On The External Legal Effect Of The Non-establishment Of Company Resolutions

After the promulgation of the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of the Company Law of the People’s Republic of China（IV）in September,2017,China’s defective types of company resolutions were newly established in the revocable and invalid "dichotomy" system,thus forming a "dichotomy" system of resolution defects.Article 85 of the Civil Code promulgated in2020 stipulates that if the resolution procedure of the profit-making legal person is flawed or the content of the resolution violates the articles of association of the legal person,the investor of the profit-making legal person may request to revoke the resolution,without affecting the civil legal relationship with the bona fide counterpart.Interpretation 4 of the Company Law added a new type of defect that the resolution was not established,but did not explain the application of its external legal effect.Until December 2021,Article 75 of the Company Law（Draft）proposed to regulate the application of the external effect of the resolution was not established,which together constituted the external legal norm of the defective resolution.Based on the study of judicial precedents,this paper discusses the external legal effect of the non-establishment of company resolutions.The full text is divided into four parts: The first part: Expounds the connotation of the external legal effect of the company resolution’s non-establishment,analyzes the determination of the company resolution’s non-establishment,the generation and structure of its external legal effect,and the differences between the company resolution and the revocable and invalid company resolution in terms of external legal consequences.Part II: Studying judicial precedents,combing according to the distribution of time and trial level,screening out the company’s resolutions that can have external legal effect in judicial practice,and the application of the rules that local courts do not establish external legal effect for resolutions,and summarizing the judgment results as having external legal effect and not having external legal effect respectively.Part III: Through combing the judicial data,in the judgment,due to the different efforts of the courts in different places to protect the interests of bona fide third parties and companies,the judgment ideas and the identification standards of bona fide counterparts are not uniform,resulting in different external legal consequences.Besides,the courts have different attitudes towards whether the lawsuit filed by the interested parties that the company resolution is not valid can apply the limitation of action and the exercise period.Part IV: Reasonable distribution of the duty of care of a bona fide third party.If the third party constitutes goodwill,the external legal effect rules of revocable and invalid resolutions will be applied together.If the third party fails to constitute goodwill,the unauthorized agency system will be applied,and the company will exercise the right of ratification to unify the judicial practice and protect the legitimate rights and interests of the bona fide third party and the company in an equitable manner.Besides,a reasonable prosecution period will be stipulated for the lawsuit of the resolution’s failure,so as to avoid the long-term instability of the legal relationship due to the long exercise period.