The legislation of many countries and regions prohibits or restricts the provision of guarantees by companies to others. Article 16 of the Company Law of Taiwan stipulates that "a company shall not be any guarantor except for those who may be guarantors under other laws or the articles of association." Article 106 of the French Code of Commercial Companies stipulates that "except for the financial business of the company, it is forbidden for the company to provide guarantees and guarantees for the obligations of directors, general managers, permanent persons of directors of legal persons and their relatives to third parties." ”
Article 16 of the Company Law of the People's Republic of China stipulates that the provision of external guarantees by a company shall be decided by the competent decision-making authority of the company in accordance with legal procedures. Restrictions are imposed on the representation of the company's legal representative. Where the legal representative provides security for others without authorization, the validity of the contract shall be determined separately by distinguishing whether the creditor is bona fide at the time of conclusion of the contract: if the creditor is in good faith, the contract is valid;Otherwise, the contract is null and void.
How to determine whether the creditor is in good faith?
It means that the creditor does not know or should not know that the legal representative has exceeded his authority to conclude the security contract. This requires that when the creditor concludes the security contract, it cannot be deemed that the legal representative has the right to sign the guarantee contract by simply signing it with the signature of the legal representative and affixing the company's official seal;Instead, the resolution documents of the company's competent authorities should be reviewed. Of course, the creditor's review of the content of the company's resolution is generally limited to the formal review, and the necessary duty of care is sufficient.
Where the company argues that the creditor is not in good faith on the grounds that the resolution of the organ is forged or altered by the legal representative, the resolution procedure is illegal, the signature (name) is false, or the amount of the guarantee exceeds the limit, the people's court will generally not support it. However, unless the company has evidence to prove that the creditor knew that the resolution was forged or altered.
According to judicial statistics, in 2011, the number of corporate guarantee cases accepted by courts in the first instance across the country was 5870,000 cases, with a target of 420 billion yuan;In 2017, the number of first-instance cases of corporate guarantee in courts nationwide increased to 3970,000 cases, and the subject matter of the prosecution reached 221 trillion yuan, and the number of cases accounts for nearly 10% of the total number of first-instance commercial cases in courts across the country.