On The Validity About Defect Articles In The Company's Constitution

From the revision of the company law in 2005 to the introduction of the Company Law Interpretation(IV)in 2017,the company law in China is increasingly moving towards the relaxation of state control and strengthening the direction of company autonomy.Clauses with the wording of the company's articles of association in the legal text are noticeably increasing,including "functional authorities are regulated by the company's articles of association" and "unless otherwise stipulated in the company's articles of association." It needs to be emphasized that clauses have given the company's articles of association greater autonomy.In the Company Law Interpretation(IV)carries out authoritative reading of the legal application issues concerning the transfer of shares,distribution of profits,shareholder's right of first refusal,etc.,which are representative and irrelevant to the articles of association.However,the non-negligible coerciveness of the company law also leaves the company's articles of association in a dual state of freedom and restriction.If the “degree” of coercion and self-government is not grasped on the road to corporate autonomy,it will greatly increase the defects of articles of association.This leads to the emergence of numerous disputes in judicial practice.First of all,the mandatory and arbitrary rules of the company law will greatly affect the freedom of articles of association.When the company's articles of association are drafted,mandatory rules must be complied with.For arbitrary rules,shareholders can negotiate independently according to the needs of the company,and defect clauses are formed in this space.In prohibitive clauses,mandatory clauses and arbitrary clauses,arbitrary defect clauses are most effective.Partial or incomplete invalidity of these clauses will result in partial or incomplete invalidity of the compa ny's articles of association and may even affect the continued existence of the company.Only when the articles of association violates the prohibitive provisions of the law or provisions that lack absolute necessity can it lead to invalid consequences,wh ich in turn affects the corporate personality of the company.Moreover,the company's predetermination of the effectiveness of actions based on these defect clauses makes it cautious about the judgement of invalid behaviors from the principle of the contra ct's relativity,the protection of the opposing person's interests and the appearance of commercial affairs.Furthermore,considering the maintenance of business operations,it is necessary to make corrections and remedies for these defect clauses,establi sh related invalidation or revocable procedures,ensure the commitment of civil liability and promote the security and stability of transactions.