Commercial Law and Economic Law
What the exam tests
Commercial and Economic Law covers companies, bankruptcy, bills, securities, competition, consumer protection, and regulation. The Company Law revision effective 2024 is especially important: capital contribution, governance, shareholders' duties, and liquidation.
Core rules
- A limited liability company is a separate legal person; shareholders are liable to the company for their subscribed capital and, in principle, not for company debts beyond that.
- If a company cannot pay due debts, the company or creditors may require shareholders to pay contributions early (accelerated maturity). A shareholder who transfers unpaid capital may remain liable in specified cases.
- Directors and senior managers owe duties of loyalty and diligence. Related-party transactions must follow the articles and approval rules.
- Piercing the corporate veil is exceptional: where shareholders abuse separate personality to evade debts and seriously harm creditors, they may be jointly liable.
- Economic law also includes anti-monopoly review, consumer rights (right to know, safety, fair dealing), and regulatory approval for securities.
Worked example
A company has registered capital of 10 million yuan; shareholder A subscribed 6 million but paid nothing. The company now owes 2 million and cannot pay. A creditor sues A. The analysis: limited liability does not protect A from the obligation to contribute. Under the accelerated maturity rule, because the company cannot pay due debts, A can be required to pay the unpaid 6 million within the subscribed amount; the creditor may recover up to the debt. If A had transferred the shares to an insolvent transferee to evade contribution, A may still be liable. The reasoning distinguishes company debt from the shareholder contribution obligation.
Traps
Do not say shareholders are always immune from company debts. Do not confuse registered capital with paid-in capital. Do not apply veil-piercing routinely; it is exceptional. Do not ignore the 2024 Company Law changes. Do not treat consumer protection as only contract law. Do not confuse administrative penalties with civil compensation.