Company Law Regulations, The Company's Donation

Corporation donation is not only one of the means for modern corporations to take social responsibility, but also an important approach for the management to reach dural purposes of social effect and commercial interest by corporation asset. In the Anglo-American law system, corporation law's attitude toward corporation donation was undergoing a process which from prohibition to relaxion, then to encouragement with limitations: before the fifties of twenty century, the corporation donation action was deemed as an ultra vires act because it went against the corporation purpose, then as the development of social economy, corporation donation is gradually legal for catering to the social demand. In the modern society, corporation donation becomes to a world-wide common economic phenomenon, and many countries give encouragement through policies and regulations for attaching the importance to its effect of conciliating the social conflicts. However, the corporation donation is very special and subtle: it could directly decrease the profits of the company and indirectly violate the interest of the shareholders'; and could be inclined to using by the directors for their individual benefit; and also could bring on the distrust towards the Board which would increase the inner friction. In many other countries, the dissensions brought by the corporation donation are never ceased. As one of a special behavior in company's daily management, corporation donation requires regulations by corporation law to reduce interest disputes. Many countries have summarized several experience in theory and practice, rectified and suppled many legal regulations with respect to the corporation donation in their corporation law. These legal regulations are including: limiting the donation object, regulating decision-making process, limiting the donation amount and improving the relieves for defective donation etc. The Reasonableness Standard gradually formed in long-term judgement practice in Anglo-American law system is worthy for reference. As more and more emergent accidents happened in recent years, corporation donation is also regarded in our community, whose regulations are imperative under the situation. Our country are very different from the western counties in various fields, for instance the approach of economic development, the revolution ortinetation of the society, the market consciousness of micro substance and the traditonal culture, thus the reference need a course of localization. The existing corporarion law has hardly any direct provisons related donation, but only some open systems can be used. The author tries to put forward the advises for editing, amending and coodinating the systemic legal regulations for corporation donation by electing the advanced ideas and technologies of westen countries and applying to the situation of our countries. This paper can be divided into five chapters, with the contents as following:The first chapter sets forth the basic theoretic problems related to corporation donation on corporation law. It explains the conflicts between this action and traditional corporaiton law theory, and anslyses the social cause for the validity of the corportation donation. Then it points out that the related regulations should give attention to the social interest and the shareholders' interest, and try to prevent misusing the powers.The second chapter emphasizes on the process, which sets forth the decision-making process of the corporation donation. The decision-making body shall be the board of directors in accordance with its essence. The voting shall be democratic and scientific to ensure the self-government of the company, the director who has something related to the decision shall not take part in the voting; the information about the donation shall be timely disclosed to the shareholders and other related persons.The third chapter emphasizes on the substantial judging standards, which introduces the Reasonableness Standard gradually formed in long-term judgement practice in Anglo-American law system. This standard has been undergoing a course from direct benefit to long-term benefit, and finally to be objective. The objections of the donation are limited only for the public benefit and charity purpose by law, and the amount also is limited by the legal amount or proportionality principle, and the company must be in a good condition when making a decision of donation.The forth chapter emphasizes on the legal relief. The defective donations are including invalid donation, reversible donation and unreasonable donation, whose different causes result in the different legal effects, so the laws and regulations provide the different relief rights to the shareholders and the debtors. In the decision-making pocess, the director shall take a resposibility on faith and due diligence, so this part analyses the detail standards for judging whether the directors has been taken the obligation above.The last chapter emphasizes on the domestic situations, to analyses the different situation bewteen our country and the western developed countries, and ponits out the basic orientation of regulaiton in our corporation law. The author put forward several detail suggestions about corporation donation legal regultions for legislative reference.