Legal Regulation Established By The Company Defects Research

Corporation is the created system of law, is the basic main body of market trade, and bears the weight of the juristic relation. Therefore, the entry of market must be strict, which is the premise of the market order. Incorporation is the center of the corporation system. Because of the importance of the incorporation, common law system and civil law system all build strict statutes. However, legislation is not equal to the practice. When someone breaks the law, defective incorporation occurs. Corporation of defect doesn't satisfy the qualification and process of statute. In the course of trade, it will be possible to transfer the business risks to the shareholders, creditors and stakeholders. Hence, corporation law must regulate the defective incorporation.According to whether registered or not, regulation is classified to the prior method and the posterior method. The intent of prior method is to avoid the defective aspects before registration. Posterior method is to research the force of incorporating acts, which is valid or void. The principle of incorporation, the evolvement of registration system, and the change of function of the government department confirm that the effect of the prior method is quietly limited. The strict principle of incorporation can't avoid the defect. The corporation laws of other countries and areas adopt the simple principle of incorporation, which is the product of commodity economy.As defective incorporation, the two legal systems react inconsistently, but they are making an amalgamation. The author claims China should build the corporation nullity, which is based on the logic of civil law system. Incorporation should not only reflect logic, but also represent value. Protection of shareholders and creditors is the important mission of corporation laws, but in our country, the resources lack seriously. So, we should build the corporation nullity system.The article doesn't include the system of all-sided. The reasons have two: one is the length is limited; the other is the intent of the article is to emphasize the necessity to build the corporation nullity. Other contents aren't included. The author should impart this point to the readers.