Government-run enterprises and institutions have a different nature from other economic operators. They have a long-term, long-term management style, have the characteristics of serving the public, and will use the public welfare goals as the standards for their operations. Their surplus funds can not be used as other economic operators generally use, but should be used in accordance with the laws and regulations, and should even be supervised by relevant departments.
This article discusses the management of enterprise and institution surpluses from the following perspectives: 1) determination of surpluses; 2) the main characteristics of the distribution system of government-run enterprise and institution surpluses; 3) the legal system for the control of enterprise and institution surpluses; and 4) Illustrative Applicability of the enterprise and institution surplus funds.
The determination of the surpluses of government-run enterprises and institutions is mainly based on their operational objectives. To ensure the safety of their funds, the continued growth of their assets, and the making of profits, the enterprises and institutions should properly determine the distribution of the surpluses according to the actual situation of their operations, and the results of their financial audit.
The main characteristics of the distribution system of government-run enterprise and institution surpluses include scientific determination of surpluses, reasonable use of surplus reserves, and effective operation and supervision of funds. Specifically, the determination of surpluses should be conducted according to laws and regulations, and the reserves should be used to fund operational expenses, investments, and employee bonuses. There should be effective oversight over the funds, and the funds should be used strictly in accordance with laws and regulations, and be subject to public oversight.
The legal system for the control of enterprise and institution surpluses is mainly comprised of the Company Law, Securities Law, and some other related laws and regulations. The Company Law defines the terms of use of surpluses and reserves, and stipulates the prerequisites for the legal distribution of surpluses. The Securities Law stipulates that the management of securities must be based on the principle of public disclosure and high credibility, and must strictly abide by relevant laws and regulations.
To illustrate the applicability of the enterprise and institution surplus funds, it can be seen from the case of China Railway Corporation. The company recently announced that it has made a profit of 4 billion yuan in 2019, and that its surpluses, after deducting the operating costs, can be reinvested in ten projects, including infrastructure projects, railway construction projects, and related industries. These projects are all important in terms of their economic and social benefits and they will receive considerable investment from the enterprise and institution surplus funds.
In conclusion, the management of enterprise and institution surpluses should be conducted according to legal principles, and the funds should be used for purposes that are beneficial to society, to ensure the orderly use of the funds and a good return on investment.
