The legal effect of the company's external guarantee resolution

In a market economy, a company, as an independent legal entity, has independent legal property rights and assumes independent legal responsibilities to the outside world. However, in some cases, company directors, managers, and other management abuse their power and engage in irresponsible external guarantees in the name of the company, damaging the interests of minority shareholders and creditors. On the afternoon of October 12, 2024, in Denghu Classroom, Lawyer Assistant Zuo Jianfang from our firm interpreted the legal effect of the company's external guarantee resolution based on her past work experience.

Firstly, the left assistant introduced the legislative intent and legal basis of the company's external guarantee resolution to everyone. The establishment of the company's external guarantee resolution rules is mainly aimed at preventing directors, managers and other management from abusing the company's name to provide debt guarantees for themselves and stakeholders, in order to protect the legitimate rights and interests of the company and its minority shareholders and creditors behind it. The main legal provisions can be found in Article 15 of the Company Law and Articles 7 and 8 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System in the Civil Code of the People's Republic of China.

Next, the left assistant summarized the resolution procedures, exemption clauses, effectiveness and responsibility of the company's external non affiliated and affiliated guarantees, as well as the violation of rules regarding the effectiveness of the company's external guarantee contracts, including:

1. The resolution procedure for external non related guarantees of the company: According to the provisions of the company's articles of association, it shall be decided by the board of directors or shareholders' meeting.

2. The resolution procedure for external related party guarantees of the company shall be subject to the resolution of the shareholders' meeting. Shareholders or shareholders controlled by the actual controller specified in the preceding paragraph shall not participate in the voting on the matters specified in the preceding paragraph. The vote shall be passed by a majority of the voting rights held by other shareholders present at the meeting.

3. Exemption clause, the following three situations do not require a resolution: financial institutions issuing guarantees or guarantee companies providing guarantees; The company provides guarantees for its wholly-owned subsidiaries to carry out business activities; The guarantee contract shall be signed and agreed upon by shareholders who hold more than two-thirds of the voting rights on the guarantee matters, either individually or jointly. However, the provisions of the second and third items of the preceding paragraph do not apply to the guarantees provided by listed companies to external parties.

4. Violation of rules regarding the effectiveness and liability of external guarantee contracts by companies: Judgment shall be made in accordance with the rule of unauthorized representation. If there is any fault, corresponding compensation liability shall be borne in accordance with Article 17 of the Interpretation of the Supreme People's Court on the Application of the Civil Code of the People's Republic of China on the Invalidity of Guarantee Contracts.

Finally, based on his past work experience, the left assistant reminded creditors that when requesting a guarantee from a company, they should review the company's articles of association and relevant resolutions, and require the company to issue a resolution that complies with the law and the company's articles of association to ensure that the effectiveness of the company's external consent to the guarantee is not affected. At the same time, the original letter of the company's consent to the guarantee and the resolution need to be properly preserved for subsequent evidence to claim rights.

After listening to the interpretation of Lawyer Assistant Zuo Jianfang, every colleague felt that they had benefited greatly. Thank you very much for the sharing today from Lawyer Assistant Zuo Jianfang. We look forward to learning more useful knowledge through Denghu Classroom!