The Analysis On The Legal Personality Disregard Institution In Parent-subsidiary Company

The rapid development of the economy and gradually expandation of thesocializing production urged the birth of the parent-subsidiary company. As a newcompany form, its existence and unique advantage of its rapid development is that,though there is a certain relationship between the two companies, they still have theirindependent legal status, as well as, all shareholders are still bear the limited duty.However, there are also some shortcomings, the most notable is, in general, the parentcompany ownership of the subsidiary, in China, is usually over fifty percent, it hasabsolute control over its subsidiary. In order to earn more profits, some parentcompanies control the finance and the internal governance mechanism of itssubsidiary, leading to the loss of independent initiation and the corporation’spersonality. In this case, the circumstances that, the parent company let its subsidiaryoffer huge guarantee; ocuppy the subsidiary’s capital; use the subsidiary being listedas a tool to getting its money of money and so on, will be more and more. And theinterests of small and medium shareholders will be damaged as a result. ST MonkeyKing’s case happened as a wake-up call to indict this situation. If there is noregulation to limit the parent-subsidiary relationship, not only the interests ofinvestors will be damaged, but the enthusiasm of the investors also will be affected,which will affect the economy of the whole society.This article altogether is divided into four parts, the structure is as follows:The first part is an introduction of the research motivation, the presidentresearch at home and abroad, the mothods of the researh and the creative points of theparent-subsidiary corporates’ personality’s denial system.The second part is the introduction of corporate personality system.We analysethe legal person, personality, and the meaning of the legal person’s personality denialsystem, one by one. After that, we introduce the application of the system in foreignparent-subsidiary companies, in order to indict the possibility of the domestic STMonkey King case can be applied to this system.The third part is the analysis of the ST Monkey King case. After a briefintroduction of the case, emphatically analyzed the reasons which are that the monkeygroup abuse its parent company position to empty the subsidiary (Monkey King co.,LTD.), leading to its bankruptcy, intending to show that in today’s society, the legalperson personality denial system in parent-subsidiary is applicable to protect the shareholders’s interests.The fourth part is mainly talk about the six elements of Monkey King case whichis applicable to the personality denial system Subject, object, subjective factors,objective factor, subjective aspects, the consequence factosr and the causalrelationship are introduced one by one, in order to provide a clear idea to letpersonality denial system to be applied in the mother and subsidiary companies.The fifth part as a core part of this paper, further expand the analysis ofpersonality denial system’s localization. Firstly, we introduce the president situation,to find the shortcomings, then we give some advice, from the six aspects of profectingthe subject; determining the company status; defining excessive control; clearifyingthe objective requirements; identifying the responsibility forms and establishingparent faith obligations.