Exposure Of Legal Risks Of Financial Guarantee Company And Perfection Of The Legal System

Financial guarantee is the understanding reached between the guarantor and the creditors such as banks that when the guarantee can not fulfill the obligation due to the creditor, the guarantor will assume the responsibility of performance of the duty agreed. A guarantee corporation refers to a limited liability company or a corporation which is lawfully established and conducts financial guarantee. In practice, some guarantee companies conduct non-financial guarantee as well as the financial one. Financial debt refers to a channel which an enterprise uses to apply for a bank loan and uses the loan for future operation of the enterprise, which is in essence a method of using financial function of bank system for further development. Since the beginning of financial guarantee business in China, it has witnessed more than one decade. In the early stage of its development, the business was not very well adjusted. This article presents the problems facing financial guarantee business. It classifies the business into different categories. From the point of view of corporation governance and specific operation procedures, it discusses how to set a financial guarantee company under decent regulation in order to reduce management risks. Secondary, in reference to regulation experience of foreign countries of financial guarantee business, it reveals the risk control points of a financial guarantee company. Afterwards, for the risk points, it points out the perfection of the financial guarantee legal system in China. Case study and comparison methods have been used in this article. The author also used both macro and micro views in analyzing risk points and legal resolutions in financial guarantee business.