A Research On The Legal Representative Rule In China

The rule of legal representative is quite a rule of law with Chinese characteristics. Specific to the enterprises, it means the representative of a company is the sole statutory person. In practice since the reform and opening up, China’s legal representative rule made an indelible contribution to the development of the economy. However, with the further development of the economy, the shortcomings of the legal representative rule has become increasingly prominent, which mainly reflected in the "number one" system, including the abuse of powers, the adverse affect to enterprise interests, the lack of follow-up force, the increase of transaction costs, and so on. Therefore, the reform of the legal representative rule is imperative.The causes leading to the drawbacks of the legal representative rule can be divided into three aspects:economic, ideological and institutional. The economic environment of the early transition constitutes some objective requirements for the legal representative rule. However, with the deepening of economic restructuring, market mechanisms are becoming increasingly sound, the legal representative rule can not adapt to the economic development. Ideologically speaking, the idea of "ruling the company by man" is deep-rooted, which mainly reflected in the personnel system, contrary to the requirements of the market economy and rule of law. Institutionally speaking, the legal representative system is a typical phenomenon of Chinese centralized two thousand year old tradition reflecting to the economic sphere. The legal representative rule is essentially a centralized systemTherefore, the solution of the shortcomings of the legal representative rule can be set on three said aspects accordingly. On the economic level, the further economic development and market mechanisms improvement inherently shall require changes in the legal representative rule. On the ideological level, the reform of the existing personnel system shall form a consistent mechanism of powers and responsibilities, and shall get rid of the idea of "rule by man". On the institutional level, we shall explore the decentralized mechanism in governing enterprises, and introduce the position competition rule in the "number one" appointment.This paper is divided into five sections, discussing the causes of, drawbacks of and solutions to the legal representative rule in China.Section One introduces the reflections of the legal representative rule from a view of differences in text and reality. From the view the text of the law, the legal representative is an important matter of record, playing an important role of intention expression, and shows the identity and responsibility. In reality, however, the legal representative in an enterprise does far beyond the scope of the text recorded in law. The power of the legal representative extends to all aspects of an enterprise, including personnel, finance, and material supplies, becomes the "number one". In the process of analyzing the status of the legal representative in the reality level, it chooses two cases in SOEs and one phenomenon to illustrate the causes of the "number one" status.Section Two analyze the legal representative rule in a view of comparative law. The legal representative rule is a unique legal system in China, there is no such a concept in other countries, yet it’s helpful to do some research on the corporate representative rule to compare the merits of the legal representative rule. It is described from the perspective of the legal basis for the similarities and differences of Chinese and foreign corporate representative system. There’s some difference in representative rules in two may law systems. In general, the nature of the company representative can be divided into the "representation theory," and the "deputy theory", which respectively echoes the "reality theory" and the "fiction theory". On the legal basis, China’s legal representative rule does not entirely belong to the above two. In the system level, the paper selects the relevant provisions of the United States, Britain, Germany, France, Japan and other countries, comparing with China’s legal representative rule, it sums up some special natures of the legal representative rule in China.Section Three focuses on the prominent features of the legal representative rule in China, i.e., the statutory nature and the exclusive nature. It is started from the history of the formation of the legal representative rule, demonstrating it an out-coming of the special historical period. Then it is pointed out that there are two prominent characteristics of the legal representative rule which are the statutory nature and the exclusive nature. Lastly, it describes three major drawbacks of the legal representative rule, which are obstructing the transaction, leading to abuse of power and enterprises lacking stamina.Section four further describes the root causes of the defects of the legal representative rule, which can be divided into three parts. The unique historical environment of transition to market economy is the economic root; the idea of "rule by man" is the ideological root; Chinese tradition of the centralized model is the institutional root. The combined effect of these factors leads to a number of drawbacks of the legal representative rule.On the basis of the said analysis, Section Five puts forwards some initial way out to solve the problems in the legal representative rule. The first is to develop a market economy to solve the economic defects, the second is to break the "rule by man" type, and the third is to establish a decentralized company representative system. With the said three method, the defects of the legal representative rule shall be some settled, leads to an independent management, and enhances corporate administrative skill and performance...