Analysis, On A Company Protection From Its Creditors

The 18th meeting of PRC National Congress Standing Committee passed the Amendment to"Corporation Law of PRC"on October 27th,2005. One-man company meets the needs of various investors with its appealing features, which are the limited liability and particular organization, therefore it will be great impetus of the development of corporations in China, and would be great help for setting up socialist marketing economics system for it is helpful to encourage investment, develop economy and facilitate employment. However, everything has its two sides. Compared with ordinary limited company, one-man company characters, which are the singularity of the stockholder and the particularity of corporate governance structure. Thus it increases the possibility for the single shareholder to abuse his rights and damage the interests of the company's creditor.This paper is composed of four parts, and focuses on perfecting the legal protection system of creditor's interests of one-man company. It starts with the basic concept and characters of one-man company, tries to show the difference between the one-man company and the ordinary limited company, then explains why the creditor's interests of one-man company should be specially protected.The next part analyzes the current situation of one-man company in China and brings forward the issues in governing the all kinds of one-man company. These issues have to be settled by the legislation of one-man company, that is it is necessary to regulate one-man company strictly furthermore.The third part is the brief introduction of special regulations of one-man company in other countries which admit legal status of one-man company in order to reference for perfecting the interests of creditor in China.At the end of this paper, in great details the author provides with several pieces of advice for resolving the issues existing in China in order to perfect the legal system for protecting the creditor's interests of one-man company. The author introduces the frame of one-man company's creditor legislations of the newly Corporation Law, then puts forward a few measures such as burdening the exclusive shareholder with special liability; adjusting the corporate governance structure; in some circumstance, the limited liability of shareholder could be ignored and establishing the special frame of one-man company for applying the theory of"piercing the corporation's veil". By taking the measures mentioned above, the creditor's interests of one-man company would be fully protected and the order of economy would be assured.The author hopes that these suggestions will be useful to establish and improve the legal protection measures for creditor of one-man company in our country.