Q:The company must contribute the statutory surplus reserve from the annual after-tax profit?

R:According to the Company Law, the company is required to set aside a statutory surplus reserve fund at a rate of 10% per year from after-tax profits. When the aggregate sum of the company's statutory surplus reserve is more than 50% of the company's registered capital, the company can stop.

Q:What is the function of the statutory surplus reserve fund after contribution?

R:Two main uses: 

1. To be used to cover the company's losses.

2. To use it to increase the company's capital.

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