After acquiring another company through equity transfer, how will the accounts be handled?

After acquiring another company through equity transfer, how will the accounting be handled?

First, the relevant legal procedures for equity transfer. Our country's Company Law and other relevant laws and regulations stipulate the relevant legal procedures for the transfer of company equity: the company's equity transfer*** requires a shareholders' meeting to make a resolution; when a company's shareholders transfer shares to others other than shareholders (including legal persons and natural persons), they must Obtain the consent of more than half of the shareholders; the transfer of equity in Sino-foreign joint ventures and Sino-foreign cooperative enterprises must obtain the approval of the *** approval authority; the transfer of equity in state-owned holding companies must be approved by the *** competent department and the finance and state-owned assets authorities. In addition, when transferring equity, the transferor and the transferee of shareholders should sign an agreement on four major matters: the price of the equity transfer, the payment and delivery time of the share purchase price, the enjoyment of the company's undistributed profits before the transfer, and the responsibilities for claims and debts. The equity transfer agreement clarifies the rights and obligations of both parties. If either the transferor or the transferee is a state-owned enterprise or a state-authorized investment institution or investment department, the transfer agreement shall be approved by its competent department, finance, and state-owned assets department.

The second is the determination of the equity transfer price. In the above shareholders' meeting resolutions and equity transfer agreements, one of the difficult and easily overlooked issues is how to determine the share transfer price. In practice, when many companies transfer equity, they only use the original investment value to determine the value of the transferred shares. However, according to relevant national regulations, when a company transfers equity, the equity transfer price is determined in the following ways: determined based on the book value of paid-in capital (that is, the original investment value); determined based on the company’s owner’s equity; determined based on statutory The value of the company's net assets assessed by an appraisal agency is determined (the appraisal report should generally be confirmed by the company's board of directors or the department in charge of finance and state-owned assets); the transfer and transferee parties determine the agreement price through negotiation. Among the above four methods, the third method provides a socially fair equity transfer price and is the most preferable. In addition, my country's relevant state-owned assets management regulations also clearly stipulate that when one of the transferor or transferee is a state-owned enterprise, the company's net assets must be evaluated through a statutory evaluation agency when the equity is transferred, and the evaluation report must be submitted by the competent finance and state-owned assets department. confirm.

The third is the delivery of equity transfer. In practice, the conditions for the equity transfer establishment date (i.e., the equity delivery date) generally include the following points: the purchase agreement has been approved by the shareholders’ meeting and has been approved by the relevant *** department (if approval by the relevant *** department is required); The purchasing enterprise and the purchased enterprise have gone through the necessary property transfer procedures; the purchasing enterprise has paid the majority of the purchase price (referring to payment of share purchase price in cash and bank deposits) (generally more than 50%); the purchasing enterprise has actually controlled the acquired company. Purchase the financial and operating policies of a business and derive benefits or assume risks from its activities, etc. The third item above is the most important and critical sign of equity delivery. In addition, depending on whether the actual payment for the transferred shares is through the company, the transferee first pays the share price to the company, and then the company pays the transferor; the transferee pays the share price directly to the transferor. Among the above methods, the first payment method is more standardized and preferable. It not only reflects the actual capital contribution of the equity transferee to the company, but also reflects the entire process of the transferor's shares withdrawing from the company and recovering the value of the original capital contribution. Therefore, the equity The transfer is carried out under the principles of openness, fairness and justice; at the same time, this payment method is conducive to the competent tax authorities' supervision of the transferor's personal income tax due to the transfer of equity.

The fourth is the accounting treatment of equity transfer.

(1) The company’s accounting treatment when the transferee’s share payment is paid in one go. One situation is that the transferee repays the equity payment to the transferor through the company. During the equity transfer and delivery, when the transferee remits the company's share capital, "bank deposit" is debited and "other payables - transferor" is credited; at the same time, "paid-in capital (or share capital) - transferor" is debited , credited to "paid-in capital (or equity) - transferee". When the company remits the share payment to the transferor, it debits "Other Payables - Transferor" and credits "Bank Deposit". If the transferor is a natural person, and the transfer amount is greater than the transferor’s original actual capital contribution, it should be noted that the personal income tax borne by the transferor should be withheld and paid by the company, debiting "Other payables - transferor" and crediting "Bank deposit" (share transfer amount - personal income tax payable), "tax payable - income tax payable" [(share transfer amount - transferor's original capital contribution) × 20% tax rate].

