As the market competition has been more and more intensive, the legal risks may exist nearly everywhere in the production and operation of an enterprise. In the last three years, the amounts involved only in the economic lawsuits of the state-owned enterprises in Yichang have reached nearly 180 million yuan. It has been the focus of the whole society today that how to manage and protect the enterprises in a legal way and avoid these legal risks. The Municipal State-owned Assets Supervision and Administration Commission has recently launched in-depth investigations on the legal risk prevention and economic disputes in 40 state-owned and state-holding enterprises.
Over 80 million restored by Yichang enterprises in the last three years
As is indicated through the investigation, the enterprises’ awareness of legal risk prevention has been continually increasing in recent years with the constant improvement of market economic system. Many enterprises have been transformed from passive responding to lawsuits to positive prosecution and rights protection. The legal risk prevention has become a primary impetus to the sound development of an enterprise.
In recent three years, over 20 state-owned and state-holding enterprises has been involved in economic dispute lawsuits with related value of nearly 100 million RMB, more than 80 million has been recovered through legal means. Yichang Port Group tackled 9 lawsuits in total, two of which were sued as the plaintiff, gaining a compensatory payment of more than 1 million; seven of which were responded as the defendant with nearly 4.28 million being recovered. And Angle Group Co. Ltd. protected its trademark rights; patent rights by legal means and severely struck the criminals, recovering the loss of nearly 10 million yuan.
Knowledge of law is the key to risk prevention
The enterprise regulation in Yichang has so far covered the fields including operating management, human resource, financial audit and business administration. The management of investment, bidding, purchasing, engineering project and contract has been specially refined and implemented to make the enterprise’s operation more normative. Collective decision should take the place of individual decision, and illegal use of power and violation rules in market competition should be resisted, with regard to such issues as significant decision-making, appointment or dismissal of cadres in important positions, investment of major projects and usage of large sums, thus making legal risks controlled or diminish beforehand , .
The shift forward of the strategic pass of legal risk prevention has been the biggest feature of the enterprises operation in Yichang. Taking the founding of law consultant system and the reinforced supervision of major issues as the pivot point, there have registered more than 170 legal advisers of enterprises. Among the 250 state-owned or state-holding enterprises, 220 have legal affairs departments with part-time or full-time personnel. All these legal advisers and personnel play an important role in the supervision of crucial economic activities referring to enterprise’s rights and interests (the sign of contracts, merger, division, bankruptcy, investment, leasing, transfer of assets, bidding and so on), the management of the lawsuit and the protection of enterprise’s rights and interests.
According to incomplete statistics, more than 200 lawsuits referring to the state-owned enterprises’ trademark rights, patent rights and economic disputes have been tackled, recovering from economic loss of tens of millions yuan through legal procedure. Since the reform of the Hubei Changda Chemical Industry Company, the original loan disputes had lasted 10 years; and it finally settled out of court through legal means, saving more than 20 million yuan for Yichang.
Away from expectation of flukes
Through the analysis of the lawsuits from the 40 randomly selected enterprises, it is easy to find that weak points still exist in the prevention of legal risks as the number of negative responses to the lawsuits was more than that of positive prosecutions. There exist both huge legal risks and frequent economic disputes in economic activities such as the reformation, merger and acquisition, investment, financial loan, contract signing, production and marketing. Some enterprises ignore or undermine the potential legal risks in conducting business, and more focus on merely speed and efficiency in major decision making. Some with fluke mind compete with each other in an illegal manner, resulting in large economic loss and potential legal risks to the enterprise. Some without professional legal advisers have to hunt for temporary law workers when facing lawsuits, making it fail to avoid legal risks beforehand. So far, the lack of professional personnel in finance, intellectual property, international trade is one of the problems in enterprises.
It is indicated through the investigation that the establishment of the enterprise legal risk prevention mechanism is a must-do under the new circumstances. It is urgent to establish an operation mechanism that takes full implementation of enterprise legal counsel system as the core, and is compatible with the contemporary enterprise system; an enterprise legal risks prevention mode that centers most on precautions and control, and after-event remediation. There is also a need to enhance the awareness of initiatives, prospects and planning for an enterprise, so as to ensure its decision-making by law, operation and management by law, and protection of its proper rights by law.
(Correspondent Li Zuokai, Reporter Zhang Liang)