"Universal Violation Of Law" And "Selective Law Enforcement"

Given the objectives of law enforcement,law enforcement agencies are neither possible nor necessary to investigate and deal with all violations of the law,due to their rigid constraints on their resources(budgeting,preparation,and technology of law enforcement).For law enforcement agencies,as long as the laws and regulations are not expressly provided,in which cases and what kind of case,how much law enforcement resources should be invested is a series of optional matters.The concept of "selective law enforcement" comes from it.Compared to laws and cases where law enforcement costs are low and law enforcement gains are high,laws and cases with lower law enforcement costs are more likely to be neglected or even abandoned.If the illegal behaviors are out of control and law enforcement agencies unable to cope with,there will be "universal violation of law" and "selective law enforcement" coexist.This means that the corresponding regulatory system has been completely failed.Once the regulatory failure,the optimal level of law enforcement will be greatly reduced,or even down to zero.At this point to give up supervision(or the use of of other means of supervision)is the more efficient choice.Since law enforcement can not produce significant gains,it is at least necessary for law enforcement and law enforcement officers to get rid of the dilemmas of"be reluctant in law enforcement".Small and medium-sized enterprise capital regulation provides an excellent material for in-depth observation of the causes,consequences and variations of selective law enforcement.At the end of 1993,the Company Law adopted the statutory capital system.With the supporting capital regulation,it is through the capital verification to set up access threshold,and to track changes in corporate capital through the annual inspection.As an intermediary of the accounting firm entrusted by the enterprise issued a capital verification report and annual audit report.In addition to responsible for the form of review,the main task of law enforcement agencies is to investigate and deal with corporate capital fraud,including behaviors of false registration of registered capital,feigned capital contribution and withdrawal of capital.However,the serious design flaws in the capital regulatory system have led to the flooding of capital fraud in small and medium-sized enterprises.Meanwhile the weak law enforcement failed to create an effective deterrent to suppress violations.It is eventually leading to the embarrassing situation in which"universal violation of law "and "selective law enforcement" coexist.This means that 20 years of corporate capital supervision system has been useless.The facts that small and medium-sized enterprise capital fraud completely out of control will inevitably lead to a series of malignant chain reaction.For example,corporate credit may be reduced,market transaction costs may rise,and the number of market transactions may be declined.The following problems may also occur:small and medium enterprises financing difficulties,the proliferation of underground banks,private borrowing interest rates rise,business investment risk increased,and so on.And many other types of crime may rise.For example,it may leads to supply of false accounting reports,financial fraud,forged financial tickets,disguised public deposits and various behind-the-scenes transactions,etc.At the end of 2013,the Company Law abolished the statutory capital system after the third revision.The capital statutory system was replaced by the recognition of capital system.The company's capital supervision system has also undergone corresponding reforms.Capital verification system and annual inspection system was replaced by the enterprise information publicity system.Although this reform is still unable to prevent the capital fraud of small and medium enterprises,it allows law-executor and supervised entities to get rid of the plight of lazy enforcement and corresponding exhausting reply.As to the legacy of the reform,it may be possible to mitigate or overcome this by applying the burden of proof in the "corporate veil" litigation and by supplementing private enforcement with the corporate information disclosure system.The capital regulation of small and medium-sized enterprises from 1994 to 2014 is actuually a typical case of regulatory failure.The specific conclusions obtained from the analysis of this case can be generalized at the jurisprudential level.In fact,the coexistence of "universal violation of law "and "selective law enforcement" has also occurred in other areas.And the final solution is much the same,either to give up law enforcement,or soften the law enforcement.This means re-focusing or increasing the potential for market regulation and private law enforcement.The solution of the issues which looks very complex at last returns to common sense——there is no free lunch in the world,and the law is not sufficient for itself.The scope of legal control is a function of national law enforcement capacity.While the latter depends primarily on the budgetary,authorized strength and organizational and technical capacities of law enforcement agencies.The first two chapters of this paper focus on the theoretical level.The first chapter introduces two theories of selective law enforcement,namely,regulation economics and law enforcement economics.Chapter Two explains the relationship between the limited liability system,the statutory capital system,and the company registration system and reveals the nature of corporate capital fraud and the institutional logic of corresponding legal liability.From the third chapter to the seventh chapter is committed to reveal the causes and consequences of the failure of capital supervision system of small and medium enterprises.Chapter Three describes the phenomenon and extent of the outbreak of capital fraud in small and medium-sized enterprises.The fourth,fifth and sixth chapters reveal the causes of regulatory failure from the aspects of system,technology and assessment mechanism.Chapter Seven analyzes the consequences of regulatory failure.The analysis of these chapters actually provides the most powerful explanation for the reform of corporate capital regulation system in 2013-2014.Chapter Eight is to develop the academic criticism,introduces and sorts out the controversy on the company's capital system reform in the past two years,and makes comments to clarify many popular misunderstanding.Chapter Nine discusses the legacy of the reform and gives some suggestions.The conclusion part of this article expands the discussion on the coexisting problems of "universal violation of law "and "selective law enforcement" and the corresponding analysis conclusion,and raise the problem to the level of jurisprudence.