Research On The Application Of The Denial System Of Corporate Personality

Since the formally establishment of the company personality denial system by Company Law in the form of statute law,the protection of the interests of company creditors has been promoted,and to some extent,the fairness and justice of the law has been realized.The General Provisions of the Civil Law implemented in October 2017 and the Civil Code in May 2020,have clarified personality denial system in the form of statute law,highlighting the importance of the system.However,due to the strong generality of legal provisions mentioned above,it is very possible to cause problems such as different judgments in the same case due to the differences in understanding because of the discretion of judges.The study focuses on the dilemma of judicial practice in our country through the analysis of the applicability of personality denial system in the company and has proposed the measures to resolve the existing problems,so as to constantly improve the practicability of company personality denial system,ensure the better protection of creditors’ interests as well as prevent the abuse of company personality denial system,so as to effectively maintain a fair market trading order.The paper is divided into four parts,namely the overview of company personality denial system,the analysis of the applicable requirements of personality denial system in China,the analysis of existing problems in judicial practice in China and the suggestions for improving the personality denial system.The main frame centers on section two and four,which has elaborated the views and suggestions of the author to the problems in practice of personality denial system in our country.Section one has laid a theoretical foundation for the main topic and used to elicit the main content of the paper;section two has analyzed the applicable requirements of company personality denial system and explored the application situations of company personality denial system;Section three and four have proposed,studied and suggested the problems.Section one is an overview of the company personality denial system.The background,basic concepts and characteristics of the establishment of the system and the importance of maintaining the company legal person system and other basic concepts have been summarized.The formation,main views,judicial practice of foreign company personality denial system and the legislative evolution and legal provisions,judicial interpretation and relevant guiding documents of the company personality denial system in China has also been summarized.Through comprehensive and clarified understanding of company personality denial system,the theoretical basis of analyzing the subsequent applicable requirements and putting forward the existing problems as well as suggestive solutions in the judicial practice in our country has been laid.Section two is the analysis of applicable requirements of company personality denial system in our country.The subjects,subjectivity,behavior,result elements and causality have been analyzed to discuss the application situation.Subject elements,on the one hand is the subject that advocates the denial of company personality,namely the rights subjects;on the other hand,it is the subject that undertake the responsibility of the denial of personality by the company,namely the obligation subject.Subjective elements mainly discuss the necessity of subjective intention for the purpose of evading debts.Behavior elements,according to article 20 of the Company Law and Minutes of the National Civil and Commercial Trial Work Conference of Courts,has analyzed the applicable situations of personality confusion,excessive domination and control,and insufficient capital in the abusive behavior,etc.Results elements,is mainly the affirmation of the harm results,as well as the discussion of the causality between the abusive behavior and harm results.Section three has analyzed the existing problems of the judicial practice in our country.Firstly,the scope of application is narrow,which needs to be expanded according to the complexity of current economic activities;Secondly,standard of application elements has given judges considerable discretion,which results in different sentences in the same case and the disadvantages of the protection of the interests of creditors and the fairness of economic activities;Thirdly,the undertaken responsibilities are to be improved,the burden of proof of the subject of right of the lawsuit of the company personality denial system is unreasonable and there is not clear legal provisions on the scope of liability to be borne by the subject of obligation which the company personality denial system can be applied,resulting problems in the late implementation.Section four is the applicable suggestions of the improvement of company personality denial system.Due to the complexity and variability of economic activities,it is suggested that the relevant laws and regulations are elaborated as the basis of judicial practice.Meanwhile,the judicial interpretive documents such as judicial interpretation and guiding cases shall be released under the circumstances that the law provisions cannot enumerate abuses combined with practice.Firstly,the theoretical basis for the legal application of company personality denial system shall be enriched,the theoretical models of reverse pierce company veil and triangular pierce company veil shall be established so as to better regulate the abuse of power by shareholders in complex economic activities;Secondly,the identification standard of the applicable requirements of the company personality system shall be improved and the judgment shall be conducted strictly in accordance with the standard,so as to prevent the abuse of the system;Thirdly,the rights of lawsuit of company personality denial and the subject of obligation shall be reasonably defined,the burden of proof shall be reasonably allocated to determine the scope of responsibilities.