A Study Of Legal System In The Articles Of Association

Articles of Association (the “AoA”), as the autonomous rules of a company, ownsignificant research value both from practical and theoretical perspectives. By takinginto consideration the issues such as correct cognition of the AoA, getting rid ofAoA’s set pattern/model and making improvements and realizing profit increase bymeans of AoA, this paper analyzes relevant legal issues from the following fiveaspects:Part One: Basic definitions regarding AoA are made through AoA’s concept, itslegal nature and functions. This paper provides the AoA’s concept upon introducingdifferent concepts held by scholars at home and abroad with respect to the AoA. Thereare three major theories concerning the AoA’s legal nature, which are theory ofcontract, theory of autonomy and theory of charter. By demonstrating these majortheories, it is herein provided that the legal nature of an AoA reflects both the first twotheories. However, it tends more to the theory of autonomy. In addition, the functionsof an AoA are detailed under this part as well.Part Two: It is analyzed hereunder the interaction between the AoA and theCompany Law. First, based on the discussion in respect of the features and charactersof the Company Law where debates about Company Law being public law or privatelaw and mandatory rules or optional rules, it is concluded that Company Law is aprivate law composed of both mandatory and optional provisions in which case thelatter are more outstanding. Second, where provisions of PRC Company Law aresorted out, it is herein summarized that the interactive relationship between the AoAand the Company Law is represented by six authorization patterns which arerespectively absolute, specific, restrained, supplemental, additional and relative.Part Three: The AoA’s contents and principles of amending AoA and its restrictions are elaborated on under this part. First, this paper opines that AoA’scontents could be classified into absolutely necessary contents, relatively necessarycontents and optional contents based on the introduction of the AoA’s contents of thecompany laws of two genealogies of law and PRC Company Law. Second, in order tobe adapted to the company’s actual operational needs, this paper also provides that theamendment of an AoA shall abide by the principles of legality and protection ofshareholder and creditor and restrictions shall be focused on the subjects and contentsin respect of AoA amendment.Part Four: The AoA’s binding effect is explained under this part. Afterdemonstrating that AoA has binding effect on the company, shareholder, director,supervisor, senior management and employees, it is concluded by means a case thatAoA also has binding effect on the third party.Part Five: Four practical cases are introduced hereunder to illustrate the attitudethat judicial practice has on the AoA. These cases act in line with and also respond tothe opinion which runs through this paper that articles of association are highlyautonomous rules.