Problems And Solutions At Judicial Practice Regarding Disregard Of Corporation Personality

In our country, though it has not been long since the establishment of modern corporation system, the abuse of corporation personality occurs at a spreading trend. It is not rare that people take the advantage of Limited liability and Independent corporation personality, leverage the corporation to withdraw capital, transfer asset and escape from liability, resulting creditor of the corporation massive financial loss. As the fast development of our economy, it is not rare of the abuse of corporation personality; therefore many cases go to the court. Although National High Court provided judicial explanation before the revision of Corporation Law, obviously facing the various types of abuse of corporation personality and violation of creditor's interest, our legal system had been lagged behind and needed to be further strengthened. It also brought us judicial stuff working at the front-line difficulties.Clause No. 20 in 2005 revisited version of Corporation Law clearly specifies Disregard of Corporation Personality, or so-called Lifting the Veil of Corporation. The definition is when a Partner is trying to escape from its financial liability via the abuse of independent corporation personality and partner limited liability, this partner then is not eligible for its legal right of only being responsible for its original investment amount as the maximum liability at total corporation liability, and this partner should take extensive responsibility for total corporation liability. The legislative establishment of this system fine-tunes corporation personality; it is a milestone in our legislation to prevent the abuse of independent corporation personality.It has been more than one year since the effectiveness of the revised version of Corporation Law as of January 1st, 2006; we found it had rarely been a breakthrough, why? Key reason is the establishment of the disregard of corporation personality is to protect creditor's legal interest from the abuse of partner limited liability, the design is positive to protect creditor's equity, however as this new system is lack of relating procedure regulation and corresponsive institution therefore it is hardly practical in real practice and stays as virtual power on paper, just like a spiritual declaration in Corporation Law, then it brings difficulty in judicial practice, resulting either not using Disregard of Corporation Personality or abuse of this system, which could probably bring a negative effect regarding the dignity of the law. Moreover, a major problem in judicial practice is the plaintiff usually has difficulty putting to the proof. In response to various types of the abuse of corporation personality in current economy, combining with the encountering difficulty in judicial practice, we should analysis the root causes, focus on the areas including eligible condition, evidential responsibility, enforcement principle and judicial guideline, therefore to fully leverage the effect of disregard of corporation personality to guarantee a healthy and orderly economic development.