Principles of Company Law, Cases and Applications

Author: Shi Jianzhong
Publisher:
Publication Date: 2006-01-01
Features: By slightly comparing the text before and after revision, one can discover the significant extent of this revision. Out of the 230 provisions in the original Company Law, only 14 were retained without modification. This revision not only introduced several important new systems, such as one-person companies, the denial of corporate personality, mandatory judicial dissolution, the right of dissenting shareholders to repurchase shares, and derivative lawsuits by shareholders, etc.; but also modified many existing systems, such as lowering the threshold for company establishment, expanding a company's ability to provide guarantees and borrow funds, and reducing restrictions on mergers and divisions, etc.; and also abolished certain systems, such as the requirement for administrative approval for the establishment of joint-stock companies and the statutory public welfare fund system, etc. Moreover, what deserves special emphasis is that the Company Law has introduced many discretionary provisions, most notably the strengthening of the role of articles of association. This is first reflected in the revised Company Law, where the term "articles of association" appears 82 times, compared to 55 in the original. Second, compared to the pre-revision Company Law, this revision entrusts many matters originally governed by mandatory provisions to the articles of association, covering aspects such as company establishment, capital systems, the allocation of shareholder rights, corporate governance, and more. It can be said that this revision has comprehensively granted companies greater autonomy, such as Articles 13, 28, 43, 72, 76, 82, 84, 105, 106, 118, 120, 142, and 167. At the same time, after this revision, the Company Law has become more actionable. The increase in discretionary provisions and the enhanced actionability of the Company Law, on one hand, mean that investors may enjoy greater investment freedom, companies may gain more operational autonomy, and shareholders and creditors may receive more judicial remedies. On the other hand, discretionary provisions essentially impose higher requirements on the parties involved. Therefore, only by accurately understanding and appropriately applying them can the objectives of company legislation and the goals of this revision be achieved, and the legal function of the Company Law can be realized. To this end, we base our analysis on the principles of company law and company practice, interpreting each provision from four aspects: legislative purpose, key principles, typical cases, and application guidelines. Without a doubt, the revised Company Law has undoubtedly posed new challenges to the theoretical research of company law and placed higher demands on company adjudication, such as how to coordinate and resolve conflicts between the Company Law and the articles of association, and how to understand the judicial remedies for shareholder rights and the necessary limitations on litigation rights, etc. It can be asserted that this revision of the Company Law is a result and a mark of progress in foreign company law theory, and the implementation of the new Company Law will further promote the prosperity of company law theory in China and the maturation of company adjudication.