Studies On Limited Liability System Of Corporation

Corporation is the core of modern enterprise system, while the limited liability system is the cornerstone of all the systems of corporations. Philosophies of many modern corporations are derived from the limited liability system. In modern society, the limited liability system is considered the most effective legal invention for the purpose of commercial activities since the 19^th century. This regime is intended to maximize the interests of shareholders and stimulate the investment enthusiasm of investors. It reduces the investment risk and greatly improves corporations' operational efficiency. However, since the 50s of 20^th century, with the development of society, especially the emergence of the multinational corporations, the business activities of corporations continue to show negative effects. Corporate personality is abused to be "the protection of fraud or the means of defending crimes", so that the corporations' creditors are facing increased risk. At the same time, the goals which the legal system pursued have changed, the transaction security is more important than stimulating investment. The limited liability system is facing big challenges. How to improve the system to balance the interests of shareholders and creditors is of great practical significance for promoting the operation and development of our corporations.The article contains three parts: the preface, the text and the conclusions.The body is divided into four parts. Chapter one is about an overview of the limited liability system. This chapter introduces the definition of the limited liability system and analyzes the features as well as the application. It emphasizes that it's a limited liability assumed by the shareholders for the corporations at the basis of the corporate independent personality.Chapter two is the pros and cons of the limited liability system. This chapter analyzes its functions and defects in details, and comes to a conclusion that the shortcomings of the limited liability can be made up for through a variety of measures with the social development and the legal improvement. We should not abolish it due to its defects.Chapter three is the amendments of the limited liability. It introduces the theories of both the common law and civil law countries, namely "piercing the corporate veil" and "Durchgriff", then evaluate the theory of disregard of corporate entity.Chapter four is about the perfection of China's limited liability system. It is also the main part of the body. First of all, it analyzes the application of the provision of the exceptions to the limited liability. Then propose some specific Countermeasures for the perfection of China's limited liability system.