Expansion And Improvent Of The Limited Liability System

The Limited Liability System takes a dominant place as one of enterprise forms.It is the core evidence that enterprises are conceptualized as Limited Liability System.To do further study on the operating efficiency of the Limited Liability System iscrucially important for the economic construction in China. Looking back to history,we can see Limited Liability System has experienced the following stages: no anybasic principle�'a single basic principle�'dividing of the single basic principle. Itsforms have chanced as Limited Liability�'Limited Liability System�'Piercing theveil of corporation�'Adverse-piercing the veil of corporation. It shows that theinstitutional changes and creation are a continuous process.The extension of the limited liability does not means that the limited liability hasextended from corporations to partnership enterprise or from legal entities tonon-legal entities. The extension of the limited liability means that the limitedliability has extended from joint-stock limited corporations to small and middleenterprises. Any system may be considered as the product of history, which willchange with the development of society. And at the course of the extension of thelimited liability, its theories have been changed too. Firstly, the function of the limitedliability has changed from agglomerating capital to directly protecting investors;secondly, the applying conditions are more loose than they have been, and the powerdivision and qualification of legal entity are not essential conditions any more; thirdly,the value orientation of the limited liability has changed subtlety from the preferenceof efficiency to the balance of efficiency and equality.Efficient institutional arrangements are the source of economic growth, and thereasonable systems are the key to the development of a company. The LimitedLiability System evolutes from the Unlimited Liability System and proves to be amore effective system replacing one. It is an activity that the system-subjectovercomes the limitation of the system itself and enlarges the institutional supply forthe potential earnings. From the point of technical evolution, the Limited LiabilitySystem ongoing in the socialist countries was introduced from the capitalist countries, especially has the same roots with the continental law systems. By a horizontalcomparison, the author integrates various theories, which are opposite to each otherbut being reasonable. Limited Liability System is analyzed on the ground of a widecultural scope. It reveals the three system models of technical styles and the relatedsocial conditions and concludes that introducing freethinking and measurements isimportant for avoiding the stereotyped conclusionFirstly, the key of the protection by tort law is to establish the doctrine ofliability fixation which will benefit to creditors and to extend the scope of rightsshould be protected. Secondly, we can limit the application of the limited liability toprotect non-voluntary creditors. Generally, the non-voluntary creditors are those whowere damaged by torts of the enterprises.Building the reasonable dynamic operating models of Limited liability System,one partner minimizing-cost choices could be conflicted with the other’s choices. Thereasonable institutional arrangements brings not only the short-term but also thelong-term benefits for the business partners, moreover, it is a starting point forthe better going of the relevant and regulations. Company is the core of modernenterprises, which limited liability is the “king rule” of company. This Study takesLimited Liability as research subject and adopt empirical and law-economics analysisto reconstruct the limited liability system under the principle of fairness andefficiency. It will produce good social benefits for reducing the inherent conflicts,accelerating company’s operation and the overall economic development in China.