Evolution And Reconstruction Of The Legal Rules Guiding The Establishment Of Corporations With Limited Liability From The Perspective Of Corporate Autonomy

This paper dwells on the establishment of corporations with limited liability andrelevant problems. Corporate autonomy is the basic conception for the construction offundamental legal rules for corporations. With the popularization of the conception ofcorporate autonomy, the basic legal rules guiding the establishment of corporationshave undergone great transformation. With the establishment of the conception ofcorporate autonomy in our Corporate Law, the general trend of the change of thoselegal rules guiding the establishment of corporations follows the following pattern: toput back the legal rules guiding the establishment of corporations, to lower the initialrequirements for their establishment and to gradually perfect the legal mechanisms forthe assessment of them. In the process of the evolution of relevant legal rules, thecurrent legal rules over this matter are facing the task of further perfection andreconstruction. This is the mission of this paper. Efforts have been made in this paperto expound the conditions for the initiation of corporations, to dwell on relevantproblems caused by the simplification of rules, and to tackle down newly arousedproblems from the lowering of initiating conditions. The ultimate goal is to safeguardtransactions and prevent market risks.There are five chapters in this paper.Chapter one focuses on the theoretical foundations of the establishment ofcorporations. It is pointed out that the conception of corporate autonomy is permeatedin all the legal rules guiding the establishment of corporations. And on the other hand,the establishment of corporate autonomy results in the transformation of relevant rules.It is held in this paper that corporation as a form a social organization has been inexistence for hundreds of years. It is internationally accepted that the establishment of corporations should first take efficiency into consideration. The maintenance ofcorporations is the major orientation. The liability system is assigned to safeguardtransactions. The judgment of the legality of the establishment of corporations shouldtake both efficiency and transaction safety into consideration. As to the flaws in theestablishment of corporations, they should be concretely analyzed. The flaws shouldbe categorized into absolutely void ones and relatively void ones. It should beemphasized that the flaws should be corrected one matter the establishment ofcorporations is absolutely void or relatively void. At the same time, the range ofabsolutely void establishments should be strictly restricted. The negation of theestablishment of corporations and their transactions should be avoided as much aspossible in order to cushion off their impingement on transaction order.Chapter two dwells on the summary of relevant institutions guiding corporationestablishment. The basic change of our Corporate Law is the loosening of the basicconditions for the establishment of corporations. In our country, corporations aredivided into those with limited liability and those limited by shares, each kind withtheir special procedures and conditions for establishment. The legitimacy of theestablishment of corporations is judged accordingly. Meanwhile, it is pointed out thatfailure of establishment and flawed establishment are different and they should bedifferentiated as well.Chapter three deals with the analysis and carding of the concepts in the processof the establishment of corporations. The nature of the corporations in establishmentis also analyzed in theory as well as in practice. From the perspectives of transitionand aim of the establishment, the starting point of corporations in establishment is thesigning of contracts of the initiators while their end is the registration of them.Corporation in establishment cannot be viewed as a legal person, but it is alsodifferent from partnership. Corporation in establishment has legal personality, whichis restricted and allows its subject only to engage in activities related with theestablishment. In case the corporation fails, the initiators should shoulder liabilitiesconcerning their actions and relevant expenses.Chapter four is about the institutions over the flaws in the establishment ofII corporation with limited liability. The causes for the flaws are divided into objectiveand subjective ones. With the analysis of the resolution of the flaws in common lawsystem as well as continental law system, efforts have been made to analyze the flawsand defects in the institutions over the establishment of corporations. Theadministrative abolishment of flawed corporations has its shortcomings and it shouldbe addressed via relevant institutions.Chapter five deals with the void situations in the establishment of corporationswith limited liability. Void establishment will lead to fluctuation of transaction orders,therefore, countries are prudent about it. Void establishment is strictly related to casesin which the flaws are impossible to make up. Illegal tenet of corporations, absence ofcorporation regulations and rules, nonexistence of pre-approval procedures,non-existence of corporation names and list of the investment by shareholders, etc,these are the cases that lead to void establishment. It is emphasized that voidestablishment should be issued by court decisions, the liability of investors forinvestment should not be terminated while the initiators should take joint liability forcompany debts.