On The Effectiveness Of The Company’s External Guarantee

A company’s external guarantee is a business activity in which the company guarantees the creditor in its own name and all or part of its property guarantees the creditor’s rights.Among them,the most important role is to promote and guarantee the efficient development of the market economy and provide powerful assistance for corporate finance.Although the 1993 "Company Law" and 2005 "Company Law" compared to my country’s company’s external guarantee system has achieved a major breakthrough,but the newly introduced "Company Law" does not seem to fully solve the problems of the company’s external guarantee.For example: According to Article 16 of the "Company Law",the articles of association have the right to restrict the company’s guarantee decision-making organization(shareholders’(general meeting)or board of directors)and the amount,but since the guarantee matters are not mandatory in the articles of association,People’s lack of attention to guarantee matters has caused the relevant regulations to be seriously out of touch with practice,to be false,and controversial.This article is guided by the guarantee disputes involved in the second phase of the“Loan Contract Signed by China Merchants Bank DG Sub-branch and ZB Group Company” in 2015,and the impact of Article 16 of the 2005 “Company Law” in determining the legal effectiveness of the company’s external guarantees.The main problem to be solved is,"Is the validity of Article 16 of the " Company Law " determined to be a norm of validity or a regulatory norm? How effective is the external guarantee in violation of the company’s articles of association? Does the determination of the legal effectiveness of external guarantees in violation of regulations require review and What is the format of the review?"The article is discussed through the following five parts:The first part asks questions based on the case.By analyzing the case of China Merchants Bank DG v.ZB Group Company,it summarizes the main controversial issues in this case.The second part is a theoretical analysis of Article 16 of the "Company Law".Focusing on the main controversy in the theoretical and practical circles of Article 16 of the "Company Law",it is pointed out that this article is an administrative mandatory norm.Therefore,violation of Article 16 of the "CompanyLaw" will not be the main basis for the determination of contract invalidity,and it needs to be determined in conjunction with other matters.Finally,the author expounds the irrationality of directly applying the nature of Article 16 of the "Company Law" to determine the validity of the contract in practice.The third part is the determination of the effectiveness of the company’s external guarantee.Through the search of the ZB case and other similar cases,the main factor affecting the legal effectiveness of the company’s guarantee is the difference in understanding of the company’s articles of association and the creditor’s review obligations.Therefore,this part mainly analyzes the company’s articles of association and creditors’ review obligations.The fourth part is the reference of the legislation model outside the territory and in Taiwan.Mainly through the analysis of the regions with relatively developed economies and relatively complete systems,such as the United States,Britain,Taiwan,and other regions,as much as possible to explore their respective advantages,making the establishment of the system more universal.The fifth part is to improve opinions.Through the above analysis of my country’s existing regulations and relevant legislation in countries and regions with relatively developed economies outside the territory,we can provide feasible suggestions for the improvement of my country’s company’s external guarantee system.