On The Application Of The System Of Denying The Legal Personality Of Affiliated Companies In China

With the development of market economy and the evolution of company system,the form and operation mode of companies are undergoing profound changes.The strength of affiliated companies and company groups formed based on the control relationship and benefit transfer is becoming stronger and stronger,which not only promotes economic development,but also challenges the protection of creditors’ interests of companies.The system of denial of corporate personality is an exception of shareholders’ limited liability,which protects the interests of creditors to a certain extent.The Company Law of the People’s Republic of China in 2005(hereinafter referred to as the Company Law),on the basis of absorbing the experience of extraterritorial legislation,stipulated the system of denial of corporate personality in the form of written law through Article 20,paragraph 3.This is a great innovation in China’s Company Law,which balances the relationship between shareholders’ limited liability and creditors’ interests to a certain extent.However,due to the limitation of the provisions,the role of the system in China’s judicial practice is worrying.Accompanied by this outstanding problem,the confusion of the personality of affiliated companies damages the interests of creditors,the application of the denial system of the corporate personality of affiliated companies is facing some problems,such as imperfect legislative provisions,inconsistent standards of judicial adjudication,incomplete procedures of law enforcement and supervision,etc.Therefore,in 2013,the Supreme People’s Court issued Guiding Case No.15,which expanded the application subject of the system of denial of legal personality to the field of affiliated companies.In particular,the Minutes of Civil and Commercial Trial Meeting of National Courts(hereinafter referred to as the Minutes of the Nine Persons)issued in November 2019.there were cultural regulations on the application of the system of denial of legal personality to affiliated companies,which changed the unregulated situation of such problems and had great guiding value for judicial trials.However,in China,the guiding cases and the Minutes of the Nine People are not judicial interpretations and can not be directly cited as laws.Article 84 of the Civil Code of the People’s Republic of China,which was voted by the Third Session of the 13 th National People’s Congress and implemented on January 1,2021,clearly stipulates that the responsibility of the controllers behind it is investigated and protects the legitimate rights and interests of other legal persons.However,this provision is relatively broad,and the effect applicable to judicial practice needs to be further explored.In view of this,this paper attempts to analyze and expound the basic theories of the denial system of corporate personality of affiliated companies,deeply study the legislation and practice of the denial system of corporate personality of affiliated companies in China,summarize the problems existing in the application of the denial system of corporate personality of affiliated companies,and draw lessons from foreign advanced experience,and propose to further improve the application of the denial system of corporate personality of affiliated companies in China.This paper is divided into four parts except the introduction and conclusion :The first part mainly expounds the basic theory of affiliated companies and the system of denial of legal personality.It mainly includes three aspects: First,it discusses the connotation of affiliated companies and personality denial system;Secondly,it introduces the related theories of personality denial system of affiliated companies,including integration theory,agency theory and tool theory;Thirdly,it analyzes the theoretical value of the applicable legal personality denial system of affiliated companies.The second part is about the current situation and existing problems of the system of denial of legal personality in the application of affiliated companies.Mainly from the current legal provisions and judicial practice,taking the problems before and after the publication of the Minutes of Nine People as an example,this paper introduces the practice status of affiliated companies in the application of the system of denial of legal personality,and analyzes and summarizes the existing specific problems,mainly from the aspects of imperfect legislative provisions,inconsistent judicial standards and incomplete law enforcement supervision procedures,etc.The third part is about the investigation and experience of the application of the legal personality denial system of overseas affiliated companies.This paper mainly takes the representative countries of Anglo-American law system and civil law system as the research objects,respectively summarizes the legislation and practice of the system of disregard of personality of affiliated companies in these representative countries,and puts forward the experiences that China can learn from,including attaching importance to the guiding role of precedents in trials,clarifying the responsibilities of related companies and their controlling shareholders,and distinguishing the subjective and objective intention of abusing personality.The fourth part is about improving the application of the system of denial of legal personality of affiliated companies in China.It is mainly discussed from three aspects,namely,perfecting relevant legislation,formulating unified standards of adjudication,perfecting judicial rules,clarifying applicable standards of the system,perfecting law enforcement procedures and perfecting law enforcement management system.From the legislative point of view,it mainly includes increasing relevant laws and regulations,unifying the standard of free evaluation of evidence and clarifying the scope of responsible subjects;From the judicial point of view,it mainly includes the classification of applicable elements,the clarification of applicable causes of action and the rationalization of the distribution of burden of proof;From the aspect of law enforcement,it mainly includes perfecting law enforcement supervision procedures and coordinating the linkage mechanism of law enforcement teams.