Analyse On The Theory And Practice Of Disregard Of Corporate Personality

If any general rule can be laid down, in the present state of authority, it is that a corporation will be looked upon as a legality as a general rule, and when the notion of legal entity is used of defeat public convenience, justify wrong, protect fraud, of defend crime, the law will regard the corporation as an association of persons.The "Disregard of corporate personality" system which is also named "piercing the corporate veil" or "lifting the veil of the corporation" is the exceptional application of the limited liability of shareholders. One of the important reasons for limited liability companies is to encourage entrepreneurial zeal rather than risk averse behaviour.It is a well established principle of company law that there is segregation of a company from its members, each being recognised as separate legal entities. This was the Salomon v. Salomon decision of 1897. This case provided a judicial interpretation as to the separateness of a company and as a distinct legal entity a company has the capacity to sue and be Sued in its own right. Therefore, when unlawful acts are committed by the company, it is primarily the company and not its members who is liable. However, there are occasions where the corporate veil will be lifted or where the separateness of the company will not be a sufficient defence to proceedings. These occasions arise particularly where the company is being used as a vehicle to evade its legal obligations and responsibilities Therefore, in circumstances where a company is suspected of committing an act of infringement of intellectual property rights, the issue arises as to whether liability can be affixed to a company's members or directors personally, in addition to the company itself, thus compromising the concept of a company as a separate legal entity. Thus the veil is pierced.The whole article is divided into four parts which expound the subject matter in details from the different perspectives. The first part is the historical and comparative jurisprudence study, which is aimed to reveal the historical origins and development track of the "Disregard of corporate personality" system.The second part displays a history images' of our country' s present legislation on the "Disregard of corporate personality" system. Through analyzing and criticizing the existing Judicial Interpretation system, it presents some problems of judges' jurisprudence when deciding cases concerning China' s company law and some important action procedure problems in the third part of this dissertation.While addressing the research on the "Disregard of corporate personality" theory and its practice problems with the above three parts as the main thread, the author mainly introduces its fundamental legal characteristics and important legal significance at the system level, in which the subject matter of this dissertation is also pinpointed.In the last part of this article "Disregard of corporate personality System and the Improvement of the Company Law in China", the author expresses his personal opinion on the status quo and weakness of the legislation on the corporation and enterprises in the contemporary China, consequently put forward some proposals on the revision and improvement of Company Act, hoping to make little contributions to the actual legal process in our country.