Personality. Parent And Subsidiary Companies Deny

In recent years, the system of Disregard Of Company Personality isalways to be the hot topic of discussion in the company law domain. It can bedescried that most of scholars are consistent with that the system of DisregardOf Company Personality should be established in China, though there arevarious viewpoint and proves. The new company law revised edition waspassed on October 27, 2005and was to be executed in January 2006. Theexplicit stipulation on Disregard Of Company Personality was firstly made inChina by item 20.3 in the new revision. Although this stipulation is inprinciple, there is still active significance to the universal phenomenonappeared in present China that the company legal person's personality isabused to harm the creditor's benefit.In modern society, the company legal person personality is not merelyabused by the natural person shareholders but also by the legal personshareholder(parent company). With the fierce change of economic society, itbecomes an effective method that the relationship between parent andsubsidiary company is used to form commercial control. Such measure hasalso become major industry strategic to form the enterprise group. To be theindependent legal person, the parent and subsidiary companies managerespectively and each affords the profit or loss. But the parent company is thecontrol shareholder of the subsidiary company, and it actually controls thesubsidiary company.This article begins with the case of the Japanese Toyota company suingChongqing Lifan company for trademark right infringement. After proposingthe question in the opening of the article, I first analysis and elaborate thegeneral principle of the system of Disregard Of Company Personality in theparent and child company. In this partⅠmainly introduce the legal document,the main situation, the essence and the result as well as the difference in thenon- entire capital subsidiary company and in the entire capital subsidiarycompany, when we use the system of Disregard Of Company Personality.The third part of this article main analysis particular question in parent and child company when it's personality is disregarded. It displays thefollowing four aspects: First, in the parent and child company there existsreverse "Lifting the corporate veil" situation; Next, in the mother and childcompany has two times of even many times suitable personalities denialssystem the situation; Once more, because trustees and managers often hold thepost of duty in the parent and subsidiary company at the same time, butactually the authority does not be divided; therefore when they abuse thedomination that causes the subsidiary company's creditor losses, they shouldundertake the civil compensation responsibility. Finally, in the tax law, thebankruptcy law, the environment law, the labor law as well as accountant andaudits law, in the competition law domain, the parent and subsidiary companyis easy to abuse the legal person personality, therefore the system of DisregardOf Company Personality also should be used in these domains, and thedomination parent company who abuse the legal personality undertake thejoint and several liability.The fourth part of this article has mainly analyzed two kind of specialtypes parent and subsidiary companies when it use the system of Disregard OfCompany Personality. The pure public welfare and monopoly state-ownedenterprise should alone legislate, and it is not suitable for the system ofDisregard Of Company Personality. But in the competitive state-ownedholding company should be suitable this system and not be exceptional. In thetransnational parent and subsidiary company, the parent company antitheticalcouplet company's control is legitimate, moreover it appears itself is becausecontrols existence; Therefore the multinational corporation is easier to appearin the parent company who abuse the domination phenomenon, so it seriouslyharms the host country creditor's benefit. The host country often must carryon the benefit between the attraction foreign capital and the maintenance fairjustice balanced, but whether can be suitable the system of Disregard OfCompany Personality it involve the national judicature sovereignty and thenational interest question, so it is extremely complex. Solving this problemneed the consultative cooperation between national, our country at present stillhave not related legal rule. Finally, concerning the legislation present situation and the judicialpractice in China, I summarized the question which is still existed in thelegislation. It mainly was the fuzziness of the system of Disregard OfCompany Personality and the operational of this system as well in mother andsubsidiary company. Therefore the author suggested the Supreme courtshould formulate the judicial interpretation and revises the necessary legallaws and regulations, in order to strengthen the operational of this system. Atthe same time, in view of in this system's flaw and the imperfect place of thelegislation, the author suggested that we should pay attention to this system inthe judicial practice.In brief, I hope the system of Disregard Of Company Personality canplay the vital role in the judicial practice, can truly achieve the goal thatprotects the creditor benefit and maintenance social justice.