On Corporation Liquidation System

As a person formulated by law, the performance of a corporation needs to be guaranteed by complete provisions from its establishment until its termination. In the periods of its establishment, duration or liquidation, high requirements on the provision design are put forward, and this should be paid close attention to by the judicial circle and the theoretical circle, however, seeing from the current status of research in China, the establishment of corporations, from the aspects of market admittance, scientific principle and legislation, is given much attention, and the provisions of legislation are plentiful and detailed and also the results on theoretical research are pretty fruitful. Whereas, for the termination of a corporation, although it is explicitly provided in The People's Republic of China Bankruptcy Law on the bankruptcy of corporations and the provisions are maneuverable and practicable, on the aspects of the dissolution and liquidation of a corporation, scientific principle and legislation, such extent is far not reached in which it can lead a corporation to a procedure of non-bankruptcy and a procedure for a smooth quitting from the market, and meanwhile the provisions on the dissolution and liquidation of a corporation are mostly principled ones. Detailed, complete enforcement regulations and a theoretical system are not given enough, especially the corporation liquidation legal system which is the foremost and fundamental one in the termination of a corporation, is even rougher, simpler and cruder without a complete legislation or a mature theoretical standard. A corporation is a collection of many legal relationships which includes investment legal relationship between a shareholder and a corporation, employment legal relationship between a corporation and a laborer, creditor and debtor legal relationship between a creditor and a debtor and administrative management legal relationship between a corporation and the government etc. Corporation Liquidation System is a comparatively important one in corporation legal systems, and as the last period of the duration of a corporation personality, corporation liquidation is responsible for the balance of interest between interest parties. When an even of the termination of a corporation occurs and the event causes the deprivation of its right as a subject, all the above legal relationships must be put to an end so that to make them in a confirmed status, but not a pendent one. The whole process of corporation liquidation is pretty complex and every debtor-creditor relationship is needed to be well dealt with to avoid disputes caused by an unequal distribution, and so that to help a corporation to finish its process of extinction as a juridical person and ultimately withdraw from market competitions.Seeing from the current circumstances in China, the provision on corporation liquidation of the relevant legal regulations and judicial interpretations as in Corporation Law of the Peoples Republic of China is far from the extent of perfection, and the following disadvantages exist: the incompleteness of the system of corporation liquidation subject; the deficiency of important systems (the systems of liquidator regulation, liquidation registration and legal liability for liquidation etc); the imperfection of liquidation supervision mechanism (or called deficiency of liquidation supervision mechanism); the classification of corporation liquidations and the corporation liquidation schedules based on it have no way to effectively protect the interest of stakeholders entirely and to realize the goal of maximizing the effect of liquidation; the legal provisions are almost principle regulations and their operability is comparatively weak and there are some points neglected. The fast developing economic life proposes a high requirement to the practice of corporation liquidation in China while the deficiency of legal systems caused by legislation is sure to bring China much trouble on judicial practice in China. If these problems are not properly solved, it may cause great damage upon creditor's interest of a corporation, and what's more, may also have the negative influence of indulgence towards the escaping from the corporation debts, and this is not good for the protection of the regular order of the market economy. The various problems on corporation liquidation in China has also become a general issue that troubles a judge in a court in his process of handling a case, and if the issue can not be solved properly in a long term, it will do no good to the protection of the integrity and authority of justice in China.In this thesis, divergence met in judicial practice is tried to be taken as the entry point, the existing problems on the incompleteness of the corporation liquidation subject system; the deficiency of important systems (the systems of liquidator regulation, liquidation registration and legal liability for liquidation etc); the imperfection of liquidation supervision mechanism (or called deficiency of liquidation supervision mechanism); the classification of corporation liquidations and the corporation liquidation schedules based on it have no way to effectively protect interests of stakeholders entirely and to realize the goal of maximizing the effect of liquidation; the legal provisions are almost principle regulations and their operability is comparatively weak etc are all analyzed in detail from theoretical point of view, and examples are made to make them more definite and more operable so that to provide reference for investigating and handling such cases.The thesis is divided into five parts.Part-1 is mainly an introduction to the contents and extensions of Corporation Liquidation. From the comparison and analysis of the several academic interpretations on corporation liquidation of the jurisprudential circle in China, a connotative definition is reached: Corporation Liquidation System is a legal system that after the dissolution of a corporation in law, the subject of corporation liquidation makes an objective and comprehensive liquidation and disposition on the special circumstances about corporation property , debtor and creditor accounts, interest of shareholders etc according to the legal form and the legal procedure, settles corporation claims and debts, manages corporation finance, ends all legal relationships and finally deprives the qualification of a legal person. In this part, the characteristic of corporation liquidation is clarified, and through analyzing the two existing methods of division on corporation liquidation, the author proposes his own method of division on corporation liquidation in a general way and analyzes the basic meaning of corporation liquidation in detail.Part-2 is mainly the introduction to the subject of corporation liquidation. This legal definition is an original one in the practice of corporation liquidation in China because there is not an explicitly defined one in the regulatory legal documents in China. Based on this problem, the definition of corporation liquidation is created in practice through exploration. In the thesis, the definition of the subject of corporation liquidation is made more concrete and more operable. Besides, from the aspects of the differences between the subject of corporation liquidation and liquidation group and between liquidation group and liquidator, detailed theoretical analysis on the subject of liquidation is made, and practical analysis is also made through cases, thus the subject of corporation liquidation is adequately illustrated, and this is a combination of theory with practice and would be convincible.Part-3 is the analysis of a corporation in corporation liquidation. In the judicial practice in China, discussions on the legal status of a corporation in corporation liquidation always exists, it has experienced a long period, and in this period, the dominant idea that denied corporation personality in corporation liquidation turned into the current idea that admits corporation personality. In this part, through the analysis of cases, the legal status of a corporation in corporation liquidation is introduced and through the illustration of the definition, characteristics and scope of liquidation property, and what is property in liquidation is introduced.Part-4 is the illustration on the procedure of corporation liquidation. The most important part of the whole corporation liquidation procedure is the performance of corporation liquidation transactions. All the tasks of a liquidation group in the whole process of liquidation are to performance corporation liquidation transactions. Corporation liquidation transactions contain the following process: end existing businesses of the corporation, inspection of its property, designing of liquidation strategy, notification and public notification to creditors, declaration of the creditor's rights, settling claims and debts and distribution of corporation property. Debt redemptions and distribution of property are the most important ones among them. In this part of the thesis, the following six procedures are mainly introduced: establishment of the liquidation group, ending of the existing transactions of the corporation; liquidation of corporation property, designing of liquidation strategy; notification and public notification to creditors; settling claims and debts; distribution of corporation property; termination of liquidation.Part-5 is the analysis on the status and perfection of Corporation Liquidation System. By analyzing the status (advantages and disadvantages) of the Corporation Liquidation System, the disadvantages of the system are pointed out: the incompleteness of the system of corporation liquidation subject; the deficiency of important systems (the systems of liquidator regulation, liquidation registration and legal liability for liquidation etc); the imperfection of liquidation supervision mechanism (or called deficiency of liquidation supervision mechanism); the classification of corporation liquidations and the corporation liquidation schedules based on it have no way to effectively protect interests of stakeholders entirely and to realize the goal of maximizing the effect of liquidation. Then the author's design of overcoming these disadvantages is proposed and this plays a referential role on how to use Corporation Liquidation System in practice in China.