The Validity Of The Theory Of Company Guarantees

In China’s capital market the company guarantees often occur, which canpromote the circulation of capital transactions between companies. External guaranteeis the ability to reflect the company’s autonomy, is the ability of the company’s rights.But the exercise of this right is not endless and unbounded, it still need to be limited.This legislative model of corporate governance is rooted in reality. The company’scapital operation requires both a corporate guarantee, as a result of the corporategovernance norms is not normative and the very weak protection awareness ofshareholders of the company, all these lead to the company cannot provide guaranteerandomly. In our corporate governance, there is a “dominance” situation in theShareholding structure of the company, corporate guarantees easily become thelargest shareholder means operating emptied the company’s assets. Given thissituation, our country legislation guarantee making certain restrictions, is in order toprotect the interests of creditors and minority shareholders of the company.This paper adopts law hermeneutics, comparative studies, and historical researchmethods to study the company’s security problems. Corporate guarantees forlegislative model there are three main modes of mainstream legislation. Among them,having made that the company guarantees a legislative model is effective on theprinciples of the United States, court for review later on, when warranty disputes. TheTaiwan region in our country, does not allow the company guarantee, in addition tothe provisions of laws or articles of association to be special. Each legislative modelis derived from the realities of the country’s corporate governance. Although thismodel is not suitable for China’s corporate governance, by comparing the Actlegislative models in different countries and regions of the world, we can findreference for our legislative.The1993Corporation Law to require a company guarantee is too simple, thearticle apply to produce a lot of controversy.The2005Corporation Law on corporateguarantees were new regulations, it has been clear about the company has the ability of guarantee, and the right to make rules of the company guarantees is granted to thecompany’s articles. This shows that our company guarantee legislation is increasinglyprogress, continuously perfect.Although in2005the Corporation Law has made considerable progress, but dueto the abstractness of the law issues such as the law of nature is unknown, this leddirectly to the referee standard chaos in the judicial practice. In a unified for thepurpose of the law of the applicable standard, by analyzing the nature of the article16in Corporation Law, just to clear that when company guarantee is in violation ofthe provisions of the law, the guarantee effectiveness judgment should be how to do it.I think that the article16in Corporation Law for mandatory specification, so thecompany will lead to guarantee invalid guaranty in violation of the law.In judicial practice, some scholars analyze the company’s guarantee on the basisof the145judgment material. Different courts’ treatments for the problem are notconsistent, but the attitude to protect the creditor is consistent, the court tends to beconsidered controversial guarantee shall be void.Effective to guarantee by the company shall meet the requirements of three. Butin practice, there are a lot of the company’s articles of association company guaranteeare prohibited, resolution is revocable at this time. The shareholders can use thelitigation right of defective company resolution to safeguard their own interests. If itis made by the shareholders’ committee resolution, it can be regarded as is modifiedin the articles of association of a company.When the amount of guarantee inviolation of the provisions of the articles of association of the quota, from theperspective of protecting trade, court most believe limit part is effective, the beyondpart is invalid. When the articles of association makes no provision for companyguarantees, the author thinks that the company still has the ability to guarantee. whenthe articles of association of the company guarantees the resolution to authority is notclear,I thinks that the will of the shareholders’ committee can be on behalf of thecompany, so the guarantee shall be effective at this time. When the decision wasmade by the board, although the board of directors need to exercise power within thescope of authority, if the articles of association does not rule out the guaranteedecision-making authority of the board of directors, on the basis of the status of the board of directors in corporate governance, we should think the resolution is valid.Contract to a third party for the guaranty contract shall have the obligation toreview form, it is decided by the nature of the article16in Corporation Law, thepurpose of the specification as well as its value orientation to the protection of theshareholders of a company. This contract the other party has a review obligation tothe company’s articles of association and resolution, but they don’t reviewresponsibility for the authenticity of signatures, otherwise it will lead to thereasonable increase of transaction cost. When the contract the other party delayed inexercising their obligation, he not bears the obligation on defense.