Research On The Effectiveness Of The Company's External Legal Guarantees

Article16of the Company Law provides for that the resolution authority and amountlimit of external guarantees is determined by the articles of association of the company.How the legal effect of the guarantee contract, when the actual authority to makeresolutions is inconsistent with that already determined by articles of association of thecompany, or the actual guarantee amount exceeds the amount limit determined by thearticles of association or resolutions of shareholders’meeting or board of directors? As aconstraint on the company’s internal personnel management norms, articles ofassociation of the company should not be considered to have the effectiveness againstthe world. The third party doesn’t assume obligations of reviewing articles ofassociation of the company. Making resolutions on guarantee by shareholders or boardof directors should be considered to be the company internal affairs.The company can’tadvocate that the guarantee contract is invalid becausethe contract violates theprovisions of articles of association of the company. When guarantee resolutionauthority is not provided by the articles of association, shareholders will be entitled tomake resolutions in respect of the guarantee, because our country adopted‘ShareholdersCentrism’on company governance structure.If board of directors makes resolution onthat without shareholders’ authorization, the company can’t advocate the guaranteecontract is invalid, but can legally require directors to bear the corresponding legalresponsibility. Company can only provide guarantee for its shareholders or actualcontrollers when the guarantee is approved by shareholders, and such shareholder oractual controller must not vote. The guarantee contract is null and void if the companyviolates the said provisions.