Interest Conflict And Its Balancing In Corporate Donation

This dissertation addresses corporate donations of joint-stock corporations or public corporations. My main point is that regulation of law should be required for controlling corporate giving, and the purpose of legislation is, following the doctrine of maximizing social interest, to maximize the extent of utilizing corporate assets for public interest, meanwhile to minimize the sacrifice of corporate stakeholders' interests.As this dissertation discussed, the conflicts of interests caused by corporate giving among corporate stakeholders can not be overlooked. It is difficult to realize the balance of interest only depending on the market force because of its intrinsic weakness. Hence pertinent regulations including substantive limitations and procedural safeguards are essential to acknowledge corporate donation power, allocate its authority, regulate its operation and provide the protection system. All of such statutes are established for balancing the above conflicts and realizing a more harmonious society under the doctrine of maximizing social interest.Because the analysis is rather long and complex, which incorporates corporate law, contract law, securities law and tax policy, the dissertation is divided into the following eight chapters for supporting in greater detail.Chapter One introduces the fundamental theory and social practice of corporate donation. By describing the concept and category of donation as well as the history and development of corporate giving in the world and especially in China, this chapter shows that corporate giving has become a prevailing phenomenon and provides theoretical and practical background for further analysis.Chapter Two analyzes the conflicts of interests in corporate donation, including the conflicts of interests between corporations, managers, investors and government. As this chapter proved, some kinds of conflicts can be controlled by various market forces, such as product markets, capital markets, labor markets, takeover threats, shareholder voting, and managerial profit-sharing or stock options. But those forces are typically more than adequate to constrain unfair generousness. And in extreme cases where those nonlegal constraints are ineffective, the law should and can provide alternative constrain force to balance those conflicts, which have been described by Chapter Three in this dissertation.From Chapter Four to Chapter Eight, the dissertation focuses on proposing specific regulations in corporate donation. To begin with, it should be reconsidered that where and under what circumstances, corporations could give away their funds to humanitarian, charitable, or philanthropic causes. As indicated by Part Four, a corporation's power is determined by its own characters and the express provisions of its charter and regulated by rules of law. Given that altruism of donation is not consistent with business corporations, law should provide an enabling statute to acknowledge corporate giving and relative regulations to control unfair or excess donations. Whether or not such a power will be found depends upon such factors as the business of the corporation, the size of the attempted gift, the nature of the charitable institution sought to be benefited, and other relevant factors.In the next section, Chapter Five, it will answer the problem that who in corporations should have the authority of corporate donation. I describe various views about that and provide my own viewpoint. In my view, corporate manager should share such an authority, meanwhile shareholders should have chance to express their objection by designating the beneficiaries when they disagree with the manager.Chapter Six is dealt with law protection system provided for corporate investors, including shareholders and creditors, under the circumstance of unfair or excess generousness. Chapter Seven argues that obligatory disclosure of contributions information is required, because the above law system can not work unless corporate stakeholders have pertinent information timely and adequately.Chapter Eight discusses the tax treatment of corporate donations. Given that governmental attitude to corporate philanthropy can be found in tax policy, I analyze the reasons of tax recognition and tax deduction for corporate giving. Eventually, I suggest that, based on Chinese specific situation, Chinese tax policy should be reformed from reference to other countries' taxation practice.