A Study on the Guarantee of Chinese One-man Company for Its Shareholders

Abstract

Purpose - Research the legality of one member company’s shareholder guarantee. First of all, as far as the legislative purpose of the decision-making power of the shareholders’ meeting and the procedure for shareholders to avoid voting under the special guarantee stipulated in the Company Law of China is concerned, its legislative purpose is to prevent major shareholders from abusing their rights, protection of the Company and minority shareholders.
 Design/Methodology/Approach - There is no difference between large and small shareholders in a one-person company. The only shareholder of a one-person company is the only participant in the company’s operation and decision-making, who has the most direct understanding of the company’s operation, and has the most clear judgment on the company’s major issues. The oneness of the shareholders of a human company makes their behavior not only represent the will of shareholders, but also reflect the will of the company.
 Findings - Therefore, the Company Law does not deny the legality of one person’s company’s guarantee for shareholders. Secondly, the current Company Law has legally confirmed the full guarantee capacity of the company, and it is legitimate for the company to provide guarantees for others, shareholders or actual controllers of the company.
 Research Implications - Based on not violating the relevant principles of the Company Law, one person company’s provision of security for its shareholders belongs to the territory of “company autonomy”. As long as its procedures are legitimate, its behavior naturally has legitimacy.