Research On The Consequence For Breach Of Article Of Association

The implementation of the revised Company Law leads to the era of company self-governance. The company's self-governance relies upon the article of association, which is the norm for company's acts and shall considerably affect company's ability. It is of great importance for article of association to play its role in company's daily operation. The key point for the article of association becoming functional is to establish its legal status and corresponding consequence for breach of it on the basis of certainty of the nature, function and scope of effect of the article of association.Unfortunately the revised version of Company Law has not clearly pointed out the effect of article of association and the corresponding consequence for shareholder, director and officer given in breach of it. Thus this thesis intends to analyze the consequence for breach of article of association based upon the revised Company Law and related legal theory.The thesis can be divided into four parts:The first part focus on the article of association's concept, nature and its relationship with Company Law, with the aim to lay down the first footstone for the topic, that is the article of association, is the norm for company's structure, inner relationship and daily operation; is the written documents of shareholder's intention; is of contractual and self-rule nature; is the combination of state and shareholder's intention. When judging the effect and the consequence for breach of article of association, it is important to notice the difference with the effect of Company Law and shall not deem it as binding to all parties or merely binding to the inner party.The second part focuses on category of article of association, which can be divided as mandatory clause and arbitrary clause. This part is to explain that the consequence for breach of article of association shall be different while in breach of different clauses.The third part discusses over the effect of article of association. To the inner party, the article of association shall be binding to shareholders, directors and officers once it becomes effective; To the outsider party, the article of association shall not binding against the third party of good faith. This part is to explain that the effect of article of association is limited which shall be merely binding to inner party unless the third party is proved to be aware of the content of article of association.The fourth part is the core of this thesis, which analyzes and summarizes the consequence for breach of article of association according to the different breaching party based upon the revised Company Law. At the end, the thesis points out the shortcoming of the legislation and brings forward the corresponding measures.