On the Allocation of Corporate Rules

Abstract: Born as an organization or a group, which strengthens the grounds of the regulations of the state, the development of our economic and society has showed that the main purpose of the existence of the corporation is economical all the time, although it’s existence as an organization or a group of the people. There are also some cries: the corporation is a nexus of contracts, and the corporate law is an agreement that the participant can choose to opt. The theory is one thing, but the reality is another. In the world we live in there is not a country whose corporate law is full of mandatory rules or discretionary rules. If we must choose both of them, how choose in the corporate legislation. What are the criteria of the choice. Drawing a line between the mandatory rules and the discretionary rules by the choice is the main purpose of this article.This article includes five parts and its conclusion:PartⅠintroduces the precondition of the allocation of the corporate law.1.What is the essence of the corporation? The promise of the essence of the corporation determines the tend of corporate problems. The theories of the essence of the corporation are: the artificial entity theory, the entity negation theory, the entity existence theory and the nexus of contracts theory. In my opinion each theory has its advantages and limitations, and the essence of one thing does not doomed to be only one, so the different theories of the essence of the corporation does not doomed to conflict with each other, and they may verify each other from another point. I think the corporation is the entity whose existence is contracts, and the existence also needs the functions of the corporate law. 2. What are the functions of the corporate law? We must allocate the rules of corporate law on the basis of the functions of the corporate law. The elementary functions of the corporate law includes: making the demarcation of the corporation autonomy, stipulating the essential game rules of the corporation autonomy, and restricting the limitations of the corporation autonomy.3 What kinds of rules of corporation we choose to analyze. We can make different classification from different standards, but in my article what I choose is the influence of the individual will on the corporate law: the rules are classified into mandatory rules and discretionary rules.PartⅡdiscusses the principles of the allocation of the corporate law. Corporation was the consequence of the practice of the transactions of the great people heaps of times,so the creative rules of corporate law should meet the desire of the practice of the transactions, in another word the rules of corporate law must meet the desire of the practice of the transactions in order to get validity. So the main principle is doing everything according to reality. Of course, the first one is the practice of transactions. The practice of transactions has showed the economical considerations are the first considerations of the participants of the corporation, so the efficiency is at the important position. On the other side, the economic couldn’t meet all the needs of humanity, so the considerations of the equity and justice are needed at the same time. Other attention should be paid to the reality including the difference between the civil law and the corporate law and the difference between the limited liability corporation and the corporation limited by shares.PartⅢdiscusses how to allocate the mandatory rules in details. Corporate law is mainly autonomy law, which means it should be mainly composed of discretionary rules. We should also realize that the mandatory rules don’t mean the regulation and force of the state, because making the demarcation of the corporation autonomy, stipulating the essential game rules of the corporation autonomy, and restricting the limitations of the corporation autonomy all needs the help of mandatory rules. In this article I classify the mandatory rules into the mandatory rules concerning validity and the mandatory rules concerning acts. And the mandatory rules concerning validity includes the mandatory rules whose validity shall be affirmed and the mandatory rules whose validity shall be negated, and the mandatory rules concerning acts includes the compulsive rules and the inhibitive rules. The mandatory rules whose validity shall be affirmed should be allocated on the domains of asset partitioning, the protection of the essential rights of the shareholders; the mandatory rules whose validity shall be negated should be allocated on the domains of acts violating the law and the corporation’s article of association; the compulsive rules should be allocated on the conditions of the establishment of a corporation, the performing of the liability ,the registration of a corporation; the inhibitive rules should be allocated to forbid the acts of harming the interests of the small shareholders, the speculative acts of the deputies, the acts of abusing the independent status of the corporation legal person. We must draw the borderlines of the mandatory rules in order to allocate the rules of corporate law appropriately.PartⅣdiscusses how to allocate the discretionary rules in details. The discretionary can be classified into discretionary rules applied by choice and the discretionary rules applied by elimination. The participants of the corporation must choose one from the two designed arrangements when they face the first type of the discretionary rules, and the latter are some times the warnings to the participants of the law when they are lack of considerations. We should allocate the latter more when we make the corporate legislation for the reasons above. The discretionary rules applied by elimination could be allocated on the wide domains of corporate governance due to its convenience on the promotion of corporation autonomy.The conclusion of this article holds that we should allocate the rules of the corporate law appropriately in the corporate legislation, and we should reduce the conflicts between them in order to maximum the functions of the corporate law;Although the amendment of our corporate law in 2006 has released the regulation on the corporation participants and eliminated some unnecessary restrictions, but this was not enough. The appearance of the strict and meticulous regulation is the superfluous mandatory rules;On the consideration of the technic of corporate legislation, the difference between the mandatory rules concerning validity and the mandatory rules concerning acts should be paid more attention; and we should allocate more discretionary rules on the domains of the corporate governance, because it endow the corporate participants with more freedom of choice and more space to act…
Key words: Company initiators; Civil liability; Capital substantial responsibility; Damage compensate responsibility; Investment violation responsibility