Another situation is that the transferee does not directly pay the equity payment to the transferor through the company. According to the transferee's remittance voucher and the transferor's remittance voucher and receipt, "paid-in capital (or equity) - transferor" will be debited and "paid-in capital (or equity) - transferee" will be credited ; If the transferor is a natural person and the transfer amount is greater than the original actual capital contribution of the transferor, the personal income tax borne by the transferor shall be reported by the transferor to its competent tax authority.

(2) The company’s accounting treatment when the transferee’s share payment is paid in installments.

One situation is that the transferee repays the transferor's equity through the company. When the payment is less than 50% of the share transfer agreement price, "bank deposit" is debited and "other payables - transferor" is credited; when the payment is When the value of the share transfer agreement is greater than or equal to 50%, "bank deposit" will be debited and "other payables - transferor" will be debited. "Paid-in capital (or equity) - transferor" will be debited and "actual payables - transferor" will be credited. Receive capital (or equity) – the transferee”. How to deal with the accounts after acquiring another company through equity transfer?

In addition, when the equity is transferred, the transferor and the transferee of the shareholders shall agree on the price of the equity transfer, the payment and delivery time of the share purchase price, the enjoyment of the company’s undistributed profits before the transfer, and the responsibilities for claims and debts. Sign an equity transfer agreement on four major aspects including clarifying the rights and obligations of both parties. If either the transferor or the transferee is a state-owned enterprise or a state-authorized investment institution or investment department, the transfer agreement shall be approved by its competent department, finance, and state-owned assets department.

Among the above four methods, the third method provides a socially fair equity transfer price and is the most preferable. In addition, my country's relevant state-owned assets management regulations also clearly stipulate that when either the transferor or the transferee is a state-owned enterprise, the company's net assets must be evaluated by a statutory evaluation agency when the equity is transferred, and the evaluation report must be submitted by the competent finance and state-owned assets department. confirm.

The third item above is the most important and critical equity delivery sign. In addition, depending on whether the actual payment for the transferred shares is through the company, the transferee first pays the share price to the company, and then the company pays the transferor; the transferee pays the share price directly to the transferor. Among the above methods, the first payment method is more standardized and preferable. It not only reflects the actual capital contribution of the equity transferee to the company, but also reflects the entire process of the transferor's shares withdrawing from the company and recovering the value of the original capital contribution. Therefore, the equity The transfer is carried out under the principles of openness, fairness and justice; at the same time, this payment method is conducive to the competent tax authorities' supervision of the transferor's personal income tax due to the transfer of equity. How to handle equity transfer premium accounting

Equity transfer premium should be treated as investment income, debit: bank deposit (transfer price), credit: long-term equity investment (book value of long-term equity investment), credit: investment income (transfer The price is deducted from the book value of the investment) How to deal with equity tax issues when transferring company equity?

It would be better to leave equity transfer and tax treatment to relevant companies, like Xu Li, who can decode equity and have handled many similar projects. How will tax be handled when a company's equity is transferred?

Reply of the State Administration of Taxation on the issue of collecting personal income tax on taxpayers' recovery of transferred equity

1. According to the "Individual Income Tax Law of the People's Republic of China" (hereinafter referred to as "Personal Income Tax") Law) and its implementing regulations and the relevant provisions of the "Tax Collection and Administration Law of the People's Republic of China" (hereinafter referred to as the Tax Collection and Administration Law), if the equity transfer contract has been performed, the equity has been changed and registered, and the income has been realized, the transferor The income obtained from the equity transfer shall be subject to personal income tax in accordance with the law. After the transfer is completed, the parties involved sign and execute an agreement to terminate the original equity transfer contract and return the equity. This is another equity transfer, and the personal income tax collected on the previous transfer will not be refunded.

2. If the equity transfer contract has not been fully performed due to the execution of the arbitration committee’s ruling to terminate the equity transfer contract and the supplementary agreement, stop the execution of the original equity transfer contract, and recover the transferred equity at the original price, due to the The transfer has not been completed and the income has not been fully realized. With the termination of the equity transfer relationship, the equity income no longer exists. According to the relevant provisions of the Personal Income Tax Law and the Collection and Administration Law, and based on the principle of rationality of administrative actions, the taxpayer should not pay personal income tax. Income Tax. How to handle company equity transfer accounting?

