Research On Legal Issues Of Reverse Piercing Corporate Veil In China

Corporate personality independence and shareholder limited liability are the two cornerstones of modern corporate system.however,in practice,some shareholders abuse the corporate independence system to harm the interests of other shareholders,the company and the creditors of the company.in order to regulate this illegal behavior,China introduced the legal system of piercing the corporate veil when revising the company law in 2005,which requires that the shareholders who abuse the rights of shareholders should bear joint and several liability for corporate debt,which effectively protects the interests of the company and other shareholders.But with the active market economy and the development of the company form,parent-subsidiary companies and affiliated companies are emerging.Some parent companies have illegally transferred property to subsidiaries,resulting in the bankruptcy of the parent company,which has seriously damaged the interests of creditors of the parent company.Other related company’s actual controllers use the transactions between related companies to illegally transfer property between related companies and evade debts,which seriously infringes on the interests of the creditors of related companies.According to the existing laws of our country,the interests of the creditors of the parent company or the creditors of the affiliated company can not be effectively protected.In order to improve the company system and protect the interests of the parent company creditors,affiliated company creditors,shareholders creditors,the United States has established a reverse piercing corporate veil legal system,that is,when shareholders abuse shareholder rights,malicious transfer of assets to the company,resulting in personality confusion between the company and shareholders,and thus damage the interests of shareholders creditors,shareholders creditors can request the company and shareholders as a whole,by the company to bear joint and several liability for the debts of shareholders.In China,there is no legal system of reverse piercing the corporate veil,so the court can only expand the interpretation of article 20 of the company law when dealing with this kind of case,or according to the principle of good faith and fairness in the civil law to judge the case,which leads to the judgment on the basis of non-unity,different judgments in the same case and so on.In addition,the judgment results for the company’s joint and several liability to shareholders and limits are not clear,it is easy to appear in the implementation of new problems.The company is an economic entity,if the company’s property to repay the debts of shareholders,may damage the interests of other shareholders and creditors of the company,how to measure the relevant interests,the court did not explain in the decision.In order to meet the needs of judicial practice,it is necessary to construct the legal system of reverse piercing corporate veil in China.To amend article 20 of the company law,to add the protection of the interests of shareholders’ creditors and affiliated company creditors,to clarify its legal status,and to make further provisions on the system in the judicial application.First of all,the main elements,behavior elements and result elements of reverse piercing corporate veil system are defined.Secondly,the system of reverse piercing corporate veil can be applied to parent-subsidiary company,affiliated company and one-person company.Third,the provisions of the company to bear joint and several liability way and limit,the company with all its assets to the shareholders of the debt to bear joint and several liability;Fourth,the burden of proof should be applied to the general principle of proof,that is,who advocates who gives evidence;Fifth,the introduction of interest measurement methods,reverse piercing the veil of the company should give priority to protect the interests of creditors of the company,and then protect the interests of other bona fide shareholders,such as surplus to pay off the debts of shareholders creditors.