Research On Legal States And Responsibility Of Pre-incorporation

If we probe into the legislations around the world, it is not difficult to find out they all have taken an evasive attitude towards the legal status, legal capacity and other issues for pre-incorporation companies. Chinese legislations have only defined the legal responsibilities of a sponsor during the establishment of a company, yet there is still a variety of inextricable issues remaining both in theory and in practice. Therefore, it is necessary to have a discussion on the legal status and accountability mechanism of a pre-incorporation company.The author has referred to the relatively mature corporate law system and theory in the world and studied the legal status and accountability of a pre-incorporation company. The paper includes the following parts:In the Introduction, the author puts forward the conflicts between provisions under the existing Regulations on Administration of Corporate Registration regarding establishing of a company with real estates and provisions under the existing Company Law regarding the establishment date of a company. The answer to this issue is of vital importance for resolving a number of legal problems arising from the course of the establishment of a company.Part 1:A theoretical analysis is made on the conflict. The conflict can be resolved only by ascertaining that the pre-incorporation company has the ability to accept real estates. Based on this, a discussion is made on the necessity of studying the legal status and the accountability of a pre-incorporation company.Part 2:this part deals with several basic issues like the meaning of the pre-incorporation company, beginning and ending time as well as the legal characteristics in order to further analyze issues therefrom.Part 3:this part makes an investigation on the civil capacity and legal nature of a pre-incorporation company and states that the pre-incorporation company has the corresponding civil rights, capacity for act and relatively independent capacity for responsibilities. On the basis of criticizing the existing theories like "no legal capacity entity theory", "partnership theory", "non corporate body theory", etc, it is concluded that the nature of the pre-incorporation company is more like a legal person from various perspectives—entity form, existence or non-existence or extent of the civil rights; "quasi-legal person theory" can provide reasonable explanations for issues arising from corporate legislation and the practice of company establishment.Part 4:this part focuses on investigation of the legal status of a pre-incorporation company. Although there are no clear stipulations on the legal status of a pre-incorporation company in the company laws in various countries, corresponding regulations can be found in the related provisions and judicial precedents of various countries. It can be seen that the approach by giving certain legal status of the pre-incorporation company has gradually become the trend of corporate legislation. This paper has analyzed the relationships between the sponsors, the pre-incorporation company and the established company as well as between the pre-incorporation company and the established company, and concluded that China should also clearly define the relatively independent legal status of the pre-incorporation company.Part 5:this part discusses the attribution of responsibility of a pre-incorporation company. Firstly, it classifies the behaviors of the pre-incorporation company and analyzes different responsibilities under various behaviors; then based on the two different scenarios of success and failure of the company, an investigation is made on the different responsibility attributions of the behaviors in the names of to-be established company, pre-incorporation company and individual sponsors.Part 6:this part makes an analysis of the deficiencies of current Company Law and confusions of the judicial practice in China and provides recommendations on formulating a system for pre-incorporation companies in China.