Research On The Judicial Application Of China’s Corporate Personality Denial System

Affiliated company is formed based on the control relationship and the flow of interests,which has outstanding advantages in resisting commercial risks,reducing operating costs and creating trading opportunities,but its close ties also provide a breeding ground for shareholders and actual controllers to evade legal obligations by taking advantage of the company’s independent personality,thus infringing on the realization of the creditor’s rights of the company.In view of the negative impacts of affiliated companies,it has become a consensus to use the denial system of corporate personality to adjust them.After the Company Law of the People’s Republic of China was issued in 2005,the legal personality denial system was successfully introduced in China,but the subject of liability was limited to the shareholders of the company,which leads to new problems emerging in practice that are difficult to solve.In order to guide the judicial practice,the Supreme People’s Court issued the 15^thGuiding Case in 2013,which officially included affiliated companies into the denial system of legal personality.However,the reasoning in the judgment was too simple,leading to the failure to form a unified judicial application standard.In 2019,the Supreme People’s Court Judicial Committee issued the Minutes of the National Judicial Work Conference on Civil and Commercial Cases,which stipulated the specific cases of related companies applying the legal personality denial system with examples,providing guiding significance for judicial trials.It is prospective and feasible to design the system in the form of minutes in advance on the premise that the law fails to make clear provisions.But in China,neither the meeting minute nor the guiding case can be directly cited as the source of law in the judicial trial.In view of this,it is very important to study the application of the legal personality denial system in affiliated companies and clarify its identification standards.In order to further improve the judicial application rules of the legal personality denial system of affiliated companies,this thesis first introduces the theoretical basis.The view that affiliate is a number of companies with affiliate relationship is refuted by distinguishing the different meanings of affiliate relationship and affiliate company.In addition,through the analysis of the theoretical view,the specific meaning and formation reasons of affiliated companies are clarified.Afterwards,this thesis demonstrates the basis of the application of the denial system of legal personality for affiliated companies from the perspectives of relevant theories and the 15^thGuiding Case of the Supreme People’s Court.In terms of the constituent elements of the personality denial system of affiliated companies,this thesis,after analyzing the viewpoints of legislative,judicial and theoretical circles,proposes that it should be based on four elements,including the subject element,the behavior element,the result element and the causal relationship element.Then,based on the selection,induction and sorting of representative cases,this thesis finds that there are the following problems in the application of the legal personality denial system for affiliated companies in China through the case analysis method.First,due to the lack of legislation,courts have different opinions on the selection of judgment basis and the identification of affiliated companies.At the same time,there is no unanimous opinion on whether the shareholders and the actual controllers of the abusive acts are responsible.Second,under the influence of the 15th Guiding Case of the Supreme People’s Court,the current judicial practice has solidified the identification of the behavior elements of the personality denial system of affiliated companies as the only behavior of personality confusion,but different courts hold their own opinions on how to identify personality confusion,and there are many standards on how to judge the elements of personality confusion.Third,there is no agreement on the result element in the judicial application,and in the current judicial practice,it is often only declaratively mentioned to have"serious injury result"but fails to make a substantive investigation.Fourth,due to the awkward position of the result element,the judgment of causality is also in confusion,which needs to be institutionalized.Fifth,when the corporate creditors appeal to the court by virtue of the application of the associated company legal personality denial system,the court often requires the corporate creditors to provide evidence to prove their claims.However,most of the related companies with the actual ability to provide proof are not involved,which not only increases the difficulty of the creditors of the company to provide proof,but also is not conducive to judicial justice.Finally,this thesis puts forward some suggestions to solve the problems arising from the judicial application of the legal personality denial system of affiliated companies.First,clarify the personality denial system of affiliated companies and make provisions on affiliated companies through legislation.Explain and refine the applicable rules of each constituent elements through justice.Secondly,from the perspective of the subjective judgment of solidification,this thesis proposes that for the cases involving the personality denial of affiliated companies,it is necessary to judge whether the legal personality denial system applies to the related companies first,rather than determining that the behavior of each company constitutes the personality confusion and then making the judgment that each company is an affiliated company.At the same time,the definition and specific form of the associated company should be given a clear standard,and the shareholders and actual controllers who commit abuse of rights should be included in the scope of the subject of liability.Thirdly,as for the behavioral elements,this thesis argues that in addition to personality confusion,significant capital deficiency and fraud should also be included and the specific application criteria of the two should be given.For personality confusion,it is suggested that business confusion should be placed as important as property confusion,and personnel confusion should be removed from personality confusion.Fourthly,put forward a unified identification standard on the result and causality elements.Fifthly,for the burden of proof,this thesis provides a specific design in the case of distinguishing voluntary creditors from involuntary creditors.Sixthly,the thesis points out that when the company creditors have the right of subrogation,the right of revocation,the right of security and other ways to realize the creditor’s rights,it is not suitable to apply the personality denial system of the affiliated company because the affiliated company personality denial system covers a wide range of areas.