On The External Validity Of Certificate Of Incorporation

We are living in a time of information. Information plays a very important role in the process of economy and society development. While, there is a great problem we must be confronted with, which is that the information resources is very scarce for the reason of specific social labor division, namely imperfect information and asymmetry information. And to get enough information, we must invest a lot to produce, translate, gather information. Therefore, we must be confronted with the three problems: imperfect information, asymmetry information and information cost.In the commercial fields, the essence of corporation entail the self-governance of corporation, and self-governance of corporation has become the trend in the world. Complying with the trend, we have amended the corporation law, meaning the time of corporation self-governance has come. But problems follow, the self-governance complicate the information of corporation, compared with the one governed by strict law. A mechanism to expose the inside information of corporation to the public is severely needed.The Certificate of incorporation is the vivid and complete reflection and the base of the self-governance of corporations. Furthermore, The Certificate of incorporation can function to expose the information to the public by registration,electronic and being laid-down some special places. Consequently, there is no choice for the certificate but to play the role of the bridge between the corporation and the public. And we should try best to expose the certificate by electronic, because it is convenient for and the corporation and public, especially, it can reduce the cost for searching information. However, the problems have not been solved. Firstly, how to urge the corporation to expose information as much as possible? Secondly, it is possible that the corporation pose false information, how to avoid that? Thirdly, it is about the information cost, if the problems above cannot be solved, the public in need of information will still pay a lot to search information There is urgent need to grant the external validity to The Certificate of incorporation including the defensible and reliance validity. Only defensible validity can encourage corporation to expose information as much as possible and only reliance validity can urge corporations pose information that is true to facts. Moreover, only reliance validity can encourage merchants to make transactions without unnecessary worries. Only in this way can information cost be reduced. The story is not over, the external validity can protect reasonable reliance and boost transactions. It also raises the awareness of risk of merchants to guarantee the safety of transaction. More important, it can help the shareholders to have the managers in charge of corporation affairs under their control.In view with the reasons above, there is every reason to grant the external validity to The Certificate of incorporation. The defensible validity means the corporation can defend the third person as long as the information concerned has been exposed in the Certificate of incorporation. There are two models for defensible validity, the positive one and the negative one. The former one tend to protect interests of corporation and shareholders, while the latter one to the third person. And the reliance validity means the third person can make transactions relying on the contents provided by Certificate and the transactions will be valid in law in accordance with Certificate even if the contents is not true to real facts. There are also two models for reliance validity, the absolute one and the relative one. The former one is too strict for and is not in interests of the third personHow to reconcile the outside validity of Certification with other systems concerned is still a problem for law in most times depend on logic system to solve disputes. Corporation registration has the same validity as the Certificate as the important path to expose commercial information. How to define the relation between them? Firstly, corporation registration can not serve as the role of certificate for it only registers limited information. Secondly, in the case of validity, the validity of certificate of corporation is inferior to that of registration, because it is intervened by public power and seems more formal. As far as the relation between the external validity and the system by estoppels, the external validity is the reference to judge whether the third person is in good faith. The doctrine of ultra vires that is very useful to protect shareholders has been applied in common law system for many years but decline gradually in recent years. The external validity is the amendment to the doctrine.