Study On The Corporate Guarantee

During1993and2005, the PRC corporate law’s attitude on the corporateguarantee had experienced from negative to positive. The traditional theory of westerncountry also had once prohibited the external security of the corporation, butaccompanied by the declining of the Ultra vires doctrine, the legal capacity of thecorporation kept growing, the legislation had turned to accept the external security ofthe corporation. To conform to the new legislation trend, the2005corporate law tryto seek the balance point between the self-government and regulation of the securityof the corporation. But on the one hand, due to the briefness and abstract of theclauses of the2005corporate law, a series of debates was initiated. On the other hand,the setup procedural standard of the external security of the corporation has its ownunreasonable problem which could not achieve the purpose of the corporate lawlegislation.The first chapter of this article is devided into3sections to analyze the basictheory of the external security of the corporation. First of all, we search the theorybase of the external security of the corporation through the evolution of the legalcapacity of the corporation. In the traditional theory, the legal capacity of thecorporation is regulated by the Articles of Association or the business scope. But sincethe Ultra vires doctrine was abandoned, the business scope or the purpose of thecorporation did not limit the legal capacity of the corporation anymore, thus thetheory base of the external security of the corporation was founded. Secondly, weanalyze the advantages and the disadvantages of the external security of thecorporation, try to figure out the related legislation attitude. There are disadvantagessuch as increasing the risk of business, threatening the right of shareholders or debtorsand increasing the risk of market; otherwise, the external security of the corporation also plays a positive role in encouraging the transaction, boosting the cash flow,promoting the competitiveness of the corporation and grouping the corporation. Lawshould not forbidden it just because it can bring risk, the right way for the law is tosetup a series of system to highlight the advantages but also avoid the risk.The purpose of the second chapter is to find out the legislation trend at presentthrough the comparition of legislation in different countries, hoping that it could giveus some inspiration in our own legislation program. As we know, the law in manyother countries has accepted that a corporation can give guaranty to others as a legalbehavior, but set some degree limitations on it substantially of formally. The commonlaw system does not fit china’s situation. But on the point of judging the interest, wecan use the standard of reasonable management for reference.“The corporate law” inTaiwan has shown that the totally forbidden of the external security of the corporationwas infeasible in practice. Therefore, the PRC law should admit the legal capacity ofthe corporation to give external security, and control the risk through a propercorporate governance structure and reasonable restriction standard.In the last part of this article, we will take a deep look at the shortages of ourcurrent legislation, and give perfecting suggestion aimed at the shortages. The2005corporate law admitted the legal capacity of the corporation of external security,endowed related right of autonomy in Articles of Association and set up procedure toregulate the external security. But due to the briefness of the clauses, it bringsuncertainty and leak behind the law. On the other hand, the unreasonable procedureset up in the corporate law could not achieve the legislation purpose. Thus, in themicro-level, the Supreme Court should disambiguation the clauses and fill the legalleak by announcing new judicial interpretation; in the macro-level, the legislatorshould modify the corporate law through the sight of promoting the corporategovernance structure, endow the board of directors of director with decision-makingpower and set up the power restriction system.