Legislative Regulation Of Company Reinvestment

Corporate re-investment system is one of the most important contents in company law. It refers to an act of law in which a company gets the shares of other companies, enterprises, or economic organization lawfully and becomes a member of them with the purpose of getting profits. Corporate re-investment reflects company's ability which is helpful to maximize profit and enlarge the corporation scale and enhances the anti-risk ability in the rapid development of our market economy. Within the scope of law and company articles corporate re-investment can help reasonable transfer of resources and the normal operation of the capital which can not only develop the company own capital advantage and promote optimal allocation of resources in the market. Although reinvestment has great economic significance it also has risk both to the investment company and company invested. For example causing inflated and parent and subsidiary corporations, which may infringe the interests of the corporation's shareholders and creditors, or even break the market order.The legislative attitudes of Anglo-American law or continental law system to the corporate re-investment system, have mostly experienced from strict restriction to relaxation. The new revised Corporation Act of P.R.C made a lot of changes, which complied with the trend of corporate development and improved the competitiveness of our companies in the international market, is a great progress of corporate legislation. But there are still limits to corporate reinvestment permitted by law and the relative clauses are expressed too succinct to handle problems in practice. Therefore, it is meaningful in practice to continue researching the corporate re-investment system.Four chapters are included in the paper as the main contents. The first chapter analyzes the basic legal issues of corporate re-investment. At first the concept of"reinvestment"is the focus of my attention. Then take a dialectical analysis on both two sides of corporate re-investment, to explain the inevitable trend of corporate re-investment and we have to take the legislation on the basis of corporate re-investment.The second chapter carefully analyzes the situations of relevant legislations of Anglo-American law or continental law system and their legislative approaches, in order to know the developing trend of Company Law and combine advanced legislative experience of two law system and the actual situation of our country to improve and perfect the law in corporate re-investment.The writer in the third chapter carefully analyzes the situations of corporate re-investment in our country Company Law. The new revised Corporation Act of P.R.C made a lot of changes in corporate re-investment based on original Company Law, which extends object of investment from Co., LTD. and a limited liability company to all enterprises, if not be in jointly and severally liable for the debts of the enterprises. It shows that our legislations have made great progress and give more autonomy. Furthermore, the amount of reinvestment is not the net assets of 50% restrictions but endow company articles, which fully embody basic principle of"autonomy" as private law and build a platform for company and shareholder to manage companies better. reinvestment has brought new challenges to the protection of shareholders and creditors objectively, and our Company Law also formulates the corresponding regulating mechanism for example introducing personality negative system of corporation, perfecting shareholder interest protection mechanism , and prescribed shareholders the right of access and copying the articles of association of the company ect. But our company investment system is not perfect, although we have introduced personality negative system of corporation but no detailed provisions of applicable scope and ways which lead to be unable to operate in judicial practice.The fourth chapter fully analyzes the situations of corporate re-investment in our country Company Law and proposes several aspects to improve the legal regulation of company reinvestment. First of all, from the perspective of small and medium shareholders protection, compensatory obligation and honesty obligations of the controlling shareholders should be strengthened, the voting exercise should be limited, and a part of shareholders'voting exercise should be avoided in some matters. Second, from the perspective of the creditor protection personality negative system of corporation should be perfected .At last, the writer expound the assume of associated enterprises legislation in separate chapter.