The Supreme Court's Four Rules for the Judgment of Companies' External Guarantees
The court held: Regarding the scope of liability. Article 7 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Guarantee Law of the People's Republic of China" stipulates that "If the main contract is valid but the guarantee contract is invalid, and the creditor has no fault, the guarantor and the debtor shall suffer economic losses to the creditor of the main contract, Undertake joint and several liability for compensation; if the creditor or guarantor is at fault, the guarantor’s civil liability shall not exceed one-half of the debtor’s insolvency . ”
Jieer Company did not have sufficient evidence to prove that ICBC’s Jiulongpo Sub-branch had issued the “Letter of Undertaking for Completion of Differences” that its legal representative exceeded the authority and issued the facts. The claim that it should also be liable for compensation due to its fault should be supported in accordance with Article 7 of the "Interpretation of the Supreme People's Court on Certain Issues Concerning the Application of the Guarantee Law of the People's Republic of China".
Regarding the liability ratio. Regarding the invalidity of the "Letter of Undertaking to Make up the Difference", the Jiulongpo Sub-branch of the creditor's artificial bank did not require Jieer to provide the board of directors to approve the guarantee. The resolution was at fault. The guarantor Jieer was also at fault for issuing the "Letter of Undertaking for the Make-Up" , Combined with factors such as Jieer’s equity changes before and after the issuance of the "Letter of Completion of Differences" and the business relationship between Jieer and Yunheng, the two parties have basically the same proportion of the liability for the "Letter of Completion of Differences". For the debts that Yunheng Company cannot pay off, the company shall bear one-half of the compensation liability to ICBC Jiulongpo Sub-branch.
Case source: ( 2019 ) Supreme Law Minzhong No. 877 Chongqing Jieer Medical Equipment Co., Ltd. and Industrial and Commercial Bank of China Co., Ltd. Chongqing Jiulongpo Branch Financial Loan Contract Dispute
Rule 2: A company whose main business is guarantee provides external guarantees, and whether there is a decision by the resolution authority does not affect the validity of the guarantee contract
The court held that: the nature of the commercial guarantee company is a guarantee company that provides guarantees to others as its main business, and the guarantee business involved in the case belongs to the main business scope of the commercial guarantee company. Regardless of whether the commercial guarantee company’s agency resolution authorizes Liu Lizi, it It cannot be determined that the signing of the guarantee contract violates the true intention of the Shangrong Guarantee Company. Therefore, the issue of the authenticity of the resolutions of the board of directors of the commercial financial guarantee company does not affect the validity of the "Maximum Guarantee Contract" involved in the case. Therefore, the original judgment on this issue does not have any violation of legal procedures that may affect the correct handling of the case. The appraisal application submitted by the guarantee company in the second instance lacks necessity, and this court will not allow it.
(2019) Case source: Supreme Law Minzhong No. 1791 , Shanxi Shangrong Financial Guarantee Co., Ltd., Shaanxi Borong Zhongchuang Technology Co., Ltd., financial loan contract dispute
Rule 3: In the case of the creditor’s good faith, if the company’s resolution on external guarantees is deemed invalid, it does not affect the validity of the creditor’s signing of the guarantee contract in accordance with the resolution
When Cinda Hunan Branch signed the “Maximum Mortgage Contract” with Loudi Agricultural Machinery Company , it required Loudi Agricultural Machinery Company to issue a “Letter of Intent for Guarantee” and “Guarantee Resolutions of the Board of Directors (Shareholders’ Meeting)” signed by all members of the board of directors and stamped with the seal of Loudi Agricultural Machinery Company. And so on, fulfilled the obligation of reasonable and prudent review. Therefore, the court of first instance held that Cinda Hunan Branch was a bona fide creditor, which conformed to the objective circumstances of the case and was not improper.
In addition, according to the "Supreme People's Court on Several Issues Concerning the provisions applicable <People's Republic of China Law> (d)" Article " the shareholders' general meeting, the board of directors is invalid or People's Court confirmed the revocation of the company according to the resolution " The civil legal relationship with the bona fide counterpart shall not be affected " , although the two "Board of Directors (Shareholders) Guarantee Resolutions" involved in the case were deemed invalid in a separate case, they did not directly affect the outcome of the trial;
(2020) Case source: Supreme Law Minshen No. 3281 Loudi Agricultural Machinery Co., Ltd. and China Cinda Asset Management Co., Ltd. Hunan Branch Financial Loan Contract Dispute
Rule 4: A one-person company provides external guarantees. Since a one-person company has only one shareholder, when providing external guarantees, it cannot convene a shareholder meeting to make resolutions in accordance with Article 16 of the "Company Law of the People's Republic of China". Therefore, the effectiveness of the company's external guarantees The determination should be based on whether the guarantee has been approved by the shareholders.
The court held that: Yonghua Company is a one-person company to determine the validity of external guarantees. Yonghua Company is a one-person company. Although its shareholding structure is unique, the current Chinese law does not prohibit one-person companies from providing external guarantees. Since a one-person company has only one shareholder, when providing external guarantees, it cannot convene a shareholders meeting to make a resolution in accordance with Article 16 of the "Company Law of the People's Republic of China". Therefore, the effectiveness of Yonghua's external guarantees should be determined by whether the guarantee acts Subject to the consent of the shareholder Yingdebang Company. In this case, when the "Letter of Guarantee" was issued, Chi Yaohui acted as the legal representative of Yonghua Company and Yingdebang Company, and at the same time actually controlled the two companies. There is no evidence in this case to prove another shareholder of Yingdebang Company at the time Wu Bin opposes the guarantee provided by Yonghua Company. Therefore, Yonghua Company’s “Letter of Guarantee” to provide guarantee for Yingdebang Company shall be deemed to have obtained the consent of its sole shareholder Yingdebang Company. Yonghua Company’s guarantee is legal and valid. It shall be bound by the "Letter of Guarantee" and shall bear the responsibility of guarantee in accordance with the law.
Case source: ( 2019 ) Supreme Fa Min Zai No. 177 Xue Xinggang and Qingdao Yonghua Investment Real Estate Co., Ltd. on equity transfer dispute