"Corporation" and "Corporate Law" in China: a comparative analysis of theory and legislation
The understanding of a corporation varies from country to country. The concepts of "corporation" and "corporate law" in China have their own specifics. This article discusses the problems of defining the terms "corporation" and "corporate law" and their content in the law of the People's Republic of China. The Chinese national specifics concerning the understanding of the term "corporation" in its semantic and legislative-traditional aspects, as well as in the aspect of classification of legal definitions, are analyzed. Special attention is paid to the understanding of the term "corporation" in various countries, a comparative legal study of Chinese understanding with continental and common law and a historical analysis of Chinese law is conducted, the work reveals differences and similarities in the understanding of this term in China and abroad. It is proved that the corporation "is a national phenomenon". Based on the conducted research, the author proposes, taking into account the differences between the relevant definitions in general and continental law, as well as the specifics of Chinese law, to define "corporate law" in a rather narrow sense, which corresponds to the general view in China.
Keywords: PRC law, corporation, corporate law, comparative analysis, company, definition.
1. Introduction. Over the past few years, Russia has been actively attracting Chinese enterprises and investments in various fields, which eventually leads to the formation of a structure of comprehensive cooperation, the expansion of which takes place in such most important areas of the economy as trade, investment, etc., the implementation of which is carried out, including through the organization of joint ventures. At the same time, the content of the concepts of "corporation" and "corporate law" in the Chinese legal field is certainly important both for identifying the legal status of the relevant entities in China and for conducting a comparative study of the problems of corporate law under the legislation of Russia and China.
The discussion on the concept and types of corporate organizations was resolved at the legislative level by consolidating the legal definition of a corporation and the list of corporate organizations in the Civil Code of the Russian Federation. At the same time, many Russian legal scholars note that modern foreign legislation does not use a unified definition of a corporation, and the term "corporation" itself is understood differently in national legal systems <1>. In China, the concept of "corporation" is not defined by law, instead, as a rule, a special term of the Chinese language is used -"gongs" (kit. ,). How does this concept differ from a corporation? How is "corporate law" understood in China?
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<1> Syrodoeva O.N. Joint stock law of the USA and Russia (comparative analysis). M.: Spark, 1996. pp. 17-30; Stepanov P.V. Corporations in Russian civil law // Legislation. 1999. N 4. pp. 11-15; Kozlova N.V. The concept and essence of a legal entity: an essay on history and theory. M.: Statute, 2003. pp. 200-221.
2. Basic research. According to the "Chinese-English Universal Dictionary", "gongs" can be translated as "company" (company) and "corporation" (corporation) <2>. According to the New Chinese-English Dictionary, "gunsy" translates as: 1) "company", 2) "corporation", 3) "Corp." (the usual abbreviation of "corporation"), 4) "Co." (the usual abbreviation of "company") and 5) "firm" (firm) <3>. Therefore, "company" and "corporation" seem to be the most accurate translations of the Chinese term "gongs". However, in translations of Chinese laws into foreign languages, "gongs" are always translated as "company" <4>, which may lead to a certain semantic inaccuracy due to the fact that in the Chinese language and legal science there is no corresponding term denoting a corporation in the Anglo-American legal system, whereas In the common law system, a company, in fact, does not differ from a corporation in terms of its organizational and legal structure.
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<2> Dai M., Dai V. Chinese-English universal dictionary. Shanghai: Shanghai Education of Foreign Languages, 1991. p. 322.
<3> Shan Ts. New Chinese-English dictionary. Beijing: Education and Research of Foreign Languages, 1993. p. 263.
<4> See, for example: The Law of the People's Republic of China "On Companies". URL: https://chinalaw.center/civil_law/china_company_law_revised_2013_russian / (accessed 04/13/2020); Company Law of the People's Republic of China (Revised in 2013).
