On The Effect Of Corporation's External Guarantees

Corporation's external guarantees are the incarnations of commercial guarantees in the domain of corporate law.In today's context which is characterized by diversity in economy,corporation's external guarantees are,as insurance policies for creditor's rights as well as a kind of legal phenomena,playing a more important role in the reinforcement of the market credit,in the facilitation of free flow of goods and capitals,and finally in the achievement of the prosperity of market economy.However,it will also bring some risks to corporation's normal course of business.Considering all these situations,Chinese legislators on the corporate law have adopted a cautious attitude.Generally speaking,however,we have witnessed an transition from the severe surveillance by the government towards a release in control to a limited extent,as can be demonstrated in the transition from the Company Law of 1993 to that of 2005,adopted for the purpose of a more intense competition.Unfortunately,since the entry into force of Article 16 of the Company Law of 2005,new questions have arisen in terms of the interpretation of that article,to the point that they have resulted in new controversies concerning how to understand and apply its provision in our practice.Obviously,these controversies would not be helpful to the sound development of corporate governance and of economy.In order to deal with them,we will take Article 16 of the Company Law asthe core of our discussion,and Article 50 of the Contract Law as well as relative provisions of the Guarantee Law.By means of literal interpretation,practical search and theoretical reorganization,we will attempt to sort out the theories related to corporation's external guarantees.We will also focus on the typical case law and clarify the thinking in those cases,in order to lead a thorough analysis about our system of corporation's external guarantees in a reasonable framework.The first part of the introduction will be dedicated to the presentation of corporation's external guarantees from a functional aspect and to the analysis concerning their advantages and disadvantages;the second part of the introduction is to define the theme of this paper,which includes the concept and the classification of corporation's external guarantees.The Chapter ? will summarize and comment on the legislative evolution and current legislative situation of corporation's external guarantees.This chapter will first comb the different provisions set in the company's external security field by the new and old versions of Company Law.It will then introduce the controversies in the academic arguments and the judicial practice around corporation's external guarantees system,and put forward the core viewpoint of this paper: under the premise of deconstruction of the external guarantee transaction into two parts,we should probe into internal effects and external effects separately.The Chapter ? will mainly analyze the internal effects.This chapter will focus on the Article 16 of the Company Law.With the interactive relationship between the Company Law and the corporation's articles of association as the main line,we will analyze the determination of the effects of all kinds of flawed external resolution of the corporation as well as the configuration of the corresponding relief measures.At the end of thischapter,we will make profound introspection concerning the Article 16 of the Company Law from the perspective of law and economics: the present thesis holds that the defects in the legislative techniques are one of the factors which result in the breaking out of those problems about the corporation's external guarantee transactions in China.Chapter ? will be contributed to the analysis of external effects.Centered on Article 50 of the Contract Law,we will discuss the issue of the effect of those ultra vires guarantees,the core of our legal practice.We will attach importance to the conditions based on which those interests arising from the actions of the corporation's representative will be attributed to that corporation.The key to this attribution is the duty of care on the external creditor when signing the contract of external guarantees.On account of the optimization of the security and efficiency of the transaction,we suggest that formality examination be established as an obligation on the external creditor.