商法双语复习题

1、1. What is a partnership? Answer: A partnership is an association of two or more persons to carry on as co-owners a business for profit. Although the word "persons" suggests living individuals, a partnership may also include other partnerships among its members; where it is permitted by lo

2、cal law, corporations can become partners. 2What are the essential characteristics of a partnership? Answer: （1）It is an association of individuals. （2）It is voluntary, in the sense that no person can be forced into a partnership. （3）There is co-ownership. Each of the partners must have a proprietar

3、y interest not only in the profits, but also in the enterprise itself. （4）The association must be for profit. Nonprofit organizations cannot be partnerships. （5）There is mutual agency of partners. Each partner is the agent of the others and of the firm for all partnership acts. Since there is mutual

4、 agency, the relationship between partners is a fiduciary or confidential one, which means that there must be good faith and full disclosure among all the partners. （6）There is mutual liability of partners. Each partner is liable for all partnership acts.This means, in effect, that each partner may

5、become exclusively liable for partnership debts and obligations if the firm and/or partners become insolvent. 3Who may be a partner? Answer: Any person competent to make a binding contract may become a partner.4. Public and private companiesPrivate companiesTend to be small scale enterprises owned a

6、nd operated by a small number of individuals. They cannot offer their shares to the public at large. Their shares are not quoted on any share market and tend not to be freely transferable. Public limited companiesTend to be large, and are usually controlled by directors and managers rather than owne

7、rs. They are sources of investment and have freely transferable shares which are quoted on the Stock Exchange. 5Legal differences between public and private companies(a)public companies must have at least two directors, whereas private companies need only have one; (b) public companies have minimum-

8、issued and paid-up capital; (c) the requirement to keep accounting records is shorter for private companies; (d) the controls over distribution of dividend payments are relaxed in relation to private companies; (e) private companies may purchase their own shares out of capital, but public companies

9、cannot; (f) private companies can provide financial assistance for the purchase of their own shares, but public companies cannot; (g) there are fewer and looser controls over directors in private companies, as regards their financial relationships with their companies6. Types of companies in China a

10、 limited liability company a joint stock limited company The following conditions shall be fulfilled for the incorporation of a limited liability company:(1) The number of shareholders conforms to the statutory quorum; (2) The capital contributions of the shareholders reach the statutory minimum amo

11、unt of capital; (3) The shareholders have jointly formulated the articles of association of the company; (4) The company has a name and an organizational structure established in compliance with the requirements for a limited liability company; (5) The company has a domicile.A one-person limited lia

12、bility company referred to herein means a limited liability company with a sole shareholder of either a natural person or a legal person. A wholly state-owned company referred to herein means a limited liability company established through the States sole investment by the state-owned assets supervi

13、sion and administration authority entrusted by the State Council or local peoples government to perform the capital contribution functions. The establishment of a joint stock limited company is subject to the following conditions: (1) The number of sponsors meets legal requirement; (2) The amount of

14、 capital stocks subscribed for by the sponsors and publicly placed reaches the legally-prescribed minimum capital level; (3) The issue of its shares and the preparation for its establishment comply with the law; (4) The sponsors prepare the articles of association, and such articles of association o

15、f a company established by public share offer shall be adopted by the establishment meeting; (5) There is a company name, and the organs complying with the requirements for a joint stock limited company are established; (6) The company has a domicile. The registered capital of a joint stock limited

16、company established by sponsorship shall be the total amount of share capital subscribed for by all the sponsors and registered with the company registration authority. The initial capital contribution of all the sponsors shall not be less than twenty percent (20%) of the registered capital, the rem

17、aining of which shall be paid in full within two (2) years of the establishment of the company. In the event of an investment company, the remaining part of the registered capital may be fully paid within five (5) years of the establishment of the company. Prior to a full contribution to the registe

18、red capital, sponsors shall not offer the shares to others. The registered capital of a joint stock limited company established by public share offer shall be the actual total amount of share capital that is paid up and registered with the company registration authority. The minimum amount of the re

19、gistered capital of a joint stock limited company shall be RMB 5,000,000. Where there is a higher level of the minimum amount stipulated by laws and administrative regulations, such stipulations shall apply. 7. The duty of loyalty The duty of loyalty addresses fiduciaries' conflicts of interests

20、 and prohibits fiduciaries from serving their own interests at the expense of the corporation's. Duty of care The duty of care, in simplest terms, requires directors to exercise the level of care that a person in a like position would exercise under similar circumstances. (1) in good faith(2) in

21、 a manner the director reasonably believes to in the best interests of the corporation. Business judgment rule Because directors, officers, and controlling shareholders enjoy positions of trust with the corporation, they must act in good faith and with loyalty toward the corporation and its sharehol

22、ders. The undivided loyalty expected of fiduciaries means that managers must place the interests of the corporation above their own personal interests. Sometimes these corporate interests and personal interests collide, and it becomes necessary to resort to applicable statutes and decisional law. Us

23、ually such collisions involve (1) corporate opportunities(2) conflicts of interestThe corporate opportunity doctrine forbids directors, officers, and controlling shareholders from diverting to themselves business deals or chances that in fairness or in justice belong to the corporation. Personal gai

