The Theory And Application Of Disregard Of Corporate Personality System

Disregard of corporate personality is a misuse of corporate shareholders on the company independent status and limited liability to evade the debt, seriously damaging the interests of the creditors of the company shall be jointly and severally liable for debts of the company's legal situation. In this paper, the basic theory of the system, scope, components, applicable standards were discussed, and I presented my views on some areas of the current domestic situation.The first part: the theoretical basis of disregard of corporate personalityThis component describes the basic theory of piercing the corporate veil. The beginning of the summary we have already introduced the disregard of corporate personality, from the concept we can see that the system established to protect the independent personality of companies and make sure that companies play a positive role in commodity economy at the same time, prevent the company controllers seek illegitimate interests, harm the interests of creditors. The value of this system is that: firstly, the establishment of piercing the corporate veil is a necessary complement to the Company Law and the legal system of protection. Secondly, disregard of corporate personality improves and develops the legal system.The second part: the application of disregard of corporate personalityWe discussed the main application areas of disregard of corporate personality in this part. The system is mainly used in the traditional areas. The traditional areas we talked about means shareholders pass the responsibility to the company. That is, in particular the abuse of dominant shareholders of limited liability of shareholders and the company denied the case of legal personality behind the company and its shareholders and the shareholders of each of the independent personality of the limited liability, and ordered the company's shareholders take responsibility for creditors of the company and the public interest. This is the most common situation.With the development of society, the traditional field of application of disregard of corporate personality can not meet all the needs, naturally the extended situation comes out. Here the extended situation we talked means the unusually way to take responsibility. The traditional way to take responsibility is that the companies take it for the shareholders, but the extended situation is the opposite way. The extended situation include two kinds: The first kind is the opposite application of disregard of corporate personality, the other kind is the disregard of corporate personality in sisters companies.The third part: the elements of disregard of corporate personalityFirstly, let us discuss the main elements of disregard of corporate personality. It seems ok that from the provisions of company law,the accuser of cases of disregard of corporate personality are creditors of companies,the shareholder or the shareholder company are the defendant. We need to discuss the main elements in order to help solving the lawsuit in a practical view. This includes the applicability of accusers and defendants.Secondly, It needs to be sure that the shareholder abuse the personality of company in activity elements when the disregard of corporate personality needs to be used. There might be positive behavior such as over-control or negative behavior such as insufficient funding among these behaviors. The most common are four types of behavior: significant lack of capital, personality confused, the company without personality and excessive control.To discuss the results element, from the analysis of results, if confirmed using the rules of disregard of corporate personality, it must appears the result that causing harm to the others or the society by the activity of shareholders firstly.The fourth part: the applicable standards of disregard of corporate personalityIn this section, we discuss the application problems of disregard of corporate personality.Firstly, the significant shortage of capital situation. The capital is very important for a company, it is not only the base of company, but also the guarantee of company. When we judge what situation is significant shortage of capital, we need to judge the capital is registered capital or paid-in capital. The time we make judge is also need us to analysis the different situation. At the same time, the significant shortage of capital will cause the responsibility from shareholders to companies or other shareholders or creditors. We will make further discuss in the paper.Secondly, the personality confused situation. Confusion is the important standard of judging disregard of corporate personality. Personality confusion means that the company is not independent with other companies, the repeat of personality of company appears. Although the personality confused is similar with excessive control and company without personality, there are different among them. The personality confused situation appears majorly in property confused, business confused and workers confused.Thirdly, the excessive control situation. The excessive control means shareholders'activity is illegal according to over control the company. The company will become to the puppet of shareholders when this situation appears. From the real practice, the excessive control situation is common in mother-son companies.Fourthly, the company without personality situation. The company without personality situation means shareholders confused with company completely and make the company to be the other personality of shareholders. The company without personality situation is an serious situation, we have to make sure that the extreme result appears when we want to judge the company without personality situation.The fifth part: the problems and suggestions of disregard of corporate personalityThe author takes out the opinions on our country's disregard of corporate personality system in evidence problems, execution step and whether counts have right to use disregard of corporate personality without asking.The problems of evidence is difficult for the accusers'evidence getting and standard of judging. We can make it batter that improving the evidence and the rules of evidence to get better results. There are different opinions on whether taking disregard of corporate personality to execution step. I believe that we should say no to the ideas that take disregard of corporate personality to execution step. Besides that, the count should do not use the disregard of corporate personality on duty without asking in my opinion.