Study Of The Legal System Of China's Rural Credit Cooperatives

Rural credit union constitutes an important part of China's financial system and serves as a fundamental force in rural finance. In particular, with the development of rural market economy, the contradiction between financial supply and demand in rural economy deepens, thus giving prominence to the position and function of rural credit union. The Regulations of Rural Credit Union, constituted by People's Bank of China in Sep. 15, 1997, defines rural credit union as the rural cooperative financial institution. As a cooperative financial organization, rural credit union should be typically characteristic of spontaneity, mutual aid among union members, regional distribution as well as self-government. However, being the main body of China's rural cooperative finance, rural credit union has been unworthy of its name. It has undergone several reforms, but with insignificant effects. Nowadays, there are a good many problems in our country's rural credit union: the severe contortion of the management tenet which deviates from the principles of cooperative system; the actually nominal property rights and the misplacement of principal parts of property rights result in the fact the venture responsibility in the rural credit union cannot be fulfilled; the juridical person structure is not right, making the insiders take the control, in addition to the imperfect trade management and financial supervisory systems. The reasons undoubtedly lie in the traditional systems. However, the major reasons are the legal systems. Experiences can be learned from other trades. Practices in the development of foreign rural credit union prove that the canonical development in rural credit union depends on its right financial legal system. Looking at China's rural cooperative financial legislation, we may find that the legal system is not right with low effectiveness and there exist some conflicts among related laws as well as many problems in the Regulations of Rural Credit Union, which serves as the special regulations for the rural credit union. As a result, the cooperative financial legal system must be improved to standardize the rural credit union and foster its reforms. The key is to constitute the special law—The Rural Credit Union Law. However, several basic theoretical problems should be solved in the first place, such as, both comprehensive and separate legislative mode should be set up; sticking to the cooperative principle; standardizing property rights of rural credit union according to the cooperative principle; making sure the legal attribute of enterprise juridical person in the rural credit union; specifying the role—orientation of governmental law-makers. Based on the above-mentioned, the main contents of the Rural Credit Union Law include: 1. to ensure that the rural credit union is one rural cooperative financial institute which is independent qualified enterprise juridical person ; 2. to establish the basic principles according to the actual situations of the development in the rural credit union as well as the developmental trend of international union: membership qualification is open conditionally; economic participation; priority given to distribution by transaction amount, accompanied by multiple distribution ways; emphasis on demonstration, education, training and publication; principles of independence and self-government; 3. to make clear that the rural credit union is the established enterprise juridical person by law and to formulate the conditions on the set-up of the rural credit union; 4. to ensure that the union members enjoy extensive rights. These rights include: rights of participation, summons and soliciting, voting and being voted, deprivation, financial censor, advising and questioning, profit-sharing by law, loan priority, preferential interests as well as rights of enjoying cultural welfare work in communities; 5. to standardize the treatment structure of juridical person: the rural credit union should divide its management into three major functions: decision-making, enforcing and supervising according to certain theories, and set up union member convention, council and supervisor, which cooperate and restrict with each other; 6. to standardize the supervisory system of the rural credit union which is mainly supervised by China Banking Regulatory Commission, accompanied by trade self-discipline management, based on the internal control management and supplemented by external social supervision.