Research On The Determination Of The Validity Of The Guarantee Of The External Guarantee And The Distribution Of The Responsibility

As a close company, limited liability company was granted many right to manage affairs by itself. There is few mandatory law, against which the contract will be invalid on the matter of guarantee for others, especially for the person but its shareholders and its managers. In Corporation Law, only one article refers to the fomulation of the resolution to guarantee for others. And all of its content is just two choices for the company resolution decider. As for other matters involved in guarantee for the others, the company should specify them in its articles of association. In fact, due to different financial conditions, companies will have different stipulations on their guarantee articles. Even the company itself should change its articles of association with the company development. Of course, regulations on gurantee for others can’t stay where it is all the time. So there come the unsuited resolution decider, the inconsisitent resolution procedure and the over-collateral, and the like.The abstract stipulation of Corporation Law and the unstability of the articles of association, not only perplex creditors in identifying the company’s ability, but also make it hard for judges to find a standard on identifying the decision maker and procedure, as well as the gurantee amount. The different judgements to the cases of guarantee lead to the interest unbalance between the shareholders and the creditors. It will both damage the authority of law and lessen the creditor’s enthusiasm for investment because of the uncertain validity of the guarantee contract.This paper begins with the meaning of company’s guarantee for others, and elaborates its necessity from the point of social responsibility, LLC’s benefit, and creditors’benefit. By dividing the defective resolution into three types (resolution under the prohibition from company’s articles of association, resolution under unclear regulations from company’s articles of association, resolution failure to comply with Corporation Law and regulations) and analysing the nature of such guarantee, the legal capacity on gurantee for others of the limitid liability company, the paper talks about different defective resolutions’validity under different viewpoints. Then the paper analyses company’s publicity, government’s publicity, dicider and procedure of the resolution, guarantee amount, as well as the allocation of responsibility among different reditors, and clarifies the validity of the guarantee contract with different defect. At last, this paper divideds the creditors into three groups (financial institutions, corporations and individual person) and distinguishes their obligation by their ability to check the guarantee resolution documents. And the paper tentatively allots the responsibility based on whether the creditors complied with their own duty or not.