Legal Analysis of Ultra Vires Guarantee by Corporate Legal Representatives

When a company's legal representative provides a guarantee externally, the validity of such act has been a contentious issue in judicial practice. Article 16 of the Company Law provides the basic framework for corporate guarantee procedures.

The Supreme People's Court has recently released typical cases, providing important guidance for judicial practice.

For related-party guarantees, i.e., when the company provides a guarantee for its shareholders or actual controllers, a shareholders' meeting resolution is required. The counterparty should conduct a reasonable review of the resolution.

It is recommended that enterprises integrate compliance into their routine management, conduct regular self-inspections, and establish a compliance culture.