The Legal Validity Of The Company Guarantees

Today, In the fast economic development situation, the company guarantee system plays an mportant role in the company’s daily business activities, not only to promote the flow of funds operating in the market between subjects, but to protect the secured creditor to realize. Therefore, in most countries and regional legislations generally consider corporate guarantee as a fundamental right of companies.However, the company guarantees property rights and interests involving multi-party body, not only involves the company’s own interests, but also involves the interests of shareholders and creditor of the company. If the abuse the capacity of corporate guarantee, it will not only harm the legitimate interests of stakeholders, and even endanger the public interests. Thus, while affirming the company’s ability to guarantee also should be appropriate restrictions on their behavior in order to safeguard the legitimate rights and interests of the main parties.The company guarantee mainly focuses on the Article 16 in Corporation Law.However, the theory and practice have the different understanding of the article,which generates a lot of controversy, mainly around the normative nature of the article, the company’s internal behavior( the articles of association, guarantee resolution) whether has the external effect, and which guarantee the effectiveness of breach of contract and other issues. Article 16 affirms the company’s external guarantee ability, but also to the behaviors of the company guarantee are certain restrictions. The company law will give the rights of company guarantee to the articles of association, the company decides to provide guarantee by itself, which reflects the principle of autonomy of private law. But the company law also clearly stipulates, the company will only provide guaranty for the resolutions made by the shareholders(large) meeting or board of directors, for the special guarantees, it is only by the shareholders(large) meeting decision, in addition to other institutions shall have the right to decide the matters of guarantee.Through the analysis of the legislative purpose, the transaction security and judicial practice, etc., the article belongs to the mandatory provisions of themanagement, which does not necessarily lead to a security breach of the contract null and void. In fact, the object of the behavior of external guarantee of Article 16 is not the company’s external guarantee behaviors, but the company’s internal resolution guarantees, in essence, the standard is the company’s internal management issues, belonging to the company’s internal legal relationship, and the company’s external guarantee behavior, which belongs to the company’s external legal relations.There is no certain relationship between the internal and external legal relations. The internal resolution guarantees was revoked by the court, which will not directly affect the effectiveness of the guarantee contract signed by the company.In addition, with the abolition of "the theory of constructive notice", the articles of association does not have the external validity, and can not be bound the third party outside the company. But once the terms of the articles of association regarding the company guarantee are raised from internal requirements to the clear provisions of the law, the guarantor should pay attention to this provision, which also need to guarantee the right of people to fulfill certain obligations in the form of review. In violation of Article 16 of the case "Company Law", mainly for the ultra vires acts guarantee of the legal representative, the ruling when the validity of the guarantee contract, should be combined with the provisions of Article 50 of the "Contract Law",even though the resolutions of the security flaws was revoked, in order to safeguard the legitimate rights and interests of good faith parties and transaction security, the guarantee behavior of the company is still valid. Determine whether a security right "good faith" that the security right track whether the guarantor knows or should know the legal representative to exceed the representative authority, which requires the guarantor to rational general duty of care as the standard, review of the company charter, the resolutions of the security and related guarantee the information shall be prior to the signing of the contract of guarantee, undertake reasonable formal examination liability.When the company’s articles of association is "silence" for the matters of guarantee, the shareholders(large) meeting, board of directors will as the subject of legal resolution, the party making the resolution of any warranty, as long as reflects the company’s real intention, the resolution shall be recognized as valid.