Reasearch On The Identification Of The Corporate External Guarantee's Effectiveness

After the revision of the Company Law in 2005,the dispute over the company's ability to guarantee has come to an end.However,it is lack of legal ability on violating the provision of Article 16 after imposing some restrictions on the Resolution bodies and resolution procedures of the corporate external guarantee.Whether the conduct of corporate external guarantee in violation of Article 16 is effective or not,a new round of controversy has arisen in theory and practice and there are various theories and opinions.However,a consensus has not been reached on this issue up to now.Different courts have different judgment ideas and conclusions,and even the Supreme Court has different judgments in different periods.On one hand,corporate external guarantee is in favor of financing and realizing of creditor's rights and promoting the conclusion of transactions,on the other hand,corporate external guarantees will have an impact on the company's property security and the interests of shareholders.Therefore,it is should be significant in accurate defining of corporate external guarantee validity upon the breach of Article 16 and establishing a unified rule of adjudication,and it is for the benefit of establishing a stable psychological expectation for both parties to the transaction,improving their own risk prevention mechanism,and promoting the realization of the value of the corporate external guarantee and the sound development of the guarantee business.In the identification of the validity of a corporate external guarantee,the focuses of controversy are about three aspects: the normative nature of Article 16 of theCompany Law,the external validity of the articles of association and the duty of examination of the counterpart.and accordingly,three path of analysis are taken,namely,"analysis path of provision nature","analysis path of the external validity of the articles of association" and "analysis path of the duty of examination of the counterpart".In terms of analysis path of provision nature,Article 52(5)of the Contract Law is the applicable provisions to judge the validity of a corporate external guarantee contract.If Article 16 is mandatory,the security contract in violation of Article 16 is invalid;if Article 16 is not mandatory,the guarantee contract in violation of Article16 is not invalid.The Supreme Court has interpreted the mandatory provisions of management and the mandatory provisions of validity in the form of treatises,but this interpretation of the Supreme Court is difficult to understand and fails to unify the standards of judgment in practice.In fact,the relevant provisions of the Contract Law and the General Civil Law on the validity of contracts and civil legal acts have completely covered the situation of mandatory provisions on validity in the interpretation of the Supreme Court.Therefore,it is no longer necessary to distinguish between mandatory provisions of validity and mandatory provisions of administration.The General Civil Law promulgated in March 2017 avoids the concepts of "validity provisions" and "administrative provisions",which shows that legislators emphasize that the court should return to exploring the normative meaning of specific provisions when applying the law instead of using a simple dichotomy,judicial explanations are trapped in circular arguments.Therefore,it is of great significance to explore the normative meaning of Article 16 of the Company Law.From the legislative process and the purpose of article 16,the normative meaning of article 16 is to regulate the internal resolution of the company's external guarantee.This article constitutes a statutory restriction and a constitutional limitation to the representative of the company's external guarantee affairs.In terms of analysis path of the external validity of the articles of association,as the Company law stipulates the resolution organization and the amount of the guarantee of the corporate external guarantee to the articles of association,if thearticles of association are externally binding,the guarantee contract in violation of the articles of association is invalid.If the articles of association are not externally binding,the guarantee contract made in violation of the articles of association shall not be void.With the abolition of the theory of "constructive notice" and "ultra vires" which is the basis of the company's articles of association against third parties,the external effectiveness of the company's articles of association has no theoretical basis.In the case of the articles of association "silent" on the guarantee,the analysis of the effectiveness of the company's articles of association will bring obstacles to interpretation.In fact,the company's external guarantee needs to be restricted by resolution comes from the law,and has nothing to do with the effectiveness of the articles of association.Therefore,when determining the effectiveness of the company's external guarantee,it is not appropriate to analyze with the general principle of charter effectiveness.The company's external guarantee usually needs to be made through the representative of the company.The legal representative,director,and manager all have the appearance of the right to make external guarantees on behalf of the company.The legal representative,the director and the manager may,due to the characteristics of their natural persons,make external guarantees in violation of the provisions of the company law and the articles of association if their personal interests conflict with those of the company.The violation of the external guarantee by