The provident fund is divided into two categories: surplus reserve fund and capital reserve fund.

1. The concept of surplus reserve fund: 1. Surplus reserve fund refers to the reserve fund drawn from the company’s surplus.

2. The surplus reserve fund can be divided into two types: statutory surplus reserve fund and discretionary surplus reserve fund.

The law stipulates that the statutory surplus reserve fund shall be withdrawn at 10% of the company's after-tax profits (minus making up for losses). When the accumulated surplus reserve fund has reached more than 50% of the registered capital, no further withdrawal may be made; the discretionary surplus reserve fund shall be allocated in accordance with the provisions of the company's articles of association or the resolution of the shareholders' meeting.

Resolution is extracted and used.

2. The concept of capital reserve fund; 1. It refers to the reserve fund formed directly from capital reasons, such as the premium obtained from issuing shares in excess of the par value, the revaluation and appreciation of company property, the value of donated assets, etc.

2. The purpose of the provident fund is to increase share capital.

However, the capital reserve cannot be used to cover the company's losses.

Upon resolution of the shareholders' meeting, the reserve fund can be converted into share capital, and new shares can be issued to shareholders in proportion to their original shares or the par value per share can be increased.

When the statutory surplus reserve fund is converted into share capital, the reserve fund retained after the conversion shall not be less than 25% of the registered capital before the conversion.

3. The main purposes of the surplus reserve fund: 1. To make up for losses: When an enterprise suffers a loss, it should be made up by the enterprise itself.

There are three main channels to make up for losses: First, make up for it with pre-tax profits in future years.

According to the current system, when an enterprise suffers a loss, it can use the pre-tax profits realized within the next five years to make up for the losses. That is, the period for pre-tax profits to make up for the losses is five years.

The second is to make up for it with after-tax profits in future years.

If the losses incurred by the enterprise are not fully compensated within five years, the uncompensated losses shall be compensated with profits after income tax.

The third is to use surplus reserves to make up for losses.

When an enterprise uses the surplus reserve to make up for losses, it shall be proposed by the company's board of directors and approved by the shareholders' meeting.

2. Conversion into capital: When an enterprise converts surplus reserves into capital, it must be approved by a resolution of the shareholders' meeting.

When the surplus reserve is actually transferred to capital, it must be carried forward in accordance with the shareholder's original shareholding ratio.

When the surplus reserve is converted into capital, the amount of surplus reserve retained after the conversion shall not be less than 25% of the registered capital.

3. Distribution of dividends: In principle, when distributing dividends, an enterprise must not distribute dividends if it has no profit for the year. If, in order to maintain the reputation of the enterprise, the surplus reserve is used to distribute dividends, the following conditions must be met: (1) After the surplus reserve is used to make up for losses, the item

There is still a balance in the provident fund.

(2) When using surplus reserves to distribute dividends, the dividend rate cannot be too high and must not exceed 6% of the face value of the stock.

(3) After distribution of dividends, the statutory surplus reserve shall not be less than 25% of the registered capital.

4. Classification standards of company provident funds: 1. Based on whether it is compulsorily withdrawn in accordance with legal provisions, provident funds can be divided into statutory provident funds and discretionary provident funds.

(1) Statutory provident fund refers to the provident fund that must be withdrawn compulsorily according to legal provisions.

The withdrawal ratio (or amount) and use are directly stipulated by law.

Statutory provident fund is also called "mandatory provident fund".

(2) Discretionary provident fund refers to the provident fund that the company freely sets up or withdraws from the statutory provident fund in accordance with the company's articles of association or the resolution of the shareholders' meeting.

Therefore, whether the discretionary provident fund is set up to defraud and how to withdraw and use it are all decided by the company without any interference from the law.

2. Based on the source standard of the provident fund, the provident fund can be divided into a surplus provident fund and a capital provident fund.

(1) Surplus reserve fund refers to the reserve fund withdrawn by the company from its after-tax operating profits.

Therefore, its source is only, that is, it can only come from the company's surplus.

(2) Capital reserve fund refers to the reserve fund drawn from the income generated from the company's non-operating activities.

5. Relevant provisions of the company's provident fund: 1. When the company distributes after-tax profits, it shall withdraw 10% of the profits into the statutory provident fund; if the cumulative amount of the company's statutory reserve fund is more than 50% of the company's registered capital,

Can no longer be extracted.

2. If the company's statutory reserve fund is not enough to make up for the company's losses in the previous year, the current year's profits should be used to make up for the losses before withdrawing the statutory reserve fund and statutory public welfare fund.

3. After the company withdraws the statutory public reserve fund from the after-tax profits, it can withdraw the discretionary public reserve fund upon resolution of the shareholders' meeting.

4. In accordance with the provisions of the law, a joint-stock company shall, in accordance with the provisions of the law, obtain premiums from issuing shares at an issuance price that exceeds the par value of the shares and other income that is included in the capital reserve fund as prescribed by the financial department of the State Council, shall be listed as the company's capital reserve fund.

5. When a joint-stock company converts its reserve fund into capital by resolution of the general meeting of shareholders, it shall distribute new shares or increase the par value of each share in proportion to the shareholders' original shares; however, when the statutory reserve fund is converted into capital, the remaining reserve fund shall not be less than the registered capital.

Twenty-five percent.

Legal basis: Article 166 of the Company Law of the People's Republic of China: When a company distributes after-tax profits for the year, it shall withdraw 10% of the profits and include them in the company's statutory public reserve fund.

If the cumulative amount of the company's statutory reserve fund exceeds 50% of the company's registered capital, no further withdrawals may be made.