1. 24 million yuan should be paid to A, of which 8 million yuan (1000*80%) belongs to the registered capital transfer, and 16 million yuan {(5000-2000-1000)*80%} belongs to the unallocated profit part.

2. Accounting treatment:

Debit: paid-in capital-A

Credit: paid-in capital-C How to deal with the company's claims and debts in the equity transfer

The transfer of the equity of a limited liability company does not seem to have much connection with the company's external claims and debts. From a legal point of view, they also belong to two different legal relationships. However, in corporate law theory, a company is a fictional legal actor, which requires specific people to perform specific obligations in practice. This obligor may not be the person directly stipulated by law who should bear the obligation, but the direct obligor (such as a company) needs the support of this obligor (such as a shareholder) to perform its obligations. In this way, the shareholder composition of the company, a fictional entity, and the company's internal governance structure indirectly affect the company's ability to repay external debts. Therefore, the transfer of shareholders' equity involves not only the internal issues of the simple replacement of shareholder status and changes in equity ratios, but also the external issues of the company's holding of external claims and the repayment of external debts. (1) Creditor's Rights Issues It is relatively easy to deal with situations where the company's equity is transferred and the company has external creditor's rights. 1. The situation of internal transfer of equity In this case, the repayment obligation of the external debtor does not change, but the equity transferor no longer has the right to distribute. At this time, the transferor gave up a corresponding proportion of the income rights when transferring the equity, and the transferee obtained this part of the income rights in accordance with the law. 2. The situation of external transfer of equity. Different from the above situation, the external transfer of equity cannot be generalized. If the equity transferee is a third party, the situation is the same as above; if the equity transferee is also an external debtor, it needs to be discussed on a case-by-case basis: (1) The external debtor acquires all the equity of the company, that is, the company is transferred as a whole to If the debtor is removed, the creditor's rights and debts will be mixed; (2) The external debtor acquires part of the company's equity, and the original external creditor's rights-debt relationship is likely to become the current internal related-party transaction relationship. It is worth pointing out that in practice, the transferee and the transferee sometimes indicate in the transfer agreement that the transferor is responsible for recovering the company's claims that mature before the equity transfer base date before the equity transfer takes effect. This type of clause is mainly a preventive measure taken by the transferee to prevent the company's bad debts from causing losses to the transferee after entering the company. Strictly speaking, however, such a clause does not necessarily have legal effect. First, the equity transfer agreement signed by the transferor and the transferee is a civil legal act between the transferor and the transferee, and the agreement between the two parties cannot bind a third party. As a third party, the company's claims are obviously restricted. Second, if the company's shareholders agree to have the transferor recover the company's claims, then this clause becomes effective because of the company's authorization. Based on the above various situations, based on the analysis of the legal consequences of equity transfer in this article, it can be concluded that when a company, as a creditor, transfers its internal equity, the impact on external debtors is very limited, and there is no need for the debtor to understand the internal changes of the creditor. . (2) Debt issues When the company's internal equity changes and the company has external debts, the situation becomes much more complicated. Some people believe that when a company's equity is transferred, the company's assets do not change based on the legal consequences. In other words, the transfer of equity does not affect the company's repayment ability as a debtor. Therefore, the transfer of equity has no connection with the company's debts. This view is feasible in theory, but in practice, external creditors often worry about whether their claims can truly be recovered. In other words, the company's equity has been transferred and the internal governance structure has changed. Although judging from the current situation, the company's book assets have not been reduced and its repayment ability has not been weakened. However, changes in the company's internal structure are likely to give the company a negative impact in the future. The development direction brings about changes that external third parties cannot predict, or at least are unpredictable. The company's strategic transformation makes it impossible to realize the long-term interests of external creditors who hold long-term claims on the company. In this way, the transfer of equity by shareholders will lead to changes in the company's internal structure and affect the repayment of the company's long-term debt. This potential risk makes creditors restless. Give an example to illustrate this problem. Suppose that when Company A was established, it was funded by a powerful major shareholder, Company A, and two small shareholders, B and C. After operating for a period of time, Company A borrowed a relatively large amount of funds from Company B to invest in a certain field. The loan contract does not limit the purpose of the loan.

