The Study On The Legal System Of Invalid Company Establishment

In modern society, the company, which plays an irreplaceable role in enhancingnational economic vitality and promoting economic development, has become themost important commercial agent. But from the day of birth, the company isaccompanied with defectives in its establishment. The defectives in theestablishment of a corporation can be divided into minor flaws and serious ones.Serious flaws can bring the company and its stakeholder’s enormous damage if it isnot timely corrected.However, as regard to the serious flaws in the establishment of a corporation,the two main law systems take a totally different attitude because of differences intheir capital systems. As a country with authorized capital system, the British andAmerican law usually takes a doctrine of recognition, while mainland countries withstatutory capital system or eclectic capital system will usually adopt a denial doctrine---the invalid incorporation system.The capital system in our country is the strictly legal capital system, whichdetermines that we should, like other mainland countries, establish the invalidsystem in our law system. But, regretfully, as regard to the invalid system, there isonly administrative revocation stipulated in our company’s lawmaking which is notonly theoretically defective but also inefficient in guiding judicial enforcements. Soall this requires a need for drawing lessons from the invalid system in companies ofother mainland countries.This paper researches on the invalid incorporation system, the structure ofwhich can be divided into five parts:The first part is an overview of the company’s invalid system. In this part, itmainly introduces the definition and characteristics of the incorporation’s invalidsystem. Mean well, the invalid incorporation and related concepts are differentiatedand analyzed. This part is the logical starting point of this paper and it also lays atheoretical foundation for the following writings. The second part is the comparison research for the invalid incorporation system.This part briefly analyses the different attitudes and reasons hold by the two bigLegal systems about the incorporation’s invalid system, and based on this foundation,this part analyses in detail for the two types of the invalid incorporation system incontinental law system, which is always used for reference on company legislation inour country. The purpose of this part is to provide a reference on the following textfor researching the construction of the incorporation’s invalid system in our country.The third part is about the present situation and defects of the establishment ofinvalid systems in our companies. Firstly, it gives an introduction of the presentsituation of invalid system in companies, and then analyzes the lawmaking defects inour country. The purpose of this part is mainly to show the necessity of establishingthe invalid system in our companies.The forth part is about improving the invalid system of companies in China.There are four aspects for the concretely designing and planning of establishing theinvalid system from theory to practice: principles of the invalid system, specificsituations of the invalid system, correction methods of the invalid system, and thelawsuits of the invalid system. These four aspects could provide reference for thereform of the Corporate Law.The fifth part is the conclusion. It aims at making a summary of the main ideasin each part of this text and on this basis we can get the central idea of the text, thatis, we should, like other mainland countries, establish the invalid system which isadapted to our company capital system in our law system.