterprise development fund which is drawn from the net profit in accordance with the provisions of laws and administrative regulations, used for the production development of enterprises and approved for capital increase.

2. The company's surplus reserve can be mainly used in the following two aspects:

(1) is used to make up for the loss. When the company loses money, it shall make up for it by itself. There are three main ways to make up for the loss: one is to make up for it with the pre-tax profit of the following year. According to the current system, when a company loses money, it can make up for it with the pre-tax profit realized in the next five years, that is, the period for making up for the loss with the pre-tax profit is five years. The second is to make up for it with after-tax profits in the following years. If the losses incurred by the company have not been fully recovered in five years, the profits after income tax shall be used to recover the unrecovered losses. The third is to use surplus reserves to make up for losses. When the company uses the extracted surplus reserve to make up the losses, it shall be proposed by the board of directors of the company and approved by the shareholders' meeting.

(2) Capitalization, the so-called "red shares". When the company converts surplus reserve into capital, it must be approved by the shareholders' meeting. When the surplus reserve is actually converted into capital, it shall be carried forward according to the original shareholding ratio of shareholders. When the surplus reserve is converted into share capital, the surplus reserve retained after the conversion shall not be less than 25% of the registered capital.