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Analysis of the drawbacks of the one-man company and its system

Author: HuangBinLin From: www.yourpaper.net Posted: 2007-11-20 08:05:31 Read:
[Abstract] the vast majority of countries in the world have recognized the existence of the one-man company also has a great value. Departure from its basic theoretical analysis of the one-man company's many problems, and learn from the experience of other countries and their drawbacks, and made recommendations to improve its system.
[Key words] one-man company; evasion of law; corporate; qualified to deny
A one-man company Overview
One-man company, also known as a sole proprietorship, Single-share companies, is the capital of the company by a shareholder of the company limited by shares or limited liability company. As the name suggests, refers to the shareholders (natural or legal) only one person, by the shareholders holding all funded or all of the shares Co., Ltd. (including limited liability companies and joint stock). The one-man company can be both limited liability company, is a joint stock limited company. Its true meaning, there is a real sense of the sense and form a company. The former refers to the company's capital contributions or shares is only held by individual shareholders, and the company has one and only one shareholder. Company in the establishment of the Articles of Association of the company records or registered shareholders only one person. The exception to this is the establishment of the company, the shareholders of more than one person, but during the company continues to exist, the company's capital or shares go to the hands of one shareholder. The latter refers to the number of shareholders of the company formally complex, but in essence only a person's "real shareholders" or "real interests in shares, the remaining shareholders in order to meet the legal requirements on the minimum number of shareholders of the Company or to the real interests of the shareholders and holders of certain shares of nominal shareholders. Nominal shareholders are usually the identity of real shareholder capital contributions or trustee of the shares. From the the national practical point of view, regardless of whether the countries in the Companies Act to recognize the one-man company, the real sense of the one-man company in various countries widespread.
Second, the drawbacks of the one-man company
Although the one-man company value of its existence, but its drawbacks are also obvious:
(A) the lack of group interests of creditors and other protection
In today's society, the market economy is very active. All stocks or the assets of one company by a single shareholder of all, a single shareholder can not be established for the shareholders and the Board of Supervisors for the shareholders of one line into the restraint and supervision. Although the conditions of the market economy, the risk is inevitable. However, in the presence of one-man company for trading counterpart, making riskier transactions, thereby affecting the economic and trade development and social and economic order. Especially in the one-man company, the company's property and the property of the shareholders always easy to distinguish. Such as the company's place of business and residence of a natural person mixed use, wholly owned subsidiaries and the parent company's place of business for the same place. And shareholders are often not strictly Branch property and personal property. The company's property is used for personal expenses, however, did not make the record, or do not maintain the integrity of company property records, the property of the company tend to disappear in the shareholders' personal "safe" medium, can lead to property confused. This tends to undermine the interests of creditors.
(B) for shareholders abuse of legal personality created an opportunity
The biggest drawback of the one-man company that has facilitated the de facto control of a shareholder of a company. One company does not control and supervision of the internal organs contain no shareholders are likely to use the personality of the company is engaged in various fraud illegal transactions or hiding property to evade payment of debts and other acts, to seek illegal interests for their own.
Acts of self-dealing. Including direct indirect self-dealing and self-dealing. China's "Company Law" the company's directors, supervisors, managers, etc. shall not be used in the company's status and mandate for their own personal gain. However, within the one-man company, the lack of internal oversight, the shareholders of one such company can easily be transferred to the shareholders' cheap goods; the company buy expensive shareholders of goods and services; third party other than the company with various damage the interests of the company transactions, shareholders again a third party to obtain benefits. The shareholders of a variety of self-dealing damage the interests of the company, this will make the damage to the interests of the creditors of the company for their own illegal interests.
2 Over reward. Become a director of the company, the shareholders of a full control of the company, free to work out the financial package, the name of the company to pay a lot of rewards, which also brought the consequences of endangering the interests of creditors.
Abuse of corporate personality in order to evade taxes, damaging to the national interest. Especially in arrears of state tax number is large when the one-man company, the shareholders of one is likely to borrow bankruptcy to evade taxes, which would bring great losses to the state.
Circumvent the law not as an obligation. General Corporation Law provide that the Managing Director of the non-compete obligations. Shareholders of a full control of the company, both shareholders and managers, can be carried out smoothly and intra-industry competition.
(C) to avoid tort liability
In the one-man company, especially when one shareholders to reap huge profits production of fake and shoddy goods serious infringement of the rights of consumers or management improperly, resulting in damage to company employees or other people's health life, causing heavy casualties and other circumstances, due to the limited liability of the shareholders of one, and the property of the company is very limited compared to the huge compensation, will enable the victim suffered personal injury and property damage are often too small because of the company's assets are not sufficient compensation.
(D) The transfer of assets for investors to evade the debt to provide shelter
Once the one-man company shareholders funded from the shareholders, the part of the property is legally and in fact they manipulate the formation of the so-called property of the company. Single investors are likely to be set up in the law expressly prohibits more than one company, of which only a real company to operate. When the company faces a debt crisis, other dummy one person company successfully for investors to avoid debt, provides a convenient transfer of the assets of the company.
Third, improve the one-man company countermeasures
One-man company does have a lot of drawbacks, but even if national law does not recognize its legal status, it is the same in other forms exist, it can not be an effective constraint. For our corporate legal and natural persons, even if it does not recognize the establishment of one-man company, the one-man company also abound, this is can not deny the fact. Therefore, it should be allowed to set up wholly state-owned companies and foreign investment to set up a company, it should also allow the establishment of corporate legal and natural persons. China can take a combination of separate legislation and modify the Companies Act and other laws, to regulate the one-man company. Here to improve the system of one-man company countermeasures:
(A) adhere to the strict registration, publicity and documented system
In order to allow a company's creditors in their dealings with the company to fully understand the company's situation and can provide one-man company in the establishment must be registered and records available for public inspection in the register of the company registration authority. And "strict rules of the conditions for the establishment of the one-man company and the establishment of procedures against erected a one-man company. Of course, to do to prevent one company has erected, it is necessary to strengthen the powers of the registration authority, the implementation of the doctrine of substantive examination, publicity doctrine. Like Japan and Germany, the Companies Act provides for the registration and publicity system of one-man company the sole shareholder. And some countries are more stringent, not only requires the establishment to be registered, and also requires a public register from operational status. the

(B) the implementation of the minimum capital system, strengthen the capital adequacy and maintenance obligations
For one company, the minimum registered capital quota system is very important. The company as a separate legal entity, its external responsibility depends on how much of the company's property. The registered capital of the company has become a minimum guarantee of the company of the other party. Most prone to the capital or capital confused in the one-man company, in order to make the minimum registered capital of practical significance, should also focus on the company registered capital improvement. The capital adequacy obligations, undoubtedly minimum capital system can have practical significance. Strengthen capital adequacy obligations to the shareholders to be completely and proper discharge of the capital contribution obligation to prevent contribution or withdraws the capital contribution. Makes the company after the occasion of the one-man company, the company's loss of capital can easily become a "shell company" or "shell companies", since the company was founded and before the dissolution and should strive to maintain quite the reality of capital assets, which need to strengthen the supervision of the company. However, this oversight can not interfere in the company's business activities, the company's management rights violations.
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