24、ns at the expense of the corporation represent a breach of the manager's fiduciary duties. A "corporate opportunity" commonly will be found if the manager discovers the opportunity in his or her capacity as director and it is reasonably foreseeable that the corporation would be interes

25、ted in the opportunity because it relates closely to the corporation's line of business. 8. Piercing the corporate veil. Veil of the Corporation： The corporation has an existence separate from its shareholders. Under modern corporate law, one implication of this separate existence is the rule of

26、 limited liability; A shareholder, whether an individual or another corporation, is not liable for corporate debts or obligations beyond the shareholder's investment. 9. The Article of Incorporation The constitution of the companyThe memorandum of associationThis governs the company's extern

27、al affairs and must contain the following clauses:(a) name clause: private companies are required to end their names either with the word “Limited” or the abbreviation “Ltd”; and public companies must end their names with the words “public limited company” or the abbreviation “plc”;(b) registered of

28、fice clause: this states the company's legal address;(c) objects clause;(d) limited liability clause: states that the liability of the members is limited; (e) authorised share capital clauseAssociation clause: states that the subscribers to the memorandum wish to form a company.Public companies

29、must have a clause stating that they are public companies.The articles of associationThese regulate the internal workings of the company. They form a contract between:(a) the company and the company;(b) the members and the company;(c) the members.They deal with such matters as the allotment and tran

30、sfer of shares, the rights attaching to particular shares, the rules relating to the holding of meetings, and the powers of directors.Companies can draw up their own articles or use Table A model articles. If articles are not submitted then Table A applies automatically.  Articles can be altere

31、d by the passing of a special resolution as long as it is done “bona fide in the interest of the company as a whole”.What should be set forth in the articles of association in China?The articles of association of a limited liability company shall specify the following particulars: (1) the name and d

32、omicile of the company; (2) the scope of business of the company; (3) the registered capital of the company; (4) the names or titles of the shareholders;(5) the method, amount and time of capital contributions by the shareholders; (6) the organization of the company, its method of creation, function

33、s and powers and the rules of procedure; (7) the legal representative of the company; (8) other items which the shareholders deem necessary to be specified. Shareholders shall sign and execute the article of association of the company. The articles of association of a joint stock limited company sha

34、ll set forth the following: (1) its name and domicile; (2) its business scope; (3) the method for its establishment; (4) the total number of shares of the company, the value of each share, and the registered capital of the company;(5) the names of the sponsors, the number of shares they have subscri

35、bed for, the form and time of capital contribution; In order to establish a joint stock limited company, there shall be not fewer than two but no more than two hundred sponsors, half of whom shall be domiciled in China. (6) the composition of the board of directors, its authorities, term, and rules

36、of conducting business; (7) its legal representative; (8) the composition of the board of supervisors, its authorities, term, and rules of conducting business; (9) the method for company profit distribution;(10) the causes for its dissolution and the method for its liquidation; (11) the method for g

37、iving notice and making public announcement; (12) other matters which the general meeting of shareholders deems necessary to provide for. 10. The People's Court(1)The Supreme People's Court (i) jurisdiction over cases of first instance (ii) jurisdiction over appeal (iii) supervision over tri

38、als (iv) judicial interpretation (v) review of death sentences (2) The Local People's Courts at Various Levels (i) The higher people's courts (ii) The intermediate people's courts (iii) The basic people's courts (3) Special People's Courts 11. The more common choices available to

39、 them are: Sole proprietorshipA single individual, Rudy, owns the business assets and is liable for any business debts. She may have employees, such as Bud. Proprietorships tend to be small, with few capital needs. General partnershipIf Rudy and Bud arrange to carry on the business while sharing con

40、trol and profits, they automatically create a partnership. As partners, they are each individually liable for partnership debts. Partnerships tend to arise in service industries-such as law, accounting, medicine - where trust must exist among the participants and capital needs are not great. Careful

41、 planning and drafting of partnership agreements are vital. Limited partnershipRudy and Bud can form a limited partnership in which so-called limited partners provide capital and are liable only to the extent of their investment. General Partners run the business and are fully liable for partnership

42、 debts. Limited partnerships are of growing importance because they combine tax advantages and limited liability. CorporationRudy and Bud can form a legal entity called a corporation in which shareholders provide capital, and directors and officers manage the business. Unless there is fraud or an in

43、equity that justifies "piercing the corporate veil" - participants are not personally liable for corporate debts, only the corporation is liable. Corporations are the principal means of organizing businesses with complex organizational structures and great capital needs. The corporate form

44、, however, can be used for any size business, including a one-person "incorporated proprietorship. "12. Contract Definition 4. Restatement of the Law of Contracts 5. Remedy to protect:(1) Expectation interest (2) Reliance interest (3) Restitution interest 13. Issue of Shares in ChinaThe ca

45、pital of a joint stock limited company shall be divided into shares, and all the shares shall be of equal value. Shares of the company are represented by share certificates. A share certificate is a certificate issued by the company certifying the share held by a shareholder.When shares are issued,

46、the principles of openness, fairness, and equity shall be followed, and each share in the same class must have the same rights and receive the same interests. For shares issued at the same time, each share shall be issued on the same conditions and at the same price. All entities or individuals subscribing for shares shall pay the same price for each share. The issuing price per share may be at par value, or above par value, but