On The Application Of The Disregard Of Corporate Personality System In China

Corporation is one of the most important business entities in the market economy. The corporate personality system provides great incentives to investors and promotes economic development by providing an independent personality to the corporation and limiting the liability of the stockholders. The corporate personality system plays unique roles in quickly amassing capital, efficiently controlling capital, reducing investment risks, maximizing profits, etc.But with the rapid development of the economy, the various problems of the corporation that occur with a regularity in the business dealings between market entities, problems that the corporate personality system has produced, are increasingly evident and threatens to develop still further. Abusing juristic personality makes the corporations lose the capability to bear civil liability independently, and leads to damnify of purchaser for value without notice. Such as retentive investment, a flight of investment, dummy stockholders, confusing assets, and so on. A lot of social problems are sure to follow on. These problems partly belong to unperfect of limited liability, partly to the inherent limitation of it. So we have to treat limited liability scientifically. But we cannot be totally negative towards this system for those problems. The only feasible solution is to search for a system that can bring these problems under effective control while preserving the corporate legal personality system itself. This is where the concept of disregarding the corporate personality comes in.The concept of disregarding the corporate personality refers to the legal practice in which, while recognizing the legal personality of a corporation, disregard in some specific legal situations the corporate personality and the limited liability of shareholders and directly hold the persons hiding behind the corporate veil responsible. This concept dates back to the 19^th century America, it became popular in UK and Germany earlier in the 20^th century, and was adopted by Japan in the 1950s. This concept effectively helps to achieve equitableness through making afterwards remedies to the negative effects the corporate legal personality system produced, and thus promotes the development of the corporate system.In our country, in the realities of economic life, conducts that abuse the corporate personality abound. To deal with the notable problems of the abuse of the corporate personality that occur in practice, and with the aim to clear up debts and protect the creditors, China has revised and adopted the Company Law, resulting in the establishment of the disregard of Corporate Personality. Towards every kind of behavior dominant shareholder performed, a series of tests should be takenwhen the corporation veil is uncovered. Generally speaking, it is applied to the occasions, when a corporation is seriously under capitalized, and the shareholder abuses the corporate personality, or evades legal and contractual duty. The repudiation of corporate personality has been applied in case law since its establishment. But some countries have made some limitation for the abuse of stockholders' power in the provisions of the statute law. The person who is entitled to litigate is the one whose benefit is trampled, not comprise of the third part irrelevant. The defendant can be the single shareholder, or the corporation and its shareholder being accused together, still it may be that the corporation is accused first, the shareholder listed as the third people, finally annexed as defendant as well. When using the doctrine, whether in an entity law or the procedure law, equity and justice should be the highest value conception, as to the onus probandi, it should adopt convert principles. As an important innovation of corporative personality system, the system of disregard of the corporate personality and the corporative personality system are two poles, which are interaction and lean each other, it will play an important role to redress the equity and justice.The main body of a book is allotted for three parts, Part I summarizes deny that system connotation, creation develop and fundamental company corporationimpartial law justice value target. Part II is emphasize the current situation studying our country company corporation personality denies system's and suitable for use, legislation and judiciary current situation that personality denies from having the problem, applying to the problem that circumstance and actual judicial practice show solicitude for, setting forth the corporation of analytical our country company suitable for use. Part III expounds law of cooperation personality denying that system already has established formally in our country, from how further the upper thinking of legislation perfects that system. In view of this, this article attempts to give a preliminary discussion of the theory on disregarding of the corporate personality, makes a comprehensive analysis of the necessity of establishing this mechanism, sheds light on this issue from the viewpoints of its principles, requirements and legal consequences of its application in China, puts forward suggestions on the adoption of the disregarding corporate personality concept in judicial practice, and attempts to solve this very important problem that the realities of life puts before us.