Article 60 of China's former Company Law stipulates that directors and managers may not use the assets of the company to provide guarantees for the debts of shareholders or other individuals. At the same time, according to Article 2 14, if a director or manager violates the provisions of this Law and provides a guarantee for the debts of the company's shareholders or other individuals with the company's assets, he shall be ordered to cancel the guarantee and be liable for compensation according to law, and the illegally provided guarantee shall be returned to the company. Accordingly, if a director or manager violates the provisions of Article 60 of the Company Law and provides a guarantee for the debts of the company's shareholders or other individuals with the company's assets, the guarantee contract is invalid. Unless the creditor knows or should know, the debtor and the guarantor shall be jointly and severally liable for the creditor's losses. Judging from the above provisions, the original "Company Law" has restrictions on external guarantees, that is, restrictions on providing guarantees to related shareholders and personal debt guarantees, but the unclear expression has caused confusion in understanding. The original "Company Law" put this provision on external guarantee in the chapter of "limited liability company" instead of in the general provisions, which makes it unclear whether this provision is aimed at the limitation of the company's external guarantee ability or only at the ultra vires behavior of directors and managers. However, whatever the understanding, the original provisions of the law restrict the company's external guarantee activities to a certain extent. Article 388 of the Civil Law To establish a security interest, a security contract shall be concluded in accordance with the provisions of this Law and other laws. Guarantee contracts include mortgage contracts, pledge contracts and other contracts with guarantee functions. The guarantee contract is a subsidiary contract of the main creditor's rights and debts contract. If the principal creditor's rights and debts contract is invalid, the guarantee contract is invalid, unless otherwise stipulated by law. If the debtor, guarantor and creditor are at fault after the guaranty contract is confirmed to be invalid, they shall bear corresponding civil liabilities according to their faults. The legal risks of the company's external guarantee include decision-making risk and credit risk. Specifically, the risk of decision-making level and the external guarantee of the company will have a great impact on the interests of the company itself and shareholders. Therefore, when a company tries to provide external guarantee, it must make a resolution through the company's board of directors or shareholders' meeting, so as not to damage the rights and interests of the company and shareholders. Asset status and credit risk of the guarantor. When the company's external guarantee makes the guaranteed person unable to pay off the debt, the company recognizes that it is possible to be a joint debtor. Therefore, it is necessary to evaluate the repayment ability and credit rating of the guarantor when making a guarantee. (1) The procedure is as follows: 1. Enterprises apply for loan guarantees from banks and other lending institutions; 2. The bank inspects the operation, financial status, mortgaged assets, tax payment, credit status and business owners of the enterprise, and initially determines whether to guarantee; 3. Communicate with the loan bank to further grasp the relevant information and clarify the loan amount and repayment period that the bank may issue; 4. Evaluate the legal procedures such as loan guarantee and counter-guarantee agreement, asset mortgage and registration, sign a guarantee contract with the loan bank, and formally establish a guarantee relationship with banks and enterprises. (2) Article 16 of the Company Law: The company's investment in other enterprises or providing guarantee for others shall be decided by the board of directors or the shareholders' meeting in accordance with the articles of association; Where the articles of association stipulate limits on the total amount of investment or guarantee and the amount of individual investment or guarantee, it shall not exceed the prescribed limits. Where a company provides a guarantee for the company's shareholders or actual controllers, it must be resolved by the shareholders' meeting or the shareholders' meeting. Shareholders specified in the preceding paragraph or shareholders controlled by actual controllers specified in the preceding paragraph shall not participate in voting on matters specified in the preceding paragraph. The voting shall be passed by more than half of the voting rights held by other shareholders present at the meeting.
Legal objectivity:
Article 16 of the Company Law of People's Republic of China (PRC), the company's investment in other enterprises or providing guarantee for others shall be decided by the board of directors or the shareholders' meeting in accordance with the articles of association; Where the articles of association stipulate limits on the total amount of investment or guarantee and the amount of individual investment or guarantee, it shall not exceed the prescribed limits. Where a company provides a guarantee for the company's shareholders or actual controllers, it must be resolved by the shareholders' meeting or the shareholders' meeting. Shareholders specified in the preceding paragraph or shareholders controlled by actual controllers specified in the preceding paragraph shall not participate in voting on matters specified in the preceding paragraph. The voting shall be passed by more than half of the voting rights held by other shareholders present at the meeting.