Reference Case: Trading Company v. Yuehua Company and Chen Mou et al.

Even where the reduction concerns only unpaid subscribed capital that has not yet matured, the process is materially defective if the company fails to prepare the required balance sheet and asset list, fails to notify known creditors, and procures registration through false debt disclosures. Once enforcement is exhausted and the company lacks assets, creditors may seek supplementary recovery from the reducing shareholders within the scope of the pre-reduction subscribed capital, with the timing benefit of the contribution accelerated away.