Let's turn to the issues of legal regulation of the status of companies in China. Article 3 of the Law of the People's Republic of China "On Companies" <5> provides the following legal definition of the term "gongs": "A company is an enterprise with the status of a legal entity, has its own property of a legal entity and enjoys property rights in relation to this property. The company is responsible for its obligations with all its assets." According to this law, companies in China are limited liability companies (hereinafter - KOO) and joint-stock limited liability companies (hereinafter - AKOO) <6>. These two types of companies make up the list of commercial legal entities established by the General Part of the Civil Code of the People's Republic of China (hereinafter referred to as the CPC of the People's Republic of China) <7>. This list is open. A non-profit legal entity is recognized as a legal entity created for socially useful or other non-commercial purposes and does not distribute all the profits received among its contributors, founders or participants. Non-profit legal entities include budgetary institutions, public associations, foundations, and organizations providing social services. Along with commercial and non-commercial entities, the Chinese legislator also identifies special types of legal entities, which include: state bodies - legal entities, rural collective economic organizations - legal entities, rural-urban cooperative organizations, as well as primary (grassroots) mass self-government organizations - legal entities.
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<5> The Law of the People's Republic of China "On Companies" (adopted by the National People's Congress on 12/29/1993) (as amended. dated 12/28/2013).
<6> In the same place. It is worth noting that in Russian scientific works, sometimes there is a translation of these two forms of the company as a "limited liability company" (LLC) and a "joint-stock limited liability company" (AOOO) (see: Sun Ts. The responsibility of participants in corporate relations: a comparative analysis of the legislation of the People's Republic of China and the Russian Federation // Law and the state: theory and practice. 2019. N 4. P. 11). This translation is not entirely accurate, since the Chinese legislator used the term "gongs", which can be translated into Russian by a more appropriate term - "company". In addition, for the term "joint-stock company", legally enshrined in Russian legislation, the legislator did not use the phrase "limited liability company". Avoiding the term "companies", which is more appropriate as an original Chinese expression, and mixing the term "joint stock company" with the phrase "limited liability" can lead to chaos when studying the specifics of foreign legal systems and conducting comparative legal research.
<7> The general part of the Civil Code of the People's Republic of China dated March 15, 2017 (as amended. dated 13.07.2015, intro. effective from 01.10.2017) // National People's Congress of the People's Republic of China. Article 76 of the CPC of the People's Republic of China defines: "... a commercial legal entity is a legal entity established for the purpose of extracting profit and distributing it among the persons participating in it with their capital. Commercial legal entities include KOO, AKOO and other enterprises - legal entities."
A corporation is a national phenomenon. Comparing the term "company" from the law of the People's Republic of China with the understanding of a corporation in foreign law will make it possible to more clearly demonstrate the specifics of the Chinese legal system in this matter.
The understanding of the corporation in the system of continental and common law does not quite coincide. As I.S. Shitkina notes, "in the common law system, the term "corporation" is used quite widely, often denoting the integrity of an entity and its ability to act as a participant in legal relations" <8>. Analyzing the groups of corporations identified by American authors, she notes that their approach is close to identifying a corporation with a legal entity <9>. Companies in England are those legal entities that are formed in accordance with the corporate principle of membership and carry out entrepreneurial activities. And legal entities created under a royal charter or statute are usually called corporations in the UK. However, there are almost no such legal entities left.
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<8> Shitkina I.S. Corporate law: textbook / ed. by I.S. Shitkina. M.: Statute, 2019. p. 114.
<9> Ibid.
In traditional continental law, legal entities are divided into private and public by their legal nature. Differentiation of forms of volition and expression of will acts as a criterion for the division of private legal entities into institutions (institutions) and associations of persons (corporations); as representatives of classical German legal thought also note, the stable legal relationship (membership) existing within the corporation between the corporation itself and its members determines the specifics of corporate governance. The "German Civil Code" is a vivid example of such a division. As for the legal definition of a corporation in the Civil Code of the Russian Federation (Article 65.1), the modern corporation in Russia is characterized by two characteristics: 1) the right to participate (membership); 2) the formation of the supreme body by the participants. It should also be emphasized that in continental law, a corporation is not an organizational and legal form of a legal entity.
From the above legal definition of Chinese companies, the legal classification of Chinese legal entities, it is not difficult to deduce the following: 1) the Chinese term "company" and the concept of "corporation" in the context of the continental legal system do not coincide; 2) differing from the traditional continental qualification model of legal entities, the Chinese model has its own specifics, manifested in the division of legal entities not based on the criteria for dividing persons into private and public. The Chinese model also differs from the Russian classification of legal entities into commercial and non-profit organizations - the Chinese legislator uses a trichotomy, according to which legal entities are divided into commercial, non-commercial and special. The latter group of legal entities definitely does not coincide with any traditional model of the countries of continental law - these special legal entities in China are distinguished on the basis of the system of socialist public (national) and collective ownership; 3) the term "company" in the CPC of the People's Republic of China is a kind of formulation (an integral part) in the names of two specific organizational and legal forms of legal entities - KOO and AKOO, which does not differ from the above-mentioned specifics of the concept of "corporation" in continental law.
