Research Company For Shareholders Guarantee

A warranty provided for shareholders by corporations is a common phenomenon in economy activity. Before the revision of the Company Law, relative law and rules have no significant provision about this kind of guaranty. How to confirm the potency of this kind of guaranty touches on the confirmation of the nature of the subjects bore obligation and their duty and involves the interests of such subjects as corporations, shareholders and creditors. The Company Law revised not only provides clearly that a corporation can provide a warranty for its shareholders, but also provides the examination procedure that a corporation provides a warranty for its shareholders. New provisions prescribe that it is significant to prevent effectively shareholders of a corporation from maneuvering directory or general meeting of stockholders to provide a guaranty for him. This essay will compare the Company Law unrevised with the Company Law revised by analyzing the cases chosen to discover the defects of the relative provisions of the Company Law revised and make suggestions to perfect and measures for application. This essay concludes four parts.PartⅠCases Introduction. In this part, by introducing the details of the chosen cases, the dispute focuses of legal parties and the adjudication of the first instance and the final instance, I extract the disputes of this case that is whether the Company Law unrevised forbid a corporation provides a warranty for its shareholders or the directory has the power to decide to provide a warranty for shareholders, which are the two problems this essay will solute.PartⅡCases Analysis. In this part, I will analyze in detail the problem extracted in Part I. On the basis of introduction of understanding of the paragraph 3 article 6 of the Company Law unrevised by the academic community and the practical community. I analyze at first the capacity that a corporation provides a warranty for shareholders. Because the Company Law revised has provided for this and made clear that a corporation has the capacity to provide a warranty for shareholders, I will analyze this problem simply. Then, I will analyze in detail whether the directory has the capacity to decide the problem of providing a warranty for shareholders and make a conclusion that the directory should has the capacity to decide to provide warranty for shareholders of the corporation and that the capacity to decide to provide a warranty for shareholders is given to the directory is choice of the structure of corporation management. At last, I will analyze the practical significance of this adjudication of this case by comparing the adjudications made by the Supreme People's Court in the cases in the past.PartⅢThe conclusion of case. The first, before revising the Company Law , to providing guarantee for the shareholder is not forbidden. The second, the directory has the capacity to decide to provide a warranty for shareholders. The third, when the shareholder's right, legal right conflict the benefits measure of the worth mindset should have the initiative a protection creditor benefits.PartⅣUnderstanding and Application of New Law. By understanding the paragraph 2 article 16 of the Company Law revised, the Company Law revised gives the capacity to decide to provide a warranty for shareholders to the general meeting of stockholders excluding the directory, but does not provide whether the decision made by the directory is effective or not. In this part, I will discuss around the paragraph 2 article 16 of the Company Law revised. At first, I will point out my view on how to identify the effect that the directory decision on providing a warranty for shareholders and how to apply the paragraph 2 article 16 of the Company Law revised. Second, I will suppose some measures how to avoid effectively the risks of guaranty practice because of vague provisions of law in the view of the guarantees and banks.