The Application And Comprehension Of The System Of Disregard Of The Corporate Entity Of China

The system of disregard of the corporate entity is an important matter of Company Law, which is an equitable measure adopted in the common law family and continent law family countries, when shareholders abusing the limited liability and independent personality of a company as a legal person, and the supplement and development of the traditional system of legal person. In the newly revised Company Law of People's Republic of China, Article 20 and Article 64 stipulate definitely the system of disregard of the corporate entity, that is a forward step. Due to the principle stipulation of disregard of the corporate entity system in our country and compared with the complicated social life and economic activity, each person will have different opinions on the comprehension and application of these two articles, which leave a big space to debate.Article 20 is a general provision and can be applied to all companies including one person company. People should pay attention to several aspects of this article when comprehend and apply it: Firstly, compared with the system of disregard of the corporate entity stipulated in foreign laws, our country's system of disregard of the corporate entity applies in a comparatively limited range, only the relationship of creditors' right and debt. Secondly, subject of liability is the active shareholders of a company who abusing the limited liability and independent personality of a legal person. Thirdly, the infringement on the interests of companies' creditors must be severe, estimated according to damage, subject malice, the ability of repaying debt and so on. Fourthly, shareholders who abusing their rights should bear unlimited jointly liability. Article 64 is a enumerative provision, can only be applied to one person company. This provision has two characteristics, one is the inversion of onus probandi; the other is that it can only be applied to the situation of hotchopt.In the proceedings, our country should only allow "lodged lawsuits of disregard of the corporate entity", court can not deny the independent personality of a company according to its authority on its own initiative. It's better for the intermediate court where debtor's company located to rule. The brief of a case should be determined by the final legal relation, that is the relation between creditors and company. The plaintiffs in our country's litigation of disregard of the corporate entity can only be the creditors of the company, defendants should be codefendants, that is the company and the active shareholders behind it. The allocation of onus probandi in such cases has its particularity, the cause of disregard of the corporate entity is usually inside information, it is hard for the creditors to get the proof, the feasible way is to apply "elementary proof rule". In order to maintain and protect the system of limited liability and independent personality, the expanding of such lawsuits should be strictly prohibited.