Further, it seems advisable to conduct a comparative legal analysis in two directions - to compare the term "company", peculiar to Chinese law, with the systems of continental and common law, thus revealing the relationship between "company" and "corporation".
Russian Russian law scholar Wang Zhihua, comparing "gongs" <10> with the corresponding Russian terms, notes in his article that "there are several relevant terms in the Russian language <...>; in practice, "gongs" (quotation marks by us. - T.Ya.) it can be equated to the everyday understanding of "company" in Russia <...>; another term "corporation" is also translated into Chinese as "gongs", but its meaning is much broader than "gongs", due to the fact that the company is one of the types of corporations" <11>. In the same work, Wang also translates the terms "society" and "partnership" as "gongs". This approach has a basis: if we identify the guns and the company in its Russian understanding, then we can conclude that they are covered by the term "corporation". However, if we transferred the term "corporation" from the Civil Code of the Russian Federation to Chinese law, then, apart from "gunsa", which organizations in corporate form would be included in it?
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<10> This refers to the Chinese term "company". To avoid confusion when comparing terms that have similar meanings in the legal systems of different countries, the author uses the Chinese expression "gongs" in this paragraph.
<11> Wang Ch. Types of companies (corporations) in Russia and their characteristics: comparative legal analysis with China // Comparative legal analysis. 2007. N 3. pp. 88-89.
Firstly, it should be noted that, taking into account the above, according to the present Chinese classification of legal entities, rural collective economic organizations and rural-urban cooperative organizations belong to special types of legal entities. This division mixes the privacy and publicity of the organization's status, which does not coincide with the classification of "corporation - institution" in continental law. In addition, partnerships <12> in China are not legal entities, but rather, by nature, represent a joint activity based on a contract, which does not correspond to the traditional division of Romano-German law. Therefore, in addition to "gunsa", other Chinese organizations cannot be considered as corporations in the continental legal meaning of this term. Secondly, when comparing organizational and legal forms, it is very easy to notice that "huns" as part of one legal definition is more correctly identified with "business society". Identifying it with a "company" and even more so with a corporation in its Russian understanding is not entirely correct. Thus, the assimilation of "gunsy", a term used in the legal definitions of some types of Chinese legal entities, to "companies" in Russian may be detrimental to legal science; there is also some inaccuracy in the legislation of foreign countries regarding the translation of this term.
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<12> Chinese terms (Partnership enterprise; Hehuoqi>e) are often translated as joint venture, partnership, partnership enterprise, partnership enterprise, etc. It is also worth noting that partnerships in the Chinese sense do not belong to companies.
It should also be noted that the term "corporation" <13> as such has not been fixed in Chinese legislation, it is found only in the scientific works of Chinese researchers. Being limited by the system of a centrally planned economy, the division of law into private and public was not recognized by Chinese legal theory for a long time, respectively, the term "corporation" initially had no logical basis for consolidation in legislation. Classification of legal entities in the "General Provisions of the Civil Law of the People's Republic of China" (hereinafter referred to as the Criminal Group of the People's Republic of China) <14> 1986, mainly inheriting the Soviet "model of functionalism", divided legal entities into enterprises and non-enterprises, and the OCGC of the People's Republic of China partly borrowed the American experience, distinguishing commercial and non-commercial legal entities taking into account the peculiarities of the social system China <15>. The allocation of special types of legal entities, along with the refusal to apply the continental model of classification of legal entities, causes a situation of inconsistency of borrowing, the "track effect" (path dependence) caused by the provisions of earlier legislation. Thus, it can be noted that the term "corporation", which exists in the theory of Chinese law and coincides with its understanding in continental law, is not analogous to "gongs" (companies).
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<13> "shetuanfazhen in China is often understood as an organization formed by several individuals, whose composition is based on membership."
