Study On A Company's Guarantee Effect

Since the Company Law takes effect, a limited liability company or joint-stock company often involves in guarantees and therefore frequently encounters creditor's claim for borrower's on account of guaranty, it is significant to probe into such guarantee effects. Currently the Company Law does not prohibit a company from presenting a debt guarantee. However, the judicial interpretation of the Supreme Court of P.R. China forbids a director and manager to present a guarantee for a shareholder and individual's debts. The Securities Regulatory Commission(CSRC)'s relevant documents also forbid a company to present a guarantee for the debts of its shareholder, shareholder's holding subsidiary company, subordinate enterprise, other affiliated parties holding less than 50% of stocks, non-legal entity, and individual. In fact, a matured Company Law should allow a company guarantee to all kinds of market subjects.