Analysis On Fictitious Investment Of Limited Liability Company

Since the reform and opening-up, especially since the last decade, China’s socialist market economy has been rapidly developed, the market economy environment has been increasingly perfect and mature, and China has gradually established and perfected the modern enterprise system. Modern enterprise system is such a new enterprise system, which bases on the market economy, subject to perfect enterprise legal person system, takes limited liability system as the core, mainly formed by cooperate firms, with conditions of clear established ownership, clarifying power and responsibility, separation of enterprise from administration, and scientific management. This system mainly includes:the enterprise legal person system, corporate self-financing system, investor’s limited liability system, the scientific leadership and management system. Investors’ limited liability system is an important part of the modern enterprise system; it is also of great significance for the development of modern company. It overcomes the risk of personal bankruptcy of those unlimited liability company shareholders in case company bankruptcy. Being easy for people to invest, this system is effective means to raise funds widely and mobilize and take full advantage of the of social resources quickly. As a typical organization form of enterprise legal person system, Limited Liability Company plays a pivotal role in the market economy. Investors’ limited liability is established on the basis of legally establishment and normal operation, therefore, investors shall undertake their capital obligation while enjoy benefits of limited liability brought by this corporate system, in order to maintain interests of all parties. However, in the real contribution process, there is often lack of funding, which badly damages the normal operating order and transaction security. According to statistics, the arrival rate of Chinese corporate capital is generally low; cases of breach of funding obligation are common and endless. Fictitious investment and investment evading are two most common illegal ways. Such violations likely cause a chain reaction, threat the market integrity, destroy the operation order, and impede economic development. Therefore, it is necessary to study funding issues during the process of company establishment, in order to govern violations, guide investors’legal compliance, and maintain interests of all parties. According to provisions of the Companies Act, there are two forms of Chinese corporation:limited liability companies and joint stock limited companies. According to statistics, the limited liability company, which accounts for90%of the total number of companies, far more than joint stock limited company plays a basic role in the economic development. In addition, Chinese laws and regulations are relatively complete for joint stock limited companies regulation, and the supervision from administrative departments is relatively strict, as a result, violation of the obligation of capital contribution is relatively rare. Compared to that, violations are more common and more serious in the limited liability company investment process. Based on above reasons, I intend to explore the investment of Limited Liability Company, which accounts for a higher proportion and conduct illegal activities more generally. Because special provisions in the Companies Act for one LLC and wholly state-owned company, I temporarily only study the general sense of the limited liability company. The research methods used in this thesis is the ldocumentation method, and the object of study of the paper is shareholders of a limited liability company false capital contribution, through the research on the system of our country existing corporate investment, objective and harm on false capital contribution behavior, discussion and analysis and remedy the responsibility of false capital contribution, finally put forward the way of governance, to improve the investment environment the company, maintain the order of the market economy to provide help.