Specific differences:
1. From the source and essence,
Paid-in capital (or share capital) refers to the capital actually invested by investors in the enterprise according to the articles of association or contracts and agreements and registered according to law, which embodies the basic property right relationship between the enterprise owner and the enterprise. Capital reserve refers to the part in which investors contribute more than their share of registered capital, as well as the gains and losses directly included in owners' equity. It does not directly indicate the basic property right relationship between the owner and the enterprise.
2. From the point of view of use
The proportion of paid-in capital (or equity) is the basis for determining the owner's participation in enterprise financial management decision-making, the basis for distributing profits or dividends, and the basis for determining the owner's right to claim net assets when the enterprise is liquidated. The purpose of capital reserve is mainly to increase capital (or share capital). Capital reserve does not reflect the proportion of owners, nor can it be used as the basis for owners to participate in enterprise financial management decisions or make profit distribution (dividend distribution).
Although there are essential differences between capital reserve and paid-in capital. However, both paid-in capital and capital reserve are part of the owner's equity of an enterprise and belong to the category of invested capital.
1. Paid-in capital
Paid-in capital refers to the capital actually received by an enterprise from investors. According to investors, it can be divided into state capital, collective capital, enterprise capital, individual capital, Hong Kong, Macao and Taiwan capital and foreign capital.
Paid-in capital refers to all kinds of property invested by investors as capital, which is the source of all legal capital registered by enterprises, and it embodies the basic property right relationship between owners and enterprises. The proportion of paid-in capital is the main basis for enterprises to distribute profits or dividends to investors.
China's "Regulations on the Administration of Enterprise Legal Person Registration" stipulates that unless otherwise stipulated by the state, the paid-in capital of an enterprise shall be consistent with the registered capital. When the paid-in capital of an enterprise increases or decreases by more than 20% compared with the original registered capital, it shall apply to the original registration authority for change registration with the certificate of capital use or capital verification.
2. Capital reserve
Capital reserve refers to the accumulation fund formed by accepting donations, share capital premium and revaluation and appreciation of legal property in the course of business operation. Capital reserve is a creditor's right related to capital and has nothing to do with enterprise income. Capital reserve refers to the capital invested by investors or others, which belongs to investors and the investment exceeds the statutory capital.