<14> At the current time, the OCGP of the People's Republic of China and the OCGC of the People's Republic of China act together as common principles of civil legislation. See: General Provisions of Civil Law of the People's Republic of China (adopted by the National People's Congress on 04/12/1986) // Website of the National People's Congress.
<15> Yan T. Classification models of legal entities in the Russian Federation and the People's Republic of China // Bulletin of St. Petersburg State University. Right. 2018. Vol. 9. Issue. 2. p. 207.
Also interesting is the fact that in China the law on companies ("gunsyfa"; Gunsy law; English company law) It is considered as a separate discipline of law and is often translated into English as corporate law due to the fact that the terms "corporate law", "business law", "enterprise law" and "company law" do not differ significantly in semantic aspect and content <16>. And "corporate governance" in Chinese is written as (gunsi zhdili), which hieroglyph after hieroglyph translates as "company governance" (company governance). Although the legal system of the People's Republic of China is of a mixed nature, representing a fusion of ancient legal traditions and modern legislation based on the ideas of "socialism with Chinese characteristics", it still belongs to the system of continental law. The author believes that, taking into account the above, the term "corporation" in common law is clearly broader than "gunsi"; the translation of the Chinese "gunsif" as corporate law (corporate law) is a compromise way of giving the corresponding branch of Chinese law a relative definition.
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<16>
S.D. Mogilevsky, before the reform of corporate legislation in 2014, understood the term "corporation" to mean business companies <17>. This point of view seems to coincide with the English translation of the Chinese "corporate law" and is widely supported by Chinese lawyers - the objects of company law are only companies, i.e. this branch of law regulates only the COO and the COO. We must not forget that Chinese "corporate law" has a special specificity, cultivated on the basis of continental law by borrowing "nutrients" from common law in the process of its development.
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<17> Mogilevsky S.D., Samoilov I.A. Corporations in Russia: legal status and fundamentals of activity: textbook. M.: Norm, 2003. pp. 34, 37.
Pointing out that corporate law is one of the branches of national legislation, Sun Qi believes that Chinese corporate law is close to the Anglo-Saxon model. This is due to the fact that the Chinese legislator is forced to build his system of legal regulation of corporate relations from separate (special) laws due to the lack of his own civil codification as in the Anglo-Saxon model <18>. This approach contains many flaws for the following reasons: 1) there is no reason to apply this approach, since, unlike the Criminal Group of the People's Republic of China, articles on companies (commercial legal entities) are already fixed in Chapter III "Legal entities" of the OCGC of the People's Republic of China both general provisions for special laws, and, in particular, the Law of the People's Republic of China "On Companies"; 2) this point of view ignores the complex status of Chinese "corporate law" and the fact that China is a country of continental law; 3) Neither "corporate relationship" nor "corporate legal relationship" are considered as subjects of Chinese civil law.
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<18> Sun Ts. Decree. op. c. 11.
3. Conclusions. With regard to the countries of continental law, E.A. Sukhanov notes: "... the classic European "standard" of eight corporate forms is not fundamentally rigid, but allows for various options, taking into account national characteristics and current trends in economic development" <19>. The purpose of comparative legal research, of course, should not be a mechanical combination of different legal phenomena arising in different legal cultures and averaging in the legislations of different countries. Due to the dependence on the initially chosen legislative path, a significant national specificity has developed in China with regard to the naming and classification of legal entities and legal branches. A superficial comparison of Chinese "corporations" and "corporate law", which exist only in theory and correspond to the continental understanding, with the provisions of the legal systems of other countries, certainly does not matter much, because they were borrowed into Chinese theory from European legal systems. Summarizing the above, the author believes that, taking into account the various relevant definitions in general and continental law, the specifics prevailing in the Chinese legal system, it is necessary to propose a definition in a rather narrow sense: Chinese corporate law is a branch of law aimed at regulating the creation and operation of a company (KOO and AKOO), ensuring and protecting legitimate rights and the interests of companies, participants (shareholders) and creditors, maintaining socio-economic order and promoting the development of a socialist market economy, which corresponds to the general view in China.
However, in addition, it must be borne in mind that in the case when the legal terminology and branches of law in any state do not fully correspond to similar provisions of the legal systems of other countries, the need to identify gaps in relation to a specific definition in national legislation, understanding the regulatory framework, the logic of the social system, the specifics of the historical and legal process of this countries and the need to compare specific legal institutions.
