Legal Nature Of Business Scope Of Company

Legal nature of business scope of company ("BSC") is an important issue for the study regarding the effectiveness of company's acts beyond BSC. Such issue rose at the beginning of the establishment of legal system regarding BSC. The creation of BSC is based on the background that the qualification of juridical person is granted by the government to the social organization that lacks legal personality. Therefore, it is rational for the government to limit the capabilities of rights and the capacities of conduct of the company through BSC. If a company conducts beyond BSC, it will lack legal personality. The acts of such company are consequently of no effect. However, in the modern society with rapid economic development and fast-changing situation, to protect the safety of transactions, many countries including China have adopted the principle that a company's acts shall not be ineffective since beyond BSC ("Principle"). As for the specific legislation regarding the effectiveness of company's acts beyond BSC, there have two patterns, ones adopts the theory of comparatively effective. It regards the subjective attitude of the other party of trade as the standard to judge the effectiveness of company's acts beyond BSC. If the other party of trade knows that the company's acts are beyond BSC, then such acts are of no effect, otherwise, such acts are effective. Article 50 of Contract Law of the P.R.C is this pattern. Another legislation pattern adopts the theory of absolutely effective. If the acts beyond BSC have not violated any enforced laws and regulations, the effectiveness of acts will be ratified by law. Article 10 of Interpretation I of the Supreme People's Court of Several Issues concerning the Application of the Contract Law of the P.R.C in 1999 just adopts this pattern. Since the difference in understanding regarding the legislation tradition, effective principle and legislation patterns of BSC, academic circles have not agreed upon the legal nature of BSC until now.On the basis of a study of the relationship between volition, legal personality, capability of company and BSC, this thesis points out that company has the qualification of civil subject, BSC is included in the scope of capability of civil rights, however, BSC limits only parts of the capabilities of civil rights, which are just the capacities for commercial rights of the company. As a civil subject, a company will still have capacities for civil rights outside BSC and be able to conduct civil acts beyond BSC. Therefore, there has no causality between BSC and effectiveness of company's acts. Compared with the legislation pattern of comparatively effective, the legislation pattern of absolutely effective is more reasonable in nomology. This thesis will re-recognize the nature and function of BSC, put forward relevant legislative proposals according to the actual situation of China.Besides the introduction and conclusion, this thesis is divided into six parts:The first part discusses the basic concepts and function of BSC. It discusses the similarities and differences of BSC, corporate purpose and corporate power. And it also analysis the function of BSC, indicate the essentiality of reserve this system and the significance for studying BSC.The second part, with a historical point of view, summarizes the evolution and development of the legislation of BSC, analyzes the reasons behind the legislative changes, while lists the legislation of several representative countries, points out that the value judgments of protecting the interests of third party with good faith and maintenance the safety of transactions are generally accepted today. The third part makes a legal analysis of four major doctrines regarding the nature of BSC (the theory of internal responsibility, the theory of limitation of capacity for civil conduct, the theory of limitation of authorization, the theory of limitation of capacity for civil rights), reveals shortcomings in each doctrine.Through the nature of company, the fourth party analyzes the relationship between volition, personality, capability between BSC. It is concluded that a company is the organization with single volition; a company will still has the qualification of legal subject outside BSC; the nature of BSC is included in the scope of capacity of rights, BSC is the capacity for commercial rights.Based on the presentation of the fourth part, the fifth part studies the external effectiveness of company's acts beyond BSC. It also discusses the restrictive effect to the rights of representative delegated by the company, points out the responsibilities of the representative organ due to its acts on behalf of the company and beyond BSC, the nature of such responsibilities and the subjects of exemption.The sixth part concludes the legislation evolution of the BSC in China, research the problems which still exist in the laws and regulations, puts forward several advices that related to legislation and administrative supervision to improve the BSC system in China.