The Improvement Of Corporate Liquidation System

Market economy is an economy governed by the rule of law. Companies, as one of the major players under the market economy, shall comply with the rules for market entry, and for market exit when participating the competitions in the market. Liquidation, as an important component within the legal frame of the corporate law, is of great value to the society in that it sets forth a series of criteria to follow, either from the procedural norms to the substantive norms, or from the principle stipulations to the specific systems.With an effort to in conformity with the development of the market economy, the Chinese company law has provided legal criteria to be followed. In view of the corporate law legislation in the developed countries, provisions relating to corporate liquidation are generally explicitly and precisely prescribed. Compared to the counterparts in the developed countries, the stipulations on liquidation set forth in the Chinese company law is relatively simple, for instance, while it is stated in the law that liquidation shall be abided by upon a company being terminated, there lacks detailed guidance regarding how to proceed with the liquidation, which has resulted in the occurrence of the unregulated liquidations or refusals to liquidations. In the event that the legitimate interests of the creditor cannot be fully protected, the credit and the economic order of the whole society will be seriously jeopardized. Therefore, it is necessary to specify the importance and the social value of the liquidation system.The deficiencies in the existing liquidation system have caused certain inconveniences in practice. There is a need to further look into the liquidation system and study the desired protection to the creditors in terms of their interests in the liquidation process, as regulated liquidation is a symbol to evaluate the credit degree of a company, even that of the whole society. As such, the establishment of the regulated liquidation, in conception and in practice, will in the long run promote the heath development of the market economy.By analyzing the deficiencies in the liquidation system under the existing Chinese company law, the author of the present article intends to exploit feasible solutions as to such issues as how to develop the current liquidation system, how to establish the potential"liquidator"system, and how to protect the interests of the creditors.Among various relations involved in the liquidation, liquidators definitely dominate the core position. Liquidators need to clear credits and debts of a company, as well as make a balance between interests of different parties, to make the subject company entering into the liquidation procedure terminated smoothly. The Chinese company law does not set up the legal liquidator system as has been established in plenty of the continental law countries. Therefore, a frequent issue following up with dismissal of a company is that there lacks a specific entity who may take the obligations associated with the liquidation of a company, which has caused a lot of abnormal phenomena during the liquidation and has severely infringed the legitimate interests of the creditors. Although in the judicial practice multiple attempts have been made with an effort to seeking for practical solutions for this issue, the fact is there still exists some serious deficiencies in the liquidation practice. Establishment of the liquidator system within the frame of the corporate law is an effective strategy which may make this issue fundamentally resolved. Hence, in connection with the issue aforesaid, it is necessary to take a thorough look into these contents such as establishment of liquidator system etc.This article includes four chapters. Chapter I and Chapter II direct to analyze the liquidation system and liquidation procedures, respectively. Chapter III discusses how to protect the creditors'interests in the liquidation process. Chapter IV probes into possible measures to improve the liquidation system based upon the analysis as to the deficiencies under the existing liquidation system.