Study On Creditor Protection In Company Merger

Company merger is common business phenomena in free market economy, which refers to two or more companies, merge into a company by a merger agreement.With the economic reform and state-owned enterprises'restructuring in depth, the pace of company merger in China will be further accelerated. Not it helps to allocate the resource optimally, but it benefits the adjustment and optimization of the industrial structure, hence it has important significance to the economical development in China.In company merger, the rights of original company shareholders and the interests of the employees will be affected, as well as the stakeholders. Company merger is a major change in the process of business operation, which will leads to the legal effects of company elimination and shareholder change. In merger by absorption, all the assets of the absorbed company will be shifted to the other party, which may affect the interests of creditors of the absorbed company; while in merger by new establishment, the assets of all parties will be shifted to the new company,which may affect the interests of all creditors.In the process of company merger, some principles, i.e. the balance of equity and efficiency, moderate protection, and combination of pre and post should be complied with to protect the interests of the creditors. The creditors are entitled to right to know, claim of full repayment or guarantee, and damage claim for relief according to the company law.One of the purposes of revision of Company Law in 2005 is to protect the interests of the creditors.In practice, this objective is still being unachieved owning to the rigid protecting system and new problems emerged.Accordingly, this paper suggests that principle of moderate protection should be set up, and the protection systems should be built up in line with the merger form.