Research On Judicial Recognition Of Undercapitalization

In 2005,the Company Law introduced the system of disregard of corporate personality,but the provisions are relatively simple.As one of the applicable situations of the system,"Undercapitalization" lacked clear identification criteria.In 2013,the Company Law was amended,the statutory minimum capital system was abolished,and the subscribed capital system was established.In this context,under the "Undercapitalization",the possibility of applying the system of disregard of corporate personality has gradually increased,and has developed into an important institutional tool for solving corporate disputes and balancing the interests of creditors and shareholders.However,in judicial practice,different courts have different opinions on the recognition of "Undercapitalization".The phenomenon of "different judgments in the same case" is more prominent,damaging the credibility of the judiciary.Therefore,the identification of "Undercapitalization" remains to be solved.This paper evaluates applicability of the system of disregard of corporate personality under the situation of "Undercapitalization",using empirical research and comparative analysis,combining quantitative analysis with qualitative analysis.In view of the existing problems in our current judicial practice,this paper makes a corresponding discussion on the judicial identification of "Undercapitalization" and its application.In addition to the introduction and conclusion,this paper is divided into three parts:The first part tries to uncover the mystery of judicial cognizance of "significant capital shortage" by statistics and induction of 496 cases in judicial practice in China.In the case of "Undercapitalizationl",the division of "Undercapitalization" is formed by quantifying nine relevant statistical factors,such as the overall ratio,time distribution and trial level of cases denying corporate personality;the type of respondent company,the number of shareholders of the defendant company,the type of company creditor,type of recognizing "capital",the time node of determination and the reasons for judicial determination.The objective understanding of the status quo of legal identification and the practical characