Discussion On Disregard Of Corporate Personality In China

As is known to all, company is the world's most important mode of business operation. The separation of property between the company and the shareholder, the separate personality of the company and the limited liability of the shareholder ensure that the risk of business operation is in the foreseeable and acceptable level which encourage people engaged in various business activities, promote social and economic development. However, with socio-economic development, misuse of separate corporate personality are more and more done by shareholders who are hidden in the veil of independent corporate personality after the drive for self-interest, and social public interests of creditors often been seriously damaged and without strong protection, but disregard of corporate personality pierces the corporate veil, in the form of disregarding the separate personality of the company, lift the veil between the company and shareholders, directly claim on the shareholder who do the wrongful acts. Disregard of corporate personality is one of the major hot spots of Chinese revised'Company Law'in 2005, although both before and since, theorists and practitioners have never stopped the debate, there is one thing can be predicted is that once the disregard of corporate personality is constructed to a whole system, it'll do a lot of good to China's socio-economic development. However, the establishment of a integrated system is a gradual process and it will not be done overnight and requires continuous theoretic research and practice. This paper hence focuses on the establishment and consummating of the disregard of corporate personality in China, hope to do some discussion on this subject in the gradual process.There are five parts of this paper. The first part describes the legal theory of disregard of corporate personality. This section is divided into two points to be explained: first, the overview of disregard of corporate personality. The two important principles of the building as the cornerstone of company law system- independence of corporate personality and limited liability of shareholders is not absolute, when the separate corporate personality are not consistent with fairness and justice which is the value of law, it is necessary to correct and complement it by disregarding the rules, the emergence of this rule completes the corporate system and the value of equity and justice goals. Second, the essential characteristic of disregard of corporate personality is discussed. The existence of this rule is in the premise that the company has its independent legal personality otherwise it is just empty talk, and the particularity of its own quality decides that it should not be widely used; it is only applicable in specific cases. Improper use of the rule will undermine the basic building stone of company law system. The purpose of this rule applies specifically to safeguard social fairness and justice, no or excessive abuse of this value will not meet the target.The second part analyzes a general overview of the development of disregard of corporate personality in other countries. This section only briefly outlines the development of disregard of corporate personality in the rest of the world, so we can have a more comprehensive understanding of the rule. It includes: first, its development in common law countries, especially in the typical representative countries - Britain and the United States, the development of this rule were briefly introduced the situation. Second, its development in civil law countries, especially in the typical civil law countries - Germany and Japan, the development of this system were briefly introduced the situation.The third part expatiates on disregard of corporate personality in China. First, it analyses the theoretical development of disregard of corporate personality in China. Chinese theorists of this rule achieved some results, but the new legislation in addition to the "Company Law" to establish its principle, our legal system before the Company Law has no real disregard of corporate personality. Second, problems we faced both theoretically and practically. Most scholars of the current focus in this rule on legal and foreign practice, it should be appropriate to shift the focus to the application of judicial practice in China. Of course, as a typical written law country, we have no specific law to apply for about this rule. So it is necessary to consummate the system in China. In addition, the role of judges should be taken seriously enough, as the law enforcement and appropriate, no doubt the judge should also have good professional and moral quality, to ensure the accuracy and fairness be realized.The fourth part analyzes the elements of disregard of corporate personality. This part is in the combination of relevant theories of law and our research and practice, focusing on analysis of elements of disregard of corporate personality. First, it analyses the main body element of this rule. As the reality of the situation changing, the plaintiff and the defendant eligible for some confirmation would be relatively complicated. I hope that the public creditors and shareholders and the legal construction in the future can have the qualification of being plaintiff in order to achieve true social justice. Second, it analyzes the behavior element. This section lists our current typical abuse situations which are also a more accepted classification of the cases, and gave a simple example to understand. There are several scenarios: mixed personality which including the property mixed, business mixed, agency and personnel mixed and other circumstances; company's capital is significantly not enough to operate business; over control; the alter ego of corporate. The third, it analyzes the element of consequences. Disregard of corporate personality must appear in the situation that the abuse of the behavior of the independent personality causes damage to the creditors and social and public interests.The fifth part discusses on consummating of the system of disregard of corporate personality in China. The first, it needs an accurate positioning. In terms of legal principle and in terms of application with the exception of a supplementary nature ,it should be used as the ex post facto law means, basically, we have to uphold the principle of independence of corporate personality and limited liability of shareholders. Only in exceptional circumstances determines the rule should be used with caution, to be correctly applied. The second, there should be a sound legal system. This is the most important means of establishing a whole system, the need to combine the fourth part of the acts mentioned elements, the judicial interpretation or related regulations should provide specific provisions in the perfect legal and enforcement procedures, establishing a perfect system, to better and more accurate application of this rule in order to better guide judicial practice, to protect the creditors and the public interest, promote social equity and justice achieved. The third, the application of relevant procedures such as those in the bankruptcy cases and the enforcement cases, the possibility that this rule applies for the situation above. Last but not the least, there are many more efforts need to be done besides above to consummate the system of disregard of corporate personality in China.