On Legal Obligation After Corporate Termination

Corporate legal entity plays a more and more important role in the economic sector. It has made a great contribution to China's economic development. However, just like human beings, corporate is mortal. According to legislators in China's theory circle, when a corporate terminates, like a human dies legally, it no longer has independent qualifications of subject, nor continue to be entitled to relevant rights or undertake any obligation. Liquidation is considered both theoretically and practically to be the last procedure before the settlement of claim and debt, clearing all legal relationships and protecting relevant obligees' rights. A corporate can safely terminate through liquidation. There is still vacancy in laws relating to the problems of relevant obligations and profits allocation after the termination of the corporate. For this reason, many significant impacts of legal obligations on relevant interested person brought by the termination of the corporate are not undertaken. This consequently causes the damage of lawful rights of those relevant interested person, which goes against what laws pursue—the justice, leaving a negative impact on the development of market economy. The paper thus explores the problem of the assumption of legal obligation after the termination of the corporate from both theoretical and practical aspects. It therefore aims at expounding the necessity of establishing the system of assuming obligation after the corporate terminates, and coming up with specific proposals on it.The paper consists of four parts. The first part is the introduction, explaining the lack of obligation assumption after the corporate terminates, which leads to the imbalance of the interests between corporate investors and creditors. It therefore comes to the problem that China should establish such a system of obligation assumption after the termination. Chapter one explains the consequences of the damage of interested person's rights and confusion of judicial trial outcome because of the lack of such obligation assumption, harming the authority and unity of the law, as well as interested person's lawful rights. Chapter two mainly discusses the necessity of establishing the system of obligation assumption after termination of Chinese corporate. The third chapter focuses on the basic theories on the establishment of the system, while the fourth chapter explores how to establish this system.