When distributing the after-tax profit of the current year, the company must withdraw 10% of the profit and include it in the company's statutory reserve fund. When the accumulated amount of statutory common reserve fund of the company reaches more than 50% of the registered capital, it may not be withdrawn. When the company loses money, it needs to make up the loss with the profits of the current year, and then withdraw the statutory reserve fund. The company can also decide to withdraw any provident fund. After making up the losses and withdrawing the provident fund, the remaining after-tax profits are distributed according to the company type and articles of association. Shareholders who illegally distribute profits in advance must return them.

Composition of surplus reserve fund:

1. Source of surplus reserve fund: it mainly comes from the profit distribution of enterprises and is drawn from after-tax profits according to a certain proportion;

2. Types of surplus reserve fund: including statutory reserve fund, discretionary reserve fund and reserve fund;

3. Use of surplus reserve fund: it is mainly used to make up the losses of enterprises, expand production and operation, or increase the company's capital;

4. Proportion of surplus reserve fund: the statutory reserve fund is usually drawn according to the prescribed proportion, and can be converted into any reserve fund after exceeding the prescribed proportion;

5. Management of surplus reserve fund: An enterprise shall manage and use surplus reserve fund in accordance with relevant laws and regulations and the articles of association.

To sum up, when distributing the after-tax profits, the company must first withdraw 65,438+00% into the statutory reserve fund until the accumulated amount exceeds 50% of the registered capital, and must make up the losses before deciding to withdraw any reserve fund. Residual profits shall be distributed according to the company's nature and articles of association, and those illegally distributed in advance must be returned.

Legal basis:

Company Law of the People's Republic of China

Article 166

When the company distributes the after-tax profit of the current year, it shall withdraw 10% of the profit and include it in the company's statutory reserve fund. If the accumulated amount of the statutory common reserve fund of the company is more than 50% of the registered capital of the company, it may not be withdrawn.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 the reserve fund from the after-tax profits upon the resolution of the shareholders' meeting or general meeting. After-tax profits of the company after making up losses and drawing 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, except that the articles of association of a joint stock limited company stipulate that 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.