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The Legal Regulation Problems of reinvestment behavior

Author: YuLianChao¡¡MaJie From: www.yourpaper.net Posted: 2009-11-04 08:16:45 Read:
Abstract: The company invested company's operational autonomy necessary. But the company reinvestment will bring the risk of uncertainty, we must be reasonable legal regulation it. The legal regulation of the company transferred the investment behavior generally includes both the limitations and restrictions on the size of the reinvestment reinvestment object. Our latest legislative Although the abolition of restrictions on the amount of reinvestment, but still faces many problems. These issues must take corresponding measures for improvement.
Keywords: investments; risk; legal regulation; Information Disclosure

Reinvestment is the operational autonomy of the modern company, the company's survival and development of one of the business strategy. Legislation on their national companies to be recognized, but turn investment will give its shareholders, creditors and other stakeholders who bring considerable uncertainty risk, therefore, most of the national company legislation and how would reinvestment to make different levels of regulation . Our latest legislation to abolish restrictions on the amount of reinvestment of the company's favor provisions of the reinvestment amount is determined by the freedom of the Articles of Association, which is in line with the company autonomy principle, but also the resulting reinvestment information asymmetry reinvestment formation the exercise of cross-shareholdings or voting rights of the mother-child relationship, and exceeded the company's articles of association amount Reinvestment how the force of law and so some of the issues that must be resolved.

First, the need for reinvestment and possible risks of

With the market economy continues to mature and develop, especially in the constant improvement of the theory and system of corporate governance, the company as a legal "person" rights they enjoy more and more widely, market competition and the development of free market philosophy the inevitable outcome. Turn the investment performance of the company to exercise its rights. The company as a for-profit legal organization with independent legal personality, the company has the legal property rights and operational autonomy, its established to the right to determine the mode of operation of the corporate property and business objectives, the company the right to invest in operations. The company invested significant positive active capital market. The capital is the movement of capital flows to the maximum profit the capital moment can not be stopped, the the capital only movement to achieve the purpose of its value-added. The capital market is the core of the market economy and the key, perfect, healthy and active capital market is prosperous and developed market economy logo. Company reinvestment of their capital movement and turnover up, and also led the active capital market as a whole to achieve capital appreciation and its capital management objectives. The company invested conducive to the optimal combination between the company, in order to achieve a large-scale operation. Because after reinvestment behavior acquisitions, mergers, eliminate backward enterprises can achieve complementary advantages between the company and social resources optimized configuration. Powerful combination can also be formed through reinvestment behavior, the formation of multinational companies and enterprise groups, the scale of operations.
However, the company invested may bring more uncertainty risk. First, if the the reinvestment object not be qualified, allowing the company to become shareholders of the unlimited liability, then it means all its assets is limited to their investment as a guarantee. Once the poor management of its invested enterprises liabilities or bankruptcy, the debt owed by the company may be greater than the amount of its investment affect the stability and normal operations of the company's assets, even lead the company to bankruptcy, is not conducive to the stability of the company's and shareholders' interests, the interests of creditors protection. Secondly, the company reinvestment amount is not to be limited, too much to invest in other companies abandoned their own business, not business management, will lead to violation of the purpose of the establishment of the company. Once again, the lack of reinvestment cause the company's actual capital the viability of weakening, threatening the company's asset structure, affecting the interests of the creditors of the company. Interests and company interests acquired through reinvestment difficult to achieve, in many cases, the creditors of the company will have to receive due to reinvestment of the company obtained by settled. This is actually borne by the creditors ought to be borne by the debtor company investment risk, is not conducive to the protection of the interests of the creditors of the company. In addition, the company's reinvestment result in inflated the company's capital. One-way transfer of investment and two-way switch investment capital may lead to inflated. This not only makes the public mistakenly believe that strong corporate capital, good credit, and may be contrary to the principle of the Companies Act on capital real. The true principles of the company's capital is one of the basic principles of the Companies Act. Many of the provisions of the current law are true as the basis of the capital. If the capital reinvestment inflated be ignored and not attach importance to and prevention, many of the provisions of the current law will not be able to get the implementation. Finally, directors, supervisors and other senior management staff the reinvestment by cross-shareholdings and control company's shareholders 'meeting or the shareholders' meeting. In addition, if the company invested not be limited to, the company's capital may also be applied to shareholders without the prior consent of the risk undertakings, so that shareholders face are difficult to predict investment risks.

General Legal Regulation in Comparative Perspective reinvestment behavior

Through the above analysis, we found that the reinvestment reasonable and necessary and, therefore, can not be denied the company's reinvestment or be very stringent restrictions and constraints. However, the company invested have this or that kind of risk. The company as a corporate body of the shareholders' investment and the formation of an independent legal personality, its existence and development are not isolated, it is always its shareholders (or owners), creditors, employees and the interests of society as a whole closely linked. If the company transferred the risk of investment is likely to become a reality, that will be the company's shareholders, creditors, employees and the entire interests of the community to have a significant impact. Such as the company invested unfavorable bankruptcy caused by the company, it would likely result in the loss of shareholders' investment, the interests of the creditors can not be achieved, the company is laying off workers unemployment, reduced government revenue resulting social instability. Shows that it is very necessary to be a reasonable legal regulation on the company's reinvestment behavior.
The countries in the Companies Act generally allow reinvestment behavior, but for companies to switch investments are made in varying degrees to certain restrictions. This limitation is mainly reflected in the limitations and restrictions on the size of the reinvestment reinvestment object:
First, on the the reinvestment object limit, is to solve the company's ability to partner enterprises bear unlimited joint and several liability of investment objects reinvestment. Company laws of many countries and regions have banned the company to assume unlimited liability for the members of the other economic organizations, including as the shareholders of the unlimited liability partner or unlimited liability GmbH & Co. KG. Legal restrictions on companies become unlimited liability shareholder or partner in the partnership is mainly considered protected the interests of the creditors of the company, unlimited liability shareholder and partner of venture partners bear unlimited joint and several liability of the Company or the debts of the partnership, once the companies in which it invests or partner companies are unable to repay the debt, the entire assets of the company will be at great risk, the impact of the company's shareholders and the interests of the creditors. 173 of the Korean Commercial Code provides that the company can not become the unlimited liability of the other company members (shareholders). Taiwan, China "Section 13 of the Companies Act provides that the company may not become his company with unlimited liability shareholder or partner of the partnership business. Article 55 of the Japanese Commercial Code, the Company shall become unlimited liability of shareholders of other companies. And this exception provisions, the United States "Model Act" 3.02 Subsection (9) provides that the company can become the promoters of any partnership, an association, trust organizations or other entities, partners, members, associates people or the entity manager.
Turn the scale of investment restrictions, generally refers to the restrictive provisions of the law on companies to switch to the cumulative amount of investment. Since the turn inflated the company's capital investment may lead to not only contrary to the company principle of capital adequacy, and reinvestment will reduce the company's actual control of economic resources, which may reduce the actual solvency of the company, thus increasing the risk of the company's creditors. So, the company legislation of individual countries and regions to appropriately control the scale of reinvestment, often require the highest proportion reinvestment. Taiwan, China "Company Law" Article 13 provides that: "The company shall not be a partner of the unlimited liability of the company's shareholders or partnership; such as unlimited liability shareholders of his company, its total investment divided by the investment professional or the Articles of Association of the Company pursuant to the following as otherwise provided by or through obtaining shareholder consent or the shareholders' meeting, shall not exceed 40 per cent of the paid-up share capital of the Company. " Third, the current legislation for companies to switch to the regulation of investment behavior and its problems
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