Economic Analysis Of Chinese Company Law

In any country or area, the development of economy and society must relay on rules, and the rules must confirm by laws. China now is building a high level marketing system under socialism. In other word, China is establishing a new rule of market. Laws in this period are much essential, and good laws could make the reform of economic system right and speeder. In many parts of law system, the law of company is a special one which is focus on company. All the regulations are talking about companies. They go though the whole life circle of companies. Because companies have a main status in market, so they are the starting line of the research on law of company. There are two kinds of company in Chinese company law, one is Limited Liability Company, and the other one is Corporation Ltd. Limited liability is the same core of any one of them. The so called limited liability is the investor only pay for the debt by the capital he invested. It is a innovation of company regulation, and a sign of modern company law. It separates the risk of investment, reduces the cost of supervision and maximizes the earnings. But none of systems is perfect. Limited liability also has its disadvantage. Under this system, most of the investors do not manage the company directly. The actual management is separated from the ownership. This kind of separation brings an extra cost to a company, and it is hardly avoided by the company itself. The modern theories of economy not only show us the nature of companies but also show us a new path to research law of company.Company laws are advantage to a single company on the management. They have much more information, and could certain the company's sector, regulation and balance. They are the good and economic supervision outside the company. Law of company is not only benefit to every single firm. In the macro level of market, its benefit is also outstanding. It is an important tool for ruling the market in many countries all over the world. Especially in some main developed countries like America, British and Japan, they all establish the company law in the early time. According to their experience, the company law should be flexible and convenient. The item you must do and the item you choose to do should in right proportion in company law. The three countries above try to do all they can do to avoid over Intervention on market. They believe laws are a drive for market. They act little limitation on the entry of market, make sure the market is wide open. And they do not require companies provide the whole registered capital in the first time. They also put down the power of modification to make sure the law of company gets the new change in time. These are the valuable experience for China.Chinese company law has past three historical periods. They are plan economy, the beginning of market economy and the modern company period. Chinese company law has a close relationship with the development of society. The latest company law was established on 27 Oct.2005. It meets the need of the development of Chinese economy. It is the first modern law of company in China's history. The basic philosophy of it is company's will. It trusts companies know what they should do in the daily management. In the mean time, companies could enter the market easier than before. And they have more flexible capital system and capital form. Even the new company law is good enough, it also has some problems. Just like the high cost of prosecution and so on.Chinese company law is good but not perfect. Which road we should choose is the question we have to think. I think we need to insist on four points. First, Chinese government should take the leadership. Chinese society is taking a system reform, and this reform is driven by government. So the development of Chinese company law must follow the spirit of government's reform. Second, we need to make the company law fit the reality of China. Third, we need make sure the reform of Chinese company law must under the reform of Chinese society. Market is the land company law, and the development of firm is close to economic system reform. Forth, we need a company law belong to China. The vitality of laws is not from its logic, is from the experience. Chinese problem is which we should focus on. Analyze Chinese reality and solve Chinese problems are the duty of Chinese company law.