The Application Of Piercing One-man Company's Veil

In 2005, the revised Corporation Law admitted one-man limited company legally. In order to guide the development of one-man company, the Corporation Law regulated it both from beforehand prevention and afterwards regulation. But in 2013, the newly revised Corporation Law have made some change in company's capital system. At the same time, the special regulation of one-man company's capital system also changed. It is easier to establish an one-man company. The beforehand prevention has been relaxed, therefore it became more important of afterwards regulation. When the company's shareholders abuse the company's personality and limited liability right, it is necessary of piercing the corporation's veil. This system can protect the rights of company's creditors effectively. One-man company only has a single shareholder and its management structure is simple, so it is easier to abuse the limited rights for one-man shareholder. The system of piercing the company's veil can punish the shareholder who abuses the company's personality and limited rights. The application of this system can exert the one-man company's convenient operation advantage and it can also guide the one-man company's better development.Based on the piercing company's veil system, this paper analyze some questions about one-man company, such as the one-man company's origin and development, the classification of one-man company, the question of our current Corporation Law and so on. The paper proposed that we can pierce company's veil in four kinds of situations, including the confusion of personality, the lack of company's capital, the shareholder's over control and the evasion of debt or duty. This paper quoted the 15th guiding case issued by the supreme people's court to analyze this question. In the meantime, this paper proposed some advice to solve the problem in piercing the company's veil. For example, who is the legitimate plaintiff and who is the legitimate defendant in the lawsuit, the quality of joint liability, the special distribution of proof burden in one-man company, it is allowed or not to make the shareholder undertake the responsibility in the execution phase and how to apply the piercing company's veil system when the company go bankrupt. To solve those questions, the paper has given some advice. Firstly, it is necessary to issue judicial interpretation and guiding case.Because the current law provision is ambiguous. In this way can we form the unified rules in piercing the company's veil. Then all courts in our country can give the similar judgment. Secondly, we should pierce the company's veil in reverse direction to make the company undertake debt for its shareholder. Then the question about affiliated companies who are controlled by the same shareholder can be solved. Finally, the paper give some advices about distribution of proof burden, it is allowed or not to make the shareholder undertake the responsibility in the execution phase and so on.In 2014, the newly revised Corporation Law reduced restriction in capital system. It is not necessary for one-man company to pay one hundred thousand registered capital. I think this reform reflects that it is encouraged to invest the economy. Also one-man company is an convenient method to invest for investors, so the system of piercing the one-man company's veil will be more perfect with the development of one-man company. The Corporation Law should also make more change to make it better. In this way can the one-man company exert its advantage and make more contribution to the economic development.