Research On Judicial Review Rule Of Disregard Of Corporate Personality

The new revised Company Law in 2005 has formally established the system of disregard of corporate personality in form of statute law for the first time. But related regulations in Company Law are not concrete. There is no uniform standard on the application of the regulations to this day. Although the regulations is discussed like wildfire in the theory circle, it is seldom used in the judicial practice. How to apply the regulations better to put the system on paper into animated judicial practice is becoming a very real and urgent problem.In China, preliminary exploration has been made in judicial practice regarding the system of disregard of corporate personality before the Company Law was revised. It is mainly reflected in some related judicial interpretations. However, the related regulations are still imperfect. The judges can not accurately comprehend the regulations that there are different ways of application concerning the regulations in judicial practice. The Supreme Peoples Court needs to issue judicial interpretations to guide the practice urgently.On the substantive aspect, the component of the regulations of disregard of corporate personality includes objective element, subjective element and causation element. There are seven kinds of situation in the application---a serious shortage of corporate capital, abuse of corporate personality to defraud creditors, abuse of corporate personality to engage in wrongdoing, abuse of corporate personality to avoid legal obligations, abuse of corporate personality to avoid contractual obligations, corporate personality confusion and malicious bankruptcy. The company and shareholders shoulder unlimited joint and several liabilities for the debts in the civil liability, while the company or the shareholders have the right to the recovery of other responsible shareholders after they shoulder the responsibility and the responsible shareholders do not have the right to recovery of the company. In the system of disregard of one-person company personality, the contents between Article 20 paragraph 3 and article 64 does not conflict.Moreover, the regulations of disregard of corporate personality not only applies to one-person registered company with limited liability, but also one-person company with limited liability because of transferred shares or reduced shareholders, as well as company with limited liability for a shareholder in essence.On the procedural aspect, if the causes of action are shareholder abuse company status and limited liability compensation disputes, the case should be under jurisdiction by the Intermediate People's Court or above court where the company is located. Litigants include the plaintiff and the defendant. The plaintiff is the corporation' creditor while the company and its shareholder can't be a plaintiff. Defendants include company and controlling shareholder, and the actual controller can't be a defendant. As to the distribution of burden of proof, it should be inverted. At last, the author regards that it can't be directly apply to the system of disregard of corporate personality in the implement procedure.