Company B believed at the time that Company A was well-known and had a good credit record. It was the major shareholder of Company A. In the event of a dispute with Company A, each shareholder of Company A would be liable for repayment in proportion to their capital contribution. Company A was the The shareholders were here, and they were able to repay the loan in full no matter what, so they lent it to Company A. Before the debt was due, Company A believed that its investment in Company A was not in line with its future development considerations, so it decided to sell its shares of Company A at a price lower than the stock price when it invested (but within a reasonable range). The company's equity was transferred to two other shareholders, B and C. Company A's registered capital remained unchanged, but shareholders B and C decided to re-set the business scope for Company A and invest in the real estate industry instead. Soon, the real estate industry encountered an economic crisis. Company A's solvency was greatly weakened and it was very likely to face bankruptcy. In this way, the amount of money that Company B originally lent based on its trust in Company A, the major shareholder of Company A, has changed at this time, and the long-term benefits expected by Company B at the beginning of the loan are in danger. Consider the above example from another perspective. If Company A is required to obtain the consent of creditor Company B when withdrawing from Company A, in this case, Company B will definitely not agree. Then Company A will not be able to withdraw, and Company A's rights as a shareholder will also be challenged. A duty to inform can be introduced to resolve this dilemma. When a shareholder plans to transfer the equity he holds, whether it is an internal transfer or an external transfer, if the target company has undue debts as of the transfer base date, the company should notify the corresponding external creditors. As in the case cited above, Company A withdraws from Company A, and Company B feels that its long-term interests may be interfered with by unpredictable factors. If Company A informs Company B of the major equity change when Company A withdraws, Company B can, based on this change of situation, reconsider in good faith how to make adjustments without violating the previous agreement, such as being friendly with Company A Negotiate, change the original contract, and add a guarantee clause to the original loan contract to obtain a certain degree of protection without affecting Company A's normal operations and strategic transformation, let alone Company A's exit. This suggestion is mainly based on the following considerations: First, the obligation to disclose is determined based on the principles of Article 84 of my country's Contract Law. Article 84 of the Contract Law stipulates that if the debtor transfers all or part of its contractual obligations to a third party, it must obtain the consent of the creditor. This clause is established to protect the interests of creditors, that is, to ensure that creditors can effectively recover their claims. During the equity transfer of a limited liability company, although the company's assets have not changed and the legal entity has not changed, the transfer of equity is likely to cause significant changes in the company's internal structure, and this change may even be substantial. According to the reasons explained above, in order to protect the long-term interests of creditors, creditors should have the right to know this substantial change of their debtors. This principle should be the same as Article 84 of the Contract Law. Second, it is the target company, not the transferor, that informs creditors. Corresponding to the creditor is the target company, that is, the company where the equity transfer occurs. It has a creditor-debt relationship with the creditor. Based on the principle of Article 84 of the Contract Law, the debtor should notify the creditor. Although the change of the debtor is caused by the transferor, the legal relationship cannot be confused, so the transferor cannot be required to bear this notification obligation. Third, the target company only needs to notify and does not need to obtain creditor consent. This point is completely different from the principle of Article 84 of the Contract Law. Mainly out of consideration for shareholder protection. As mentioned above, equity transfer is almost the only way for shareholders to withdraw from a limited liability company. If the principles of the Contract Law are still applied rigidly, if the creditors do not agree, it will completely hinder the shareholders' retreat. According to the principle of equity, the rights of shareholders to transfer their equity should not be infringed and the protection of creditors' forward interests from infringement are equivalent. The main purpose of setting up the notification obligation here is to remind creditors in good faith that major changes have occurred within the debtor. If it causes uneasiness to creditors, creditors can have enough time to prepare new response plans for the new situation. The essence of the notification obligation is to attract the creditor's attention. Furthermore, according to the principles of the Contract Law and the legal consequences of equity transfer analyzed above, after all, the entities and assets of the target company have not changed immediately, and the debts are still borne by the target company. It is only at this time that a legal decision is made in good faith to the creditors. There is no situation where the creditor's consent is required for early protection of risks, so notification is sufficient.

Accounting treatment for company equity transfer

Accounting treatment for company equity transfer:

1. Receiving investment unit

Debit: paid-in capital - transferor

Credit: paid-in capital - transferee

2. Transfer of equity units

Debit: other receivables - transferee

Credit: Long-term equity investment—invested unit

Investment income (if there is a loss, debit non-operating expenses)

3. Transferred equity unit

< p> Debit: Long-term equity investment—invested unit (par value of equity)

Non-operating expenses (purchase at a discount, credited to investment income)