The Protection For The Creditors'Benefits Of The One-man Company

The legislation of the One-man Company has been put into practice following three-amendment of Corporate Law promulgated on Jan 1st,2006. Since the One-Man Company's legal status has been confirmed by legislation in many countries in the world, the problems of the protection to the creditor in the circumstance of One-Man Company are getting more and more striking and obvious. The One-Man Company has an easy tendency to abuse the independent personality of the company and the limited liability principles for lack of the traditional internal check and balance system in the company of limited liability and the joint-stock company of limited liability. Although the Company Law confirmed the legal status of the One-Man company of limited liability, it didn't provide systematic and comprehensive protective measures to the creditor of One-Man Company. The paper focuses on the theory, legislation and practice of the One-man Company from the protection for creditors'benefits.Firstly the paper introduces the basic concept, historical evolution and legislative situation in various countries concerning the One-man Company and analyzes necessity of protecting the creditors'benefits of the One-man Company. Then the author finds that, the creation of One-man Company is the result of economic development, it owns independent personality, its shareholder undertakes limited liability, shareholder's property and company's property are respectively independent. Admitting One-man Company matches the lawmaking trend of most developing nation. But, while One-man Company enjoys the protection of company system, it also brings the creditors huge risk. Under the circumstance of one shareholder, the traditional company system cannot restrict One-man Company. The board of shareholders, directors and supervisors also cannot mutually restrict so do shareholders's power. The stronger shareholder power and weaker creditor changed the balance of traditional company system. So, on the basis of analysis of problems caused by One-man Company in the creditor's interest and Chinese company law, several suggestions has been put forward for the sake of the perfection of its legislation from three stage of foundation, running, and liquidation. In the stage of foundation, the following measures can be taken, definitely stipulating the qualification, maintaining minimal company's capitals.In the running stage, strengthening the obligation of capitals, introducing shareholder's unlimited liability and stipulation of self-dealing will be great helpful to protect the interest of creditor, meanwhile, the articles of piercing the corporate veil should be refined. In the stage of liquidation, the system of settlement and reformation can also be introduced. The measures mentioned above can provide creditor with full protection and assure the security of economic order .