Research On The Undercapitalization Of Disregard The Corporate Veil

Disregard of Corporate view as called Piercing the corporate veil,Undercapitalization is one type of disregard the corporate veil. The main view of this type is that registered capital means the shareholder’s good will to run the company. When the registered capital is so small that it couldn’t match the scale of the Company. That will transfer unreasonable risk to creditor then apply disregard the corporate view.With the reform of corporation law in 2013, which cancelled the minimum legal capital and capital verification. The series of reform indicates capital credit change to asset credit. The registered capital no longer shows the credit of the company,the net asset will replace that to show the company’s credit. The concept of Capital should comprehend in general way,which includes net asset.Shareholders or company will make the distribution to decrease net assets and will lead to undercapitalization.That’s why we should regulate the company’s distribution. From the perspective of dynamic, on the basis of the net assets to protect the interests of the creditors. Illegal distribution should analyze from quite causation in liability for tort theory. But to learn from the above standards must based on strict accounting rules and information disclosure mechanism.Through above logic, The total Paper is divided into four chapters.The first chapter discusses the meaning of Undercapitalization,and its connection with disregard of corporate veil.The second chapter combined with economic reality and accounting tools to analyze the concept of capital. The third chapter discusses Undercapitalization based on net worth judgment. The fourth chapter explore the differences between theory and practice by collecting the past five years China’s court judge cases of Undercapitalization of disregard corporate veil which prevent discussions excessive from the practice.Finally, advice of judicial judgment is proposed.