The Research On Reverse Piercing Of The Corporate Veil

China’s Company Law has introduced the theory of the denial of the corporation personality or piercing the veil of corporate, which is the first country to expressly provide for this system in its law. Article20and64of the revised Company Law is about this legal measure, whose main contents can be summarized as follows:where the shareholder evades the debts by a corporate abusing the independent legal status of the corporate or by abusing the shareholder’s limited liability, thereby harming the interests of the creditors of the cooperate, the creditors may ignore the legal status of the corporate and directly claim that the shareholder abusing the legal status of the corporate shall bear joint and several liability for the corporate’s debts.Under most circumstances, it is the creditors of the corporate that bring an action against the shareholders for their abuse of the independent legal person status and the limited liability to evade debts, and finally the corporate’s veil is pierced and the shareholder shall bear certain liability. However, in practice, shareholders transfer their own properties to the corporate to evade their own personal debts, such as natural person shareholders transfer his private properties to the corporate or the corporate shareholders (parent corporate) transfer properties to its subsidiaries. The net result is the successful evasion of debts, the harm of the creditors’ interests, and the disorder of market economy. Another problem is that a one-person corporate or corporate owned by the family requests to be immune from the huge sum of debts. Those are burning issues to be solved, and the solution is the reverse piercing of the corporate’s veil.This thesis starts with the problems arising from a classic case. In this case. Tianchuang corporate. Changheng corporate,Tengchuang corporate and Hanxin corporate are all independent legal persons, but they are in the charge of Mazhiping. Tianchuang corporate’s capitals are invested into the others so that there is no enough money to pay the debts owned by the creditors. In the end, the corporates controlled by the same shareholders are required to bear joint and several liabilities. This is a typical example of the theory of reversely piercing the veil of corporate discussed in this thesis. This case gives rise to three questions:1. With some cases in reality, shall the reverse piercing of the corporate’s veil be directly applied under the current legal system? This is about the foundation of the application of this theory.2. May the insiders of the corporate file an application to pierce the corporate’s veil so that they can be granted immunities. What’s subject of the outsiders, and under what situation can they apply for a reverse piercing of the corporate’s veil. This is about the subject and the constitutive requirement of the reverse piercing of the corporate’s veil.3. How to obtain the evidence in the civil cases. On the other hand, how shall the liabilities be allocated after the reverse piercing of the corporate’s veil? This is related to the rule of evidence and the assumption of liabilities in the cases of this theory.This thesis tries to analyses the necessity and feasibility of the application of reversely piercing the corporate’s veil from the perspective of the historical development of limited liability and legal economics. From these perspectives, we can see that the change from unlimited liability—limited liability—piercing the corporate’s veil-reversely piercing the corporate’s veil is a result of the change of legal environment and costs and benefits. And then this thesis seeks the legal basis of the application of the reversely piercing of the corporate’s veil from the perspective of jurisprudential.This thesis then focuses on the constitution of the theory of reversely piercing corporate’s veil from the perspective of its subject requirement, conduct requirement and the consequence requirement. The subject requirement includes the subject of right and liability; the conduct requirement is about the reverse piercing by the insiders and outsiders; the consequence requirement is elaborated from the consequence of the damage and presumption of fault.The last part of this thesis is about the specific problems of the reversely piercing corporate’s veil in the lawsuits. First is the allocation of the burden of proof. This thesis absorbs from the allocation under the traditional theory of piercing the corporate’s veil and discusses this issue from two aspects—the insiders and outsiders. Then this thesis discusses the assumption of liabilities from three perspectives—reversely piercing the corporate’s veil by insiders, transfer of the assets and affiliated companies.