1. what is the statutory reserve fund in the company law? The statutory reserve fund must be drawn according to the law. In accounting, the statutory reserve fund is generally called the statutory surplus reserve fund. When the company distributes the after-tax profits of the current year, it shall withdraw 1% of the profits (net profits of the current year) and include them in the company's statutory reserve fund. If the accumulated amount of the statutory common reserve fund of the company is more than 5% of the registered capital of the company, it may not be withdrawn. Provident fund, also known as reserve fund, is the fund accumulated outside the company's capital in order to consolidate its own property foundation, improve the company's credit and prevent unexpected losses in accordance with the provisions of the law and the company's articles of association. This provident fund has the same nature as the company's capital, also known as the company's additional capital. The company's provident fund is used to make up the company's losses, expand the company's production and operation, or turn to increase the company's capital. According to the mandatory provisions of the law, the provident fund can also be divided into statutory surplus reserve fund and arbitrary surplus reserve fund. If the company's statutory reserve fund is insufficient to make up for the company's losses in 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year, the profits of the current year shall be used to make up for the losses before the statutory reserve fund is withdrawn in accordance with the regulations. When a joint stock limited company converts the common reserve fund into capital by a resolution of the shareholders' meeting, it shall distribute new shares or increase the par value of each share in proportion to the original shares of shareholders. However, 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. Article 166 of the Company Law When distributing the after-tax profits of the current year, the company shall set aside 1% of the profits and include them in the company's statutory reserve fund. If the accumulated amount of the statutory common reserve fund of the company is more than 5% of the registered capital of the company, it may not be withdrawn.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 any reserve fund from the after-tax profits upon the resolution of the shareholders' meeting or shareholders' meeting. The after-tax profits of the company after making up the losses and withdrawing the 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, unless the articles of association of a joint stock limited company stipulate that the 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. The company's shares held by the company shall not be distributed with profits. Second, the capital accumulation fund refers to the company's various value-added caused by the invested capital itself. This value-added is generally not caused by the company's production and business activities, and has no direct relationship with the company's production and business activities. Including capital (or equity) premium, acceptance of cash donation, preparation of equity investment, transfer of funds, etc. Capital accumulation fund is not accrued, while statutory accumulation fund needs to be accrued according to regulations. The statutory reserve fund can be used to make up the company's losses, while the capital reserve fund can not be used to make up the company's losses. Arbitrary accumulation fund: statutory accumulation fund, also known as compulsory accumulation fund, refers to the accumulation fund that must be drawn according to the proportion stipulated by law. Arbitrary accumulation fund, also known as arbitrary surplus accumulation fund, refers to the accumulation fund freely drawn outside the statutory accumulation fund according to the company's articles of association or shareholders' meeting resolution. Many people know that we have a housing provident fund, which is relative to citizens, but for companies, the statutory provident fund is a kind of reserve fund. A company's income should be deducted from taxes, as well as its main capital, and it is necessary to withdraw the provident fund, and finally it is profitable.