| From its day of emergence, companies, as a kind of commercial organization, has been on the vanguard of global changes. While systems of corporate personality and shareholder’s limited liability, as two foundations of modern corporate system, have helped investors to ward off risks via its intricate design, thus remarkably boosted the investor’s enthusiasm, accelerated the establishment of the company as well the fund raising process and improved the economic development. Meanwhile, it has made possible for the shareholders to abuse their status as corporate personality, and consequently transferred the risk to the corporate creditors. The disregard of corporate personality comes into being as an effective way to balance out the benefits for the bilateral parties, ensures the benefits of the public and the creditor.Disregard of corporate personality, also known as "tearing up the corporate veil" or "unveil the company", which is meant to keep the corporate personality from being abused and protect the benefits of the public and the creditors. Based on specific facts in the legal relationship, the disregard of corporate personality will gainsay the corporate personality and the shareholder’s limited responsibility, thus made the shareholders of a company legally and directly responsible for the benefits of the creditors or the public, it’s a legal system specially designed for the goal of striking for a social justice. Originally the disregard of corporate personality should be regarded as part of modern corporate system as its complement and addition, the abuse of its application will not only jeopardize the foundation and dynamic for the survival of legal person system but also contravenes the intention of the disregard of corporate personality.All around the world there is a variety of rules and restrictions for its applicate and legal requirement in legal practice. In China,it has only existed for a short period of time and emphasized too much of its principle. Plus a few judges have misunderstood it and in turn causes its random application, thus make the corporate personality and the shareholder’s responsibility appear to be futile. Sections one reminisces the extraordinary impetus and unprecedented changes of world that companies have brought, explicates the special meaning that corporate system embodies for human society. Meanwhile, endeavor will be made to prove that the core of its dynamic is owning to corporate personality and shareholder’s limited responsibility.Sections two,via viewing the emergence of the system in retrospect, explores the value orientation of the system, makes clear the inter-relationship among the disregard of corporate personality, corporate personality and shareholder’s responsibility, namely, that they don’t exist in opposition against each other. The disregard of corporate personality is the necessary complement and maintenance for modern corporate system. The denial of corporate personality is no less the objective than a way to ensure the benefits of the public and the society. Therefore, the excessive use does not correspond to this system.Section Three introduces the legal situation before and after the promulgation of Corporate Law, points out that in this regard too much attention is paid to the principle and oversees the lack of its inclusiveness. As a consequence the judicial office’s too much discretion. What’s worse, natural compassion for the creditors from the public also causes the system to risk being abused.In section four, the author combines his own understanding with scholarly opinions. Setting his point of departure as to keep the disregard of corporate personality from being abused, in doing so,the author comes up with the cases that suitable for the use of the disregard of corporate personality, limits the entity factor and process factor in the application of the disregard of corporate personality and excludes the unsuitable cases in its application in order to ensure that the disregard of corporate personality will not be wantonly employed in legal practice. |
