Research On The Definition Of Corporation Division

Nowadays, companies are facing fiercer and fiercer competition with the economic globalization. In the face of competition, a company can not blindly pursue expand scale, but should be adjust to specialized operation when the company has developed to a certain scale. This is the only way by which a company can survival from fierce competition. Corporate division is the best tactic of corporation restructuring by shrinking their dimensions to the best point of being fit with their managing ability in order to adapt and exist. Corporate division is an important method for improving the management efficiency and optimizing organizing structure of company, thereby enhancing the competitiveness.As the demand exists in the development of the company, so a complete system should be established in company law to constraint corporate division. However,corporate division in China is not perfect at the present. On the one hand it brings trouble to judicial authority, the lack of standard will result in different court having different referee results. On the other hand,it will bring uncertainty to company, and harm the interest of the company’s shareholders and creditors. Therefore,the author thinks that define the corporate division clearly has very important practical significance.In this article, firstly, the author introduces the current legislation situation division of company of our country, the evolution of legislation about corporate division,the contents in the law about corporate division. Secondly, the paper quotes two cases: Industrial and Commercial Bank of China Shandong branch v. Xincheng company, and Nanjing Xuanwu Lake credit cooperatives v. county chemical container factory/ chemical company, new Chaoyang company, this two cases are very similar, but the courts’ decision are not consistent, which can be seen is that the define of corporate division is lack of uniform standard in the judicial judgment. The author tries to use the three basic standards of corporate division which are about the subject /the reduction of company property and the equity structure of corporate division, to analyze the corporate division. Finally the paper can draw a complete definition of corporate division.This paper expands the discussion of corporate division in four parts:The first part is about the current situation of corporate division.This chapter mainly Introduces company division present situation. Firstly, the paper introduces the current legislation situation division of company of our country, the evolution of legislation about corporate division. Through the current situation of corporate, we can see that the law about corporate division is too simple that it lacks operability in practice. Secondly, I use two cases: Industrial and Commercial Bank of China Shandong branch v. Xincheng company, and Nanjing Xuanwu Lake credit cooperatives v. county chemical container factory/ chemical company, new Chaoyang company, this two cases are very similar, but the courts’ decision are not consistent, which can be seen is that the define of corporate division is lack of uniform standard in the judicial judgment. Thirdly, the paper studies about the scholars’ view about the define of corporate division, most views about corporate division only reflect the changes about the number of subject of corporate division, because research of this problem is very little,so the views of scholars can’t be a good solution to this problem in practice. But if we can’t solve this problem, it will produce a series of negative influence on the company and its creditors. So it’s necessary to define corporate division. This paper will use the subject /the reduction of company property and the equity structure of corporate division to define the corporate division.The second part is about the subject of corporate division. It mainly includes the requirement of the subject of corporate division, the change and the legal consequence of the four factors of the subject after corporate division. This can be used to distinguish corporate division and reinvestment behavior.The third part is about the reduction of company property, first of all, the author explains the theoretical to use the reduction of company property as a standard of defining corporation division, and then studies how to judge the reduction of company property.The fourth part introduces the influence of corporate division on a corporate equity structure. In this paper, the author explains the theoretical to use the influence of corporate division on a corporate equity structure as a standard of defining corporation division. The paper tries to define the change of corporate equity structure through shareholders and shareholding structure change. The author quotes the Northeast high-speed discrete case to introduce the change of equity. Because of the corporate division, the asset of a company will reduce,which will cause changes to the company’s equity.Finally, through the above research, we can draw a conclusion, the corporate division is not only about the subject of company, it’s also about the object and the equity structure, we should consider from this three parts, so that we can define the corporate division comprehensively. I hope this paper can do help to improve the system of corporate division in China.