On Public Corporation Guarantee

Because guarantee is free gratis for nothing, Corporation Guarantee behavior is challenged by the legitimacy all along. In the practice, hazards resulted from guarantee occur frequently , which doesn't only slow the process of Chinese enterprises actively taking part in the international market and improving the competitive capability, but also bring tremendous resistance to ensuring small shareholders' right and interest, even destroy guarantee system's value and decrease guarantee's function of promoting floatation of loan and pushing forward financing resource's reasonable distribution. However, due to the necessity of the exist of corporation's guarantee, the prohibition on Corporation Guarantee is loosened gradually. Many countries involving China adapt the legislative attitude of permition in principle with several exceptions of certain kinds of guarantees. Public Corporations Guarantee itself is normal, various drawbacks in reality come from the causes that related legal rules are not completed and practical operation is not normative. As a result, permitting Public Corporation Guarantee is necessary choose. But the guarantees between relevant corporations should be regulated severely, and only "rational guarantee" can avoid the hazards caused by guarantee.Moreover, Public Corporation Guarantee should be set several terms. On essence, guarantee objects should be limited to corporate enterprises, and only guarantees which are beneficial to guarantee corporations can be permitted. On procedure, organs of authority which have power to decide are stockholders meeting and the board of directors; guarantees between relevant corporations and guarantees involving great sum of money must pass through the stockholders meeting's resolution;and the board of directors should put in hazard-analyse reports. Vote avoidance system and disclosure system are used to resure small shareholders' rights.About guarantees decided by directors and managers exceeding their authority, the third person's good faith or corporation's affirm may make the guarantee effective.The directors and managers who exceed their authority will undertake the responsibility of compensation to corportion and the responsibility of joint and several guarantee to the third person.