Path Selections And Legislative Proposals On Protecting Creditor Under China’s Corporate Capital System Reform

The corporate capital system is central system of corporation law throughout the process of operation management of corporations. In 1993, China’s first "Corporation Law" established a strict legal capital system, conforming to the demands that government should interfere with economy and maintain stable transactions under planned economy. Moreover, it protected the interests of corporate creditors. However, with the continuous development of economy and society, strict legal capital system didn’t accommodate to the market economy, but restricted the operation of commercial activities, confined optimal configuration of social capital, increased the burden on investors and limited the vitality of market economy, the original function of protecting corporate creditors was gradually undermined. Therefore, in 2005 and 2013, China revised "Corporation Law" twice, completely abolishing the minimum requirement of corporate capital, transforming paid-in registration system into subscribed registration system, abolishing capital verification system and so on. The modification of "Corporation Law" brings good news to the majority of investors, reduces market access thresholds of investors and simplifies the establishment of corporations, but it also brings the problem of protection of corporate creditors. This dissertation is written during the process of corporate capital reform, and is based on protecting corporate creditors with the purpose of balancing the interests between shareholders and creditors through comparative study, historical analysis, logical reasoning. It analyzes problems existing in current corporate capital system, and puts forward path selection and legislative proposals on protecting rights of creditors under China’s corporate capital system reform.This dissertation is divided into five chapters:Chapter 1 is the introduction, mainly on the topics of the purpose and significance, current research on the corporate capital system and protection of creditors, research methods used in this paper.Chapter 2 makes an overview on the corporate capital system. It introduces the meaning and significance of corporate capital system. Three capital systems are adopted widely by countries:statutory capital system emphasizing security, authorized capital system stressing efficiency and compromise capital system balancing security and efficiency. It focuses on the development and changes of corporate capital system in China, experiencing three historical stages of strict statutory capital system in 1993, mitigating statutory capital system in 2005 and subscribed capital system in 2013. It reflects the transformation of reform concept of corporate capital system with historical analysis, from capital credit to asset credit, paving the way for the protection of corporation creditors.Chapter 3 makes an overview on the corporate capital system and protection of creditors. It uses comparative study to introduce current legislative situation of creditor protection system in China and foreign countries. It discusses the problems existing in the protection of creditors under the current corporate capital system, including that safeguards of corporate assets is inadequate, piercing the corporate veil is imperfect, duty of diligence and loyalty of directors, supervisors and senior executives is defective, company information disclosure is opaque, supporting facilities system is unsound, and the absence of procedural safeguards. The author finds the source of problems by analyzing one by one.Chapter 4 elaborates path selections and legislative proposals on creditor protection under China’s corporate capital reform. The author attempts to explore solutions to the problems raised in Chapter 3, including reforming registration system, strengthening information disclosure system, improving the social credit system, intensifying civil liability system of directors, supervisors and senior executives, introducing the creditor involvement in the corporate governance, expanding the scope of piercing the corporate veil, and then puts forward legislative proposals aiming at different path selection.Chapter 5 is the conclusion part. It summarizes the dissertation, puts forward major measures to improve the corporate creditor protection. We must further clarify the inquiry process of information disclosure, improve the operability of system enforcement, establish a sound credit system, define the duty of directors, supervisors and senior executives, make creditors participate in corporate governance, introduce "equitable subordination doctrine" and improve piercing the corporate veil, providing a powerful guarantee for sustainable economic development.