A Study On The Company's Defective Incorporation

There are three legal concequences of the setting up a company: to set up successfully, namely, the company is established legally; can't set up, namely, the company fails to establish because of various kinds of reasons; defective incorporation, that is to say, though the company is established, it is found afterwards that the company set up with flaws. There are illegal actions of violating some compulsive legal norms. The company is an organization established according to the law. We can say that the defective incorporation accompanies the company since the formation of the company system. As regard to how to overcome this problem, avoiding the negative sides while bringing its merits into full play, different legislative conceptions will lead to great diffenrences in the disignation of legal system. In the Anglo-American law system countries which stress the economic efficiency, they adopt loose setting-up conditions and simple setting-up procedures, reducing the defects from the incorporative system on one hand, on the other hand, they take such kind of legislative attitude which acknowledging defective incorporation on principle. The qualification approve of a legal person will not be debarred unless it is necessary . Yet as to the continental law system countries which stress the safety of trade, on one hand, the government rigidly regulate the establishing conditions of a company and set up complicated establishing procedures, adhering to the principle of essential examination. It tries to eliminate the flaw of establishment from the very beginning. On the other hand, these countries take the legislative attitude which denies the defective incorporation. As to the company that violate the law, the government will debar the qualification of a legal person through the means as lawsuit and administration.In China, the law system of company was established at the end of the 1980s. We didn't get a thorough understanding as to the theroy and practice of the company's defective incorporation. On the precaution of the company's defective incorporation, due to the conventional legislative thought of safeguarding the safety of trade, the law of the setting up the company stipulates too rigidly as to the establishing conditions and the prodecures of a company. They can't get due respect of the creator in the institution. Moreover, because of the craving for staggering profits, people even violate the law and commit crimes. Due to all these factors, the defects in the company establishment emerge in an endless stream. From the legal relief of the company's defective incorporation, on the one hand, the whole law system of company strictly stipulates the civil and criminal liability and emphasizes the punishment on those violating the law.On the other hand, the stipulation of civil liability is deficient. There is no law to abide by and the victim can not get his belief. With the development of the company institution in our country, the problem of company's defective incorporation has aroused the attention of legislative departments, judicial departments and theorist circle. On the summer of 2003, the Supreme People's Court initiated the drafmg of the judicial explanations of the case-judgement of some relevent companies. It also began to explore the perfection of the systerm of company's defective incorporation.Through the analysis of current legislation of companies, we can find that in China, there are many problems concernning to the system of company's defective incorporation, namely, having overly laid stress on the safety of trade while ignoring economic efficiency on the legislative concept; the range of reasons of defective incorporation is too narrow; as to the reservation of the qualification of a legal person of the defectively incorporated company, the legislative attitude of our country is not distinct. There are a lot of measures of punishment as to the administrative revoking procedures while the measures for relief are insufficient. The results brought by the company defective incorporation are u...