A Study On The Protection Of Creditors Benefits Under The Principle Of Limited Liability

With the progresses in national economy and enterprises' reform, the corporation ,as one of the most important and the activist subjects, has developed tremendously, especially since china's entering the WTO. whereas the limited liability , an essential attribute of modern corporation, is a vital principle in establishing the corporation law. However, it plays the different roles to the shareholders and the creditors. On one hand, it diminishes the investment risks of shareholders. On the other hand, it deprives the creditors of their direct rights towards the shareholders, which means that the creditors rights will be damaged when the corporation bankrupts. As a mater of fact, the creditors are in disadvantage once the corporation is founded conforming to the principle of limited liability. Their benefits are sometimes ignored because of the flaws within the national corporation law. Although the shareholder and the creditor are rivalrous counterpart, it is possible to protect the creditors at the same time validate the limited liability of shareholders. This paper means to clarify some widespread misunderstandings about the relationship between the limited liability and the protection of creditors, so as to provide a new vay of ensuring the benefits of the creditors.