The Study On The Validity Of The Company’s External Guarantee

The implement of the Company Law in2005has resulted in a change of the country’s attitude toward the provision of guaranty of a company, that is, a change from close confinement to free licensee, which grants a company some autonomy. This is the great progress in the corporation legislation in China, and also meets the practical needs of commercial activities along with the development of social and economic development. Though the article16of the law of corporation clearly defines the standards of the nature of its judgment, the examination of its validity after the violation of the article, the possibility of the third party’s obligation to investigate the company’s articles of association and the resolution of its provision of guaranty, as well as the examination of the validity of its external guarantee in the face of the failure of the company’s articles of association stipulating its guarantee, yet there emerged new problems such as the demonstration of its validity when the amount of money exceeds the limit or the agency is inconsistent with its articles of association, which thus has aroused a heated debate.Based on the analysis of the case of a guarantee of Yinda Company, the thesis devotes itself to making a detailed analysis of the current theories involved with a focus on the controversies of the academic circle and the real business world. The study suggests that the nature of the article16shall be future discriminated and regulated regarding the three paragraph of this Article according to guaranteed objects, and points out the violation of the above Article shall impacts its validity. The third party’s obligation of investigation shall be judged based on a complete analysis of the nature of the articles of association, transaction cost, and the inquisition of industry and commerce registration. When the company’s articles of association stipulates its provision of guaranty according to different situations and then violates its regulation and rules, the validity shall be confirmed based on the third party’s obligation of investigation and his or her subjective attitude, the scope of validity of the company’s internal and external behaviors, as well as the distribution of power between its board meeting and shareholders’ meeting.