statutory surplus reserve use 📝

The statutory surplus reserve is an essential part of a company's financial management, and its uses are strictly regulated by laws and regulations. This fund is typically extracted from after-tax profits as required by law. 💰 The primary purposes include:

Firstly, it can be used to cover losses in previous years. When a company experiences financial difficulties, this reserve acts as a safety net, helping stabilize operations and maintain business continuity. 🛠️

Secondly, it can increase the company’s capital. By converting surplus reserves into registered capital, businesses can strengthen their financial position and support expansion plans. 💸

Lastly, it may also be used for distributing dividends when the company has surplus profits. However, this requires approval from shareholders and adherence to legal restrictions. 📅

In summary, the statutory surplus reserve plays a critical role in ensuring a company’s long-term stability and growth while adhering to legal frameworks. 👏