Legal Study On Company’s External Guarantee Legal System

External security system has important positive significance on the flow of funds andrational allocation of resources. Therefore, improvement of standards for the company’sexternal security also has a major significance on company’s own development andprosperity of the market economy. In the paragraph3in sixtieth provision of the1993version of company law, director, and manager of a company shall not use the assets ofthe company to provide security to the shareholders’ and other individual’s debt. However,the vague provision makes the controversy in practical application. Therefore thisprovision became the focus of the modification of company law in2005. However,although the sixth provision of the2005version of company law is more mature than theprovision of the1993version of company law, the content of the provisions are still moreabstract, which cause great disputes in the academic and judicial practice. The maindisputes include: Does the company have the ability of external security when the articlesof association have no provisions or have prohibitions? If it has, which organization hasauthority to decide? Is an internal resolution about the guarantee effective when it iscontrary to the articles of association? Is the external guarantee effective when it iscontrary to the articles of association of the company? Does the company’s externalsecured party have the obligations to examine the articles of association of the companyand internal resolutions about guarantee? Now the law does not give a clear answer tothese questions, so we need further theoretical discussion. This thesis is divided into six sections. The first part is an introduction, introducingthe research background, significance of the topic of this article and the research directionof this article. The second part is an overview of the company’s external security system,in terms of concepts, classifications, the significance and the problems we faced. In thispart we also analyze and introduce the legislation of the company’s external guarantees inother countries and regions. At the same time, based on the typical cases and theprovision in the1993version of company law and the2005version of company law onexternal security, the inadequacies about the company’s ability on guarantee, corporateguarantee decision-making bodies and the effectiveness of external guarantees areintroduced. The third part focuses on parsing the sixth provision of company law and thenature of external guarantee and confirms the company’s ability on guarantee andexternal security decision-making organ of the company. The fourth part discusses theeffectiveness of the internal resolution about the company guarantees in differentsituations based on the sixth provision of the2005version of company law and civilbehavior theories. The fifth part analyzes the effectiveness of external guarantee incorresponding different situations based on the nature of sixth provisions of company law.At the same time, the thesis analyzes the secured party’s obligation to review thecompany’s articles of association and internal resolutions about guarantee and thecontents of the review. The sixth part is the conclusion which summarizes the maincontent and ideas of this paper, and put forward proposals in order to improve theexternal guarantee system.