Data:2009-12-12 2:34
Category: Money Tips Date: 2007-01-31
According to the new "Company Law" 143rd article of shares the company shares awarded to employees of the company can acquire the company's after-tax profits of the Company's shares. In the new "Company Law" and only require companies to buy back shares as profit after tax expenditures, not on whether there is sufficient cash flow to cover the purchase price for qualification. In the company's operations around the existence of an after-tax profits of the company have sufficient cash flow may exist in different situations:
(1) the company had had a profit after tax and after-tax profits for the year to pay the purchase price of shares repurchased;
(2) the company that year without tax profits, but there is after-tax profits of the company over the years and in buy-back when there were surplus funds sufficient to cover the purchase price of the shares;
(3) non-tax profits of the company that year, but there is after-tax profits of the company over the years, the company repurchase the year need to borrow funds to pay the purchase price for repurchase of shares;
(4) The company's loss-making year, but the company still have to make up losses year after-tax profits over the years, the company has surplus funds to pay the purchase price of shares repurchased;
(5) the loss of the year, but the company still have to make up losses year after-tax profits over the years, the company needs to borrow funds to pay the purchase price for repurchase of shares.
Our concern is whether the new "Company Law" all agree that the legislative base exists as long as the company's profits can be unconditional repurchase? From our point of view, when the company make a profit, but does not have sufficient cash flow to pay the purchase price when the repurchase , the company should not have to buy back to cover the workers incentives, so that is not only detrimental to the interests of shareholders may also be detrimental to the interests of creditors of the company.
