Study On The System Of Disregard Of Corporate Personality In Related Companies

The company law standardizes the basic system of the operation of the company.The establishment of this system is based on the limited qualifications and responsibilities of the company.Limited liability is the most obvious feature of a company and it acts an important role in economic development.However,abuse of limited liability will damage creditors' rights and interests.More seriously,it will cause bankruptcy of a series of affiliated companies and easily trigger social events.To prevent abuse of company's limited liability,common law countries develop the principle of “Piercing the Corporate Veil”.It is used to be called “Personality Denial System” in continental law system,and “Durchgriff” in German company law's practice.Now “Piercing the Corporate Veil” is widely used in common law countries and continental law countries.Shareholders shall be held accountable if they abuse their shareholder's rights by the article 20 of the Company Law revised in 2005 in China.It is a result that China borrowed from theory of company law and foreign “Personality Denial System”.Although China has “Personality Denial System”,it is only applied when shareholders use the independence of the corporate personality.It does not rule abnormal transaction,misappropriate the company assets and give illegal interests between the shareholders and their affiliated company new registered.However,the abnormal transaction is not the common measure of misappropriate the company assets and give illegal interests between the related company.So we focus on the study of the personality denial of related company and now we have a lot of viewpoints and opinions.In this article,I use four parts to discuss the personality denial of affiliated company.Details as follow:Part 1: the personality denial system of confusion of company personality of affiliated company.This part defines the affiliated company and discuss the definition,characteristic and form of the confusion of company personality and the personality denial system.And it explains the important of the application of the personality denial system of affiliated company.Part 2: status quo of the application of the personality denial system of affiliated company in China.This part discusses the law,regulation and judicial precedent in China and the judicial practice of the personality denial system of affiliated company in China.Part 3: tatbestand of the personality denial system of affiliated company.This part discusses the confusion of company personality and personality denial system of affiliated company in the tatbestand of subject,behavior,result and procedure.And it focuses on the judicial practice.Part 4: perfect of the personality denial system of affiliated company.In this part,I borrow the principle established from some precedents in abroad.Mainly from the legislative,judicial,the implementation,bankruptcy progress,just like the link of the personality denial system of affiliated company,combining status,I expect to state how to perfect the personality denial system of affiliated company.