The Company Set Up Invalid System

The invalid incorporation system refers to through litigation to take order with the company which does not conform to the fundamental provisions of corporation law in the process of set-up. Specifically means that the company already was formally founded, the company sets up does not meet its legal condition or the procedure, denies the company formally personality thoroughly. The invalid incorporation system has three characteristics: integrity, relative, a court of law. The invalid incorporation system has the wide difference with other concepts.The cause of invalid incorporation includes reality slight defect and procedural slight defect. The reality slight defect includes company erector's slight defect, slight defect of capital, setting up document's slight defect, unlawful organizations, the fixed production operation place and the essential production operation condition's inexistence ,the illegality of the goal, the company name's slight defect. The procedural slight defect includes when establishment lacks legal proceedings, when application lacks the essential procedure, the document or the existence fraudulent practice, without the approval of the competent departments, Company name, purpose, and so existing slight defects.Legal value objectives of the invalid incorporation system includes:the transaction security, the efficiency of the transaction, socio-economic order, social problem of employment, social justice, etc. The invalid incorporation system costs includes: Legislative cost law, law implementation cost, opportunity cost, social cost and so on; The invalid incorporation system should be consistent with freedom, security, efficiency, equity, conforming to two big legal systems to set up the invalid common principle about the company. When a company set up invalid ,the invalid sponsors, intermediary service agencies, government agencies, the civil liability of directors supervisors should bear civil liability.Establishing invalid incorporation system can enrich the setting up system of our country, strengthen the credibility of the registration system, reflect the civil compensation first principle.To improve the system should adhere to the following principles: establishing a system which mainly judgment in the form of a company and take the invalid incorporation system as the supplement; Establishing a system in which company registration revoked by the judiciary; Establishing the principle of non-retroactivity when announces that the company set-up is invalid; To improve the system should be legislation. From a procedural perspective, we should adopt the registration substantive examination principle, should improve company's formulation procedure and content, should clearly defined the subject of the invalid establishment, should clearly defined dissolution and liquidation procedures ,should stipulate the set-up behavior's slight defect as the subject of the dissolution and liquidation procedures, should improve civil liability of the invalid incorporation system, should pay attention to the legislative operable. From the entity perspective, we should be clearly that the investment or shares of the Sponsors or subscribers belong to the establishing company, should clearly defined the boundary of the Sponsors'acts , should clearly defined the executive and the judiciary responsibility, should clearly defined the responsibility of approving authority and registration authority.