The Personal Negative Of The Legal Entity And The Legislative Idea On It

The legal entity of corporation arising out of the development of themarketing economy can make the social economy develop much faster and is thetypical mode of the modern enterprises. The corporation system has been stillbased on the independent corporate personality and the limited liability fromthe shareholders, which play an important role in the development of thecorporation and the social economy. The system, simultaneously promoting thedevelopment of the social economy, is easily controlled to make damages onthe interest of the creditors and the related parties, which is absolutelycontrary to the judicial fairness and justice. The negative theory (piercingthe veil of the corporation) for the corporation personality applied in manycountries is taken to promote the development of the corporation. We in thearticle firstly introduced the theory of the negative theory on thecorporation personality and then suggested the theory applied in our nation,brought some advice on how to establish our own negative theory on thecorporation personality lastly.The negative theory of corporation personality, also called "piercing theveil of the corporation", is to prohibit the independent legal personalityfrom being abused and to strengthen the liability of the shareholders forprotecting the creditors and the public interest. Followed by English,Germany and Japan, American was the first country to put the theory intopractice. As we all know, the theory was established on the basis of caselaws, and shall be developed further with the judicial practice.It is much significant and useful to establish the personal negative of thecorporation in China. The corporation system in our nation was establishedafter the economic reform in 1992, for that reason, the negative theory(piercing the veil of the corporation) of the corporation personality is muchsignificant and useful to establish our national corporation system. Thecorporation system in our nation somewhat (in some way) has not been incompliance with the economic development of our nation, and many shareholdershave taken use of the independent corporation personality to avoid the legalliabilities, such as inadequate capital for investing, establishing thecorporation without bona fide intention, and avoiding the obligation of thecorporation for making use of the interrelated relationship to transfercapital and paying no attention on the social responsibility, ect. Forsettling such problems, we had better introduce the system runningeffectively in West countries under the condition that the corporation lawin China is lack of specific rules and effective regulations to settle theproblems solely.The negative theory of the corporation personality has been taken in the 1judicial practice, notwithstanding specified in the statute law. Presently,bona fide principle, the prohibition of abusing power and fairness principleshall be applied to settle the legal problems of the theory. As a nation withstatute laws, the negative theory system shall be enacted in the mandatorystatutes with related complementary rules, the regulations on theestablishment of corporation, ineffective system on the incorporation andcivil liability of flawing investment. Simultaneously, the management oftrans-investment, the duties of directors, the information disclosure oflisted corporation and legal liability of service organizations shall bespecified in the mandatory statutes.