Application Of Denial System Of Corporate Personality In China

Corporation, one of the greatest legal inventions, a basic form of economic organization worldwide, covers all walks of life and plays an essential role in the area of politics, economics, culture, etc, almost as"the daily necessity". In line with the invention of the steam engine and electricity, the reputed significance of the corporation goes so far that some scholar exclaims: today's world is the corporation's world whereas this age is the age of the corporation. The booming and magic power in the corporation lives off its separate legal personality and the behind cornerstone─limited liability for investors. That's why inventors takes delight in hiding behind and shelters under the umbrella of corporate personality as to evade the unfavorable legal responsibilities arising from such misconducts as false capital contribution, shelling management, corporate affiliation, hotchpots of assets, etc. As a result, the original balance of interests gets shattered and the"issue of corporation"arises. Not only the legitimate interests of creditors are impaired, but also a chain of social and economical issues come along. Increasingly, the denial system of corporate personality is established to counteract this problem, in which China's legislative efforts in New Corporation Law conforms to the international trend. It provides in Article 20:"The shareholders of a company shall exercise their shareholders'rights in compliance with laws, administrative rules and regulations as well as the articles of association of the company, shall not abuse their shareholders'rights to injure the interests of the company or other shareholders, or take advantage of the company's independent status or the limited liability of shareholders to injure the interests of the company's creditors. Where the abuse of shareholders'rights causes any loss to the company or other shareholders, such abusive shareholder shall be liable for compensation in accordance with the law. Where shareholders of a company take advantage of the company's independent status or the limited liability of shareholders to disregard debts and seriously injures the interests of the company's creditors, such shareholders shall bear join several liability for the debts of the company". As is the general provision with respect to the denial of corporate personality. The special provision on the denial of corporate personality in one-person company is made in Article 64 which says,"Shareholder of a one-person limited liability company cannot prove that the company's assets is independent from his own property, such shareholder shall bear joint and several liability for the debts of the company".As one supplement of the corporation system, the denial policy of corporate personality has been frequently mentioned in academic researches and judicial practices, but a unified understanding of the applicable conditions and the limits hasn't been formed. China's new Corporation Law merely regulates on a principal basis, yet its applicable standards are far from the perfection. The significance of establishing a legal system is not merely to enhance the legal system but, more importantly, to make itself applied into the judicial practice and achieve the legislative goal. How to view its theoretic origin? How shall we handle its value orientation with the value of the corporate law? How to regulate its applicable conditions and prevent the misusage? Firstly, the thesis briefly elaborates on the concept of denial of corporate personality, legal traits, theoretical basis, and legislative contents. Then, based on the study of diversified countries, the study analyzes the applicable standard, and dwells more on its composing elements, applicable consequences as well as the applicable occasions. Also, measures have been proposed to perfect China's denial system of corporate personality. The study focuses on exploring the application of the principal of the law in the national judicial practice as well as its limits.