Research On The Effectiveness Of Company’s External Security

The enforcement of Corporation Law in2005to some extent eased the securityabuse phenomena resulted from the blankness in the Corporation Law of1993.Nevertheless, the general legislative mode was applied to the changes in Article16without definite regulations on the legal consequences of violations, which led to theuncertainty about the judiciary applications of this article. Due to the absence ofuniform regulations on relevant legal consequences, different applicable logicaljudgements of laws are adopted by different courts when they judge the externalsecurity dispute cases of companies in practice; not to mention a court may sometimespass different sentences for similar cases when judging relevant cases. All thesephenomena have bad impact on people’s trust in law and the authority of justice.This research carried out detailed statistical analysis of various contents ofcorporative external security judiciary cases, such as areas of distribution, forms ofeffectiveness, reasons of sentence, responsibility, etc. Three main issues were found tobe involved when the court identifies the effectiveness of external security contracts.Firstly, the identification diversity of Article16’s legal nature resulted in thedifference of effectiveness recognition when companies provide external security withviolations to Article16. Secondly, differences also exist in the following question—whether or not the beneficiaries has to assume the responsibilities toexamine the relevant articles of external security in the articles of association. Thirdly,there are differences in question if the internal actions of a company have influence onits external effectiveness recognition.As proved by statistical analysis, although most of the courts determine acompany’s effectiveness recognition by estimating and identifying the legal nature ofArticle16in Corporation Law when the company is found to violate the relevanteffectiveness issues of Article16, this judgement thought and demonstration methodhave defects. For this reason, the author insisted that it is totally unnecessary to dealwith the issues from the perspective of normative nature; it is better to identify theeffectiveness of security contracts in accordance with the specific situation of thecompany’s external security and find out corresponding judgement rules and methods.This paper consists of six sections and the first one serves as introduction,expound the cause of topic selection, primary research approaches, the domesticresearch status and outcomes on the corporative security effectiveness issues, etc.With the introduction to the sources of case sample library used for the empiricalanalysis, the second section conducts a statistical analysis of the case sample libraryand further summaries the general features of external security disputes. Thejudgement reasons, statistical analysis of legal responsibilities of the relevantjudiciary cases are included in the third part. What’s more, this part sums up andanalyses the judging thoughts used by courts when they identify the externaleffectiveness of companies; analysis and introspection of the problems of thejudgements are also revealed in this section. Section fourth reconsiders thecorresponding theoretical problems of corporative external security, mainly presentsthe theories of corporative external security effectiveness and analyzes the issues ofthe effective problems related to corporative external security. In the fifth section,effectiveness of specific situations are analyzed, such as external security provided bylegal representative beyond his authority, institutions excluded by the regulations,security amount that exceeds the specified amount in the corporative regulations,regulations without rules of external security, regulations specify that no external security can be provided, etc. Finally, the author indicated that the relevant theories ofcorporative external security should be sorted out before analyzing the effectivenessstatus of a specific external security situation; the corresponding judgement rules andmethods should be explored according to the specific situation on the above basis; thefinal step is to identify the effectiveness of security contracts.