The Comment On The Case Of Work Contract Dispute Between Zhongchuang Company And Baoli Company

China’s new Company Law has introduced the theory of piercing the corporate veil in2005, which is the first time in the form of the statute in the world.Article20of newCompany Law is about the legal measure of piercing the corporate veil,and the maincontents can be summarized as follows:while the shareholder abuses the corporatepersonality and the shareholder’s limited liability, thereby evading the debts and harming theinterests of creditors,the shareholder should should bear joint and several liability for thecorporate’s debts. With the evolution of the market and all kinds of economic problems moreand more complex and diverse, there are new cases of reverse piercing the corporate veil, forexample,the shareholders transfer their own property to the company in order to escape theirdebts, or the shareholders of parent corporate transfer assets to the subsidiary. Unliketraditional piercing the corporate veil,the liability of reverse piercing the corporate veil isfrom the shareholders to the corporate,and from the parent corporate to its subsidiary.Because there is no specify legal basis of reverse piercing the corporate veil, so the courtsfeel confused how to apply the theory of reverse piercing the corporate veil to the judicialpractice.Zhongchuang Company v. Hengxin Company and Baoli Company is a typical casethat applies the theory of piercing the corporate veil. The case gives rise to those questions:firstly, without clear legal basis of reverse piercing the corporate veil in legal system, shallthe reverse piercing the corporate veil be directly applied? Secondly, the thesis focuses onthe constitution of the theory of reverse piercing the corporate veil under the precondition forthe legitimacy application of the theory. The constitution includes the subject requirement,the conduct requirement and the consequence requirement.Furthermore, the rules of evidenceof the reverse piercing the corporate veil is also very important, and the allocation of burdenof proof will make difference impact on the case.Finally, the courts should make cautiousattitude for the application of reverse piercing the corporate veil.