Thoughts On The Legal Liability Of Defective Capital Contribution Of Shareholders And Capital Of Significant Deficiency

It has been36years since the execution of our policy of reformation, opennessand system of organization of socialism market economy. The Company Law of PRC(hereafter “Company Law”), as one of the most important and meaning laws undersuch system of organization has been amended three times in more than20yearssince that it was issued by December29th,1993. Such three amendments isconsidered as the witness for the further result of reformation and openness of ourcountry and concentrative expression of the study of theory field and practice field onCompany Law.Company Law has been amended by the Standing Committee of the12th sessionof National People’s Congress On December28th2013. The main content of suchamendment is that the statutory capital system is changed to the subscribed capitalsystem. The new system improves our system of organization of socialism marketeconomy, get through barrier to the market and play important in arousing theenthusiasm of market. Meanwhile such change and its effect caused a heateddiscussion among law theory field and justice practice field.This paper mainly analyzes disregard of corporate personality (Company Law,Article20, The shareholders of a company shall abide by laws, administrative regulations, and the company’s articles of association, and shall exercise shareholder’srights in accordance with the law. A shareholder shall not prejudice the interests of thecompany or other shareholders by abusing shareholder’s rights, nor shall theshareholder prejudice the interests of the creditors of the company by abusing theindependent legal person status of the company or by abusing the limited liabilities ofthe shareholder. Any shareholder of a company that has caused any loss to thecompany or to other shareholders by abusing shareholder’s rights shall be liable forcompensation in accordance with the law. Where any shareholder of a companyevades debts by abusing the independent legal person status of the company or byabusing the shareholder’s limited liabilities, thereby graving prejudicing the interestsof the creditors of the company, the shareholder shall be jointly and severally liablefor the debts of the company.) which is based on foreign legislation and justiceexperience, bravely introduced under the amendment made by10th session ofNational People’s Congress on October27th2005. And it discussed significantshortage of capital which take a large proportion in the practice, and study them onthe compare with Clause2, Article18, Company Law, A company shall, inaccordance with the Constitution and other relevant laws, implement democraticmanagement through a general meeting of the representatives of staff members orother forms.Company Law has made definite regulation that defective capital contributionduring the management of companies causes that the actual capital contribution isunder the registered capital contribution and there is difference on the condition ofapplicability between defective capital contribution and significant shortage of capitalunder disregard of corporate personality. And Company Law and judicialinterpretation to Company Law has made definite regulation on the responsibility forcapital contribution that defective capital contribution will not directly cause denyingcorporate personality. There is the condition for separate and dialectical applicationbetween defective capital contribution and significant shortage of capital in the fieldof theory and justice practice. In the new environment that the statutory capital system has been changed to thesubscribed capital system, the applicability of Defective capital contribution and thesystem of disregard of corporate personality shall be faced with new challenge andtest. Meanwhile, many problems should be carded as soon as possible to protect therights of creditors, shareholders, companies, ensure the guiding function of CompanyLaw, and to promote the legislative and judicial to serve the development of marketeconomy and construction of credit system.