Corporation Capital System: Reconsideration And Reconstruction

Based on investigation about the operating status of China's contemporary corporation capital system, this thesis paper reflects China's contemporary corporation capital system from the analytical angle of legal economics, attempting to propose a type of corporation capital system which can embody the requirement of efficiency notion best. Apart from the preface and epilogue, the thesis paper consists of the following four chapters. Chapter one: general introduction to "corporation capital system"; chapter two: elementary investigation about China's contemporary corporation capital system; chapter three: reconsideration to China's contemporary corporation capital system; chapter four: reconstruction of corporation capital system. Chapter one: general introduction to "corporation capital system". At first, the definition of corporation capital system is provided: corporation capital system in this thesis paper refers to the "ideology + capital formation system"mode, which contains the regulation of minimum capital requirement; the regulation of shareholders'contribution forms; regulation of stock issuance; regulation of subscription; paying rules; regulation of capital change. Besides, the connotation of different types of corporation capital system is elucidated. Chapter two: elementary investigation about China's contemporary corporation capital system. Firstly, it is referred that strictly speaking, China's contemporary corporation capital system belongs to statutory capital system. Secondly, investigation about the operating status of China's contemporary corporation capital system is provided based on the attitudes of the theoretical and practical field of corporation law towards the statutory capital system—the unanimous criticism or suspicion by theoretical field; "legal fainaigue"or virtuous transgression in practice. The purpose of this chapter is to reveal the fact that facing predicament all around, China's contemporary corporation capital system needs to be reflected and reconstructed. Chapter three: reconsideration to China's contemporary corporation capital system. The purpose of this chapter is to reflect on the rigid statutory capital system adopted by China's corporations, and try replying to the following two questions: first, why do people need corporation capital system, or what is the function of corporation capital system? Second, what is the ideology which supports China's contemporary corporation capital system? And further, is this ideology rational or does this ideology correspond to the motivation of those who need the law? The answer to question one consists of two layers: layer one—the function of ecumenic legal system. From legal econimic perspective, reasons of the existence of ecumenic legal system is that it can save transaction costs; layer two—the function of corporation capital system. The major function of corporation capital system is to reduce transaction costs and accelerate the formation of capital at maximum. The reason why corporation capital system is needed is that the above mentioned major function can bring "potential profit"for those who need corporation capital system. The second question is answered from two aspects: firstly, the importance of registered capital in China's contemporary corporation capital system and reasons of the importance are analyzed, thereafter, it is pointed out that "safety"is the supporting ideology for China's contemporary corporation capital system; secondly, reconsideration and survey about the rationality of the "safety"ideology are made. From legal economic perspective, a rational legal system at least includes contents of twoaspects: the legal system corresponds to the demands of those who need law; because of the very correspondence, the legal system is accepted by most people and runs well in practice. A conclusion can be drawn thereupon: China's contemporary corporation capital principle is a type of high—cost, low—income legislative plan, the "safety"ideology of which is the legislators'irrational conjecture. Based on the above reconsideration, two pieces of cognizance are educed: first, China's contemporary corporation capital system is irrational, a "thinking from the scratch"is needed from abstract ideology to specific principles. Second, the construction of corporation capital system should base on the respect to capital essence, company's financing function and responses for the need of those who need the very system. The construction should reduce transaction costs at maximum and adopt efficiency as its ideology for principle design. Chapter four: reconstruction of corporation capital system. The main purpose of this chapter is to provide answer to the problem—how to reconstruct China's contemporary corporation capital system. The reconstruction of corporation capital system does not merely refer to the reconstruction of specific rules, but also contains the reconstruction of legislative ideology. With regard to construction ideology, the fixed ideology should be changed from "safety"to "efficiency". In economics, efficiency refers to the state that makes collocation of resources realize "wealth maximization". Pareto's superior efficiency means that "there is no other decision that would make one individual better off without making any other individual worse off". Other reasons why efficiency should be adopted as the construction ideology exist besides the above mentioned respect tocapital essence and satisfying the motivation of the need. Firstly, from legal economic perspective, adopting efficiency as ideology is the inherent requirement for resources'proper collocation. Secondly, the ideology of efficiency is the requirement of a company to realize its function of making profit. And thirdly, adopting efficiency as ideology corresponds to the efficiency tendency of various countries'corporation capital system reform, thereby it can strengthen the competitive capability of China'corporation capital system. On the aspect of reconstruction of specific principles, the thesis paper attempts to find a system plan which can best embody the efficiency ideology through comparative study between different capital principle modes. The value implied by efficiency is the state of resources'effective application, which is the benchmark for the comparative analysis. The interest conflicts on cash, etc, between a company's shareholders and creditors are problems that corporation capital system should response. In the contradictory relations, shareholders and creditors are the two parties who represent opposite interest directions. A certain kind of corporation capital system design which corresponds to the requirement of efficiency should on the one hand, reduce the shareholders'transaction costs, maximize their profit; on the other hand guarantee that the creditors'interest is not damnified, i.e. the transaction costs do not increase. From the perspective of shareholders and creditors, the author comparatively analyzes several representational sub-regulations of corporation capital system—regulation of minimum capital requirement, authorized...