the legal representative,director and manager of the company law is in essence an ultra vires guarantee.Under the analysis path of ultra vires guarantee,whether the counterpart is "Goodwill" is the key to determine whether the guarantee contract is binding on the company.From the perspective of legal balance,the counterpart's risk prevention and control awareness is enhanced,and ultra vires guarantee disputes are reduced,and the begin development of the guarantee business,it is necessary to require the counterpart to perform certain review obligations.Therefore,the judgment of "goodwill" is closely related to whether the counterpart has fulfilled the necessary examination obligations.The obligation of the counterpart should be limited to the scope of "formal review",the validity and truth of the material is not within the scope of formal review.The counterpart should review the materials from the completeness,legal form as the general care of duty of a businessman.The scope of the review obligation includes two aspects,one is the review of the company's constitution and the other is the review of the guarantee resolution.The judgment of the goodwill of the counterpart is mainly related to the subjective cognitive ability of the counterpart,therefore,it is necessary to distinguish the types of relative people and analyze their review obligations differently.According to current practice,the relative person can be divided into financial subjects,general business companies,and natural persons.In terms of the severity of the review obligations,the review obligations of banking and other financial counterparts are higher than those of the company,and the review obligations of the company are higher than those of natural persons.In case that the connterpart's formal examination obligation will be elevated to the substantive examination obligation,it is necessary to hand over to the company the content of the two aspects of the amount of security and the actual controller that is difficult for the counterparty to perform the review obligation.When the company can not prove that the counterpart has malice in both the amount of security and the actual controller,the relative person should be considered a goodwill subject.After a guarantee contract concluded by the legal representative beyond its authority is deemed valid,the company may,in accordance with the provisions of articles 148 and 149 of Company Law,confiscate the income obtained by the legal representative as a result of the ultra vires guarantee act,and can make a claim for compensation with the legal representative.After the guarantee contract is considered invalid,the court generally assumes certain responsibilities by the degree of fault of the company according to the relevant provisions of the Security Law and its judicial interpretation,and the proportion of judgments that the company does not bear liability is low.The validity of a guarantee contract concluded by a director or manager beyond its authority shall be determined and the liability shall be attributed in accordance with the provisions of "unauthorized agency" of the Contract Law and the General Provisions of the Civil Law.If an ultra vires act of a director or manageris recognized by the company in the form of a guarantee resolution,the company shall bear the guarantee liability,and if the company does not recognize it,the company shall not bear the liability.If the relative is in good faith,it may demand that the director or manager bear the liability for Guaranty or compensation for losses.If the relative is not in good faith,the relative and the unauthorized agent shall share the liability according to their degree of fault.Because of the imperfect corporate governance structure in our country's company and the fact that the Company Law does not make the guarantee matter a necessary record of the articles of association,it is more common in practice that the company's articles of association do not stipulate the guarantee matter.When the company's articles of association do not explicitly specify the resolution agency of the external guarantee,the relative person who has reviewed the resolution made by the shareholders(large)meeting or made by the board of directors should be considered as good faith.The effectiveness of a guarantee contract concluded by a company without a resolution of the shareholders '(large)meeting or the board of directors is to be determined.If the shareholders'(large)meeting or the board of directors of the company approves the contract,the guarantee contract is valid,otherwise the guarantee contract is not restricted to the company.Where the legal representative or director or manager of a company enters into a guarantee contract with the other party by forging a resolution,if the counterpart has fulfilled its obligation of formal examination,the guarantee contract shall be deemed valid.Otherwise,the guarantee contract is not binding on the company.On August 9,2018,the Supreme People's Court issued an Interpretation(Draft)on the Legal Issues Applicable to the Trial of Disputes over Company Guarantee for Others.The interpretation adopted an analytical approach of ultra vires guarantees to determine the validity of a company's external guaranteesand affirmed the duty of formal review of the connterpart,but the draft has a tendency to overprotect company interests.The author thinks that we should adhere to the principle of internal and external distinction and give enough attention to the commercial concept,and then onthe basis of balancing all parties' s interests,we should properly identify the effectiveness of the company's external guarantee.