On The Liability Scope Of Durchgriff Shareholders In Piercing The Corporate’s Veil

As cornerstones of modern corporate system, the independent personality that the corporate possesses and the limited liability that the shareholders share promotes the rapid development of investment and accumulation of capital. However, it also provides opportunities for the shareholders to evade legal obligation, and grab unlawful interests. The business risks caused by shareholders’illicit activity are transferred to the corporate creditors, which can lead to serious harm to credits’ interests. In order to achieve balance between the corporate shareholders and creditors, the law confers the corporate creditors the right of requiring shareholders to bear compensation responsibility, which is the essence of the rule of piercing the corporate veil.The corporate law of2005introduces the rule of piercing the corporate veil. According to Article20.3, the shareholders ought to undertake joint liability of the corporation loan. But, the rules are too general, and the related judicial interpretations lack concrete regulation. Therefore, there is considerable controversy on what liability for durchgriff shareholders to undertake in both juridical practice and corporation law theory. The problem of durchgriff shareholders’ limited liability is divided into two sub-problems:liability nature and liability limit. Only when we tackle these two sub-problems first, we can determine the liability scope of durchgriff shareholders.First, we argue that it is better to adopt separate responsibility as liability nature. The paper discriminates joint (and separate) liability and complementary (and separate) liability first. The reason why our country uses joint liability instead of personal unlimited liability is due to the impact of the theory of real juristic person, which does not ignore the independent personality of the corporate. From the function of system balance and economical efficiency of piercing the corporate veil, joint and separate liability is more suitable for the value pursuit of piercing the corporate veil.Second, we argue that we should not set liability quota. The opinion that advocates limited quota, which is influenced by conventional juridical interpretations, and aimless persistence of limited liability of shareholders, does not understand the essence of the rule of piercing the corporate veil. On the other hand, compared with limited quota, unlimited quota can protect the corporate creditors’benefits, reduce transaction cost, and improve the total social benefits.Considering our country legal reality, we can define joint and separate responsibility clearly by juridical interpretation, or establish unlimited liability of shareholders through legislation, thus giving an efficient guideline to juridical practice.