Research On The Announcement Centralism Of External Guarantee Of Listed Companies

In order to eliminate the illegal security and implicit security that have always existed in listed companies,Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code has established the “announcement centralism”of listed companies’ external guarantee by incorporating the information disclosure system that originally belongs to the Securities Law.This method of combining securities regulatory rules,group organizational rules and trading rules makes the security counterpart bear the obligation to examine the security information disclosed by the listed company,plays a supplementary role of private enforcement of law to public enforcement,can overcome the defects of single securities administrative supervision in post-supervision,and is legitimate in the context of financial judicature.The particularity of the judgment rules for the external guarantee of listed companies presents a clear context from the judgmental thoughts to the judicial policy of the Ninth Minutes of the National Civil and Commercial Trial Work Conference,and then to the judgment norm of Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code.In this context,the impact of securities regulatory rules has shifted from being based on justifications to becoming normative.The provisions of Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code stipulate that the review targets and responsibility bearers for external guarantee by listed companies are centered around the announcement of external guarantee,urging the fulfillment of information disclosure obligations from the perspective of creditors,achieving a shift from a “resolution priority” to a “announcement centralism” in which the goodwill of the counterparty is recognized,and a “all-or-nothing” responsibility in the “announcement centralism”.This is distinctly different from the “resolution centralism” of non-listed companies’ external guarantee,thereby forming a “dual-track system” for the company’s external guarantee system.Based on the above,both the viewpoint of review resolution and announcement together and the “disclosure doctrine” are biased.The reasonable examination obligation stipulated in Article 20 of The Supreme People’s Court’s Interpretation of the Security System of the General Principles of the Civil Code’s Contracts Section also cannot replace the “dual-track system” due to its abstract nature.In terms of the internal positioning of the “announcement centralism”,according to the “double-layered six-stage” theory of legal actions,the act of resolution can also be distinguished into two stages: establishment and effectiveness.In the context of external guarantee made by unlisted companies,the act of resolution becomes effective upon the signing of the minutes by those who participated in the vote.In the context of external guarantee made by listed companies,there exists a stipulation that the listed company shall not bear any liability from the time of resolution but prior to the announcement implies that the timing of resolution and effectiveness is not aligned.The latter considers the procedure of publishing an external guarantee announcement as a specific condition for effectiveness,constituting a statutory exception to the principle of immediate effectiveness upon establishment.The internal effects of the“announcement centralism” are compatible with securities regulation,institutional organization rules,and transactional regulations.Moreover,through the legally mandated announcement process,it prevents legal representatives from exceeding their authority in providing security,and promotes external guarantee by listed companies in line with the interests of the company and its shareholders.Ultimately,this ensures the protection of the public interests represented by the majority of shareholders(investors).It is evident that the external guarantee made by listed companies without undergoing the announcement process render the resolution behavior inoperative,as the intention of the external guarantee has not been established.Consequently,any subsequent offers or commitments made by the legal representative lack the authorization of the company,let alone the formation and effectiveness of the security contract.In terms of the external positioning of “announcement centralism”,the representation in external guarantee under statutory restrictions and delegation rights exhibit formal similarities in normative expression,structural similarity,and rule application beyond authority.They also serve as tools to promote the autonomy of natural persons’ wills.The former’s borrowing from the latter’s already-matured system is substantively justified.The dissimilarity between the two is merely a minor aspect,insufficient to negate their similarity.In particular,in the context of negation,the viewpoint that ultra vires representation corresponds only to ultra vires agency among the three categories of unauthorized agency overlooks the typification of ultra vires representative conduct,presenting only a superficial comparison of concepts.Therefore,in terms of the source of authority for the power of attorney to confer agency rights in the principal-agent relationship,the similar external guarantee representation does not fall within the general authorization of the legal representative.It also requires a separate grant,which is manifested as the company’s internal security resolution.In the context of external guarantees provided by listed companies,when there is an announcement without a corresponding resolution,the stipulation that the listed company bears the responsibility of security implies that external announcements have superseded internal resolutions,thereby serving as the basis for the delegation of authority.Based on this,the external guarantees of listed companies are subject to the dual statutory restrictions of Article 15 of the Company Law and Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code.In situations where the legal presumption stipulates that the guarantor’s counterpart should be aware,external announcement becomes the sole legal basis for granting the authority to represent the external guarantee,and listed companies cannot retroactively ratify such guarantee through subsequent announcements.After conducting a quantitative empirical study on the external guarantee announcements released by listed companies,it can be observed that the criteria for categorization,as presupposed by the drafters of the judicial interpretation,are merely a category in practice.This overlooks the most significant distinction between security announcements and security progress announcements based on function.The disparity between theoretical presuppositions and current practical conditions has led to deviations in the application of Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code: With respect to announcements issued by listed companies that lack credibility,whether the counterpart is in good faith or not determines whether the listed company bears security liability or disclaims any responsibility.The divergences in judicial judgments provide an opportunity for listed companies to evade security liability by utilizing weak credibility announcements.In light of the outcomes,the “all-or-nothing” liability model for listed companies under a weak reliance announcement consistently yields results that deviate from legal policy.The crux of the issue lies in the fact that,in order to reduce the efficiency costs associated with the principle of “announcement for all security”,securities regulatory rules grant listed companies “autonomy in announcement”,thereby sacrificing the protection of transaction security for the guarantor.The key to interpretation and application lies in resolving the conflict between these two aspects.Upon examining the evolution of the integration of U.S.securities law and corporate law,methodological insights on the application of rule integration can be garnered: Rules that are fundamentally distinct can be integrated to achieve a specific public policy objective,however,the application of integrated rules should still be aligned with the principles of their respective sectoral laws,and the objectives of the rules themselves should not be supplanted by regulatory objectives.Based on this,Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code should still be viewed in the context of the essence of its security transaction rules,and the purpose of these rules is to protect the reasonable reliance of the counterpart.However,in the context of “autonomy in announcement”,the abstract reliance of the information disclosure system still needs to be distinguished from the specific reliance.As a result,the statutory publicity of the announcement is separated from the intensity of reliance.The assessment of reliance intensity depends on the performance of the guarantor’s inquiry and review obligations,and the determination of their review standards is actually a balancing of interests,with little ethical significance.In accordance with the above,“announcement centralism” established in Article 9 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code should be narrowed down purposely to a strong reliance announcement,in order to correspond to the single model of “all-or-nothing” liability.When the guarantor has fulfilled its formal examination obligations,the reliance is deemed reasonable,and the listed company should assume the guarantee liability.As for the applicable rules for the remaining weak reliance announcements,there exist public legal loopholes.In the balance between the intent of a listed company to violate its information disclosure obligations and the negligence of the guarantor in failing to fulfill its information gathering obligations,the intent of the former clearly cannot be absorbed by the latter’s negligence.Therefore,the listed company should bear the liability for contractual negligence for issuing a weak reliance announcement,which is based on the Subparagraph 2 of Article 500 of the Civil Code’s Contracts Section.In the determination of the scope of liability,due to the similarity between the announcement of weak reliance and the resolution of weak reliance,the former can be analogically applied to the Paragraph 1 of Article 17 of The Supreme People’s Court’s Interpretation of the Security System of the Civil Code.Based on the civil and commercial entity nature of the security counterparty,the scope of liability for listed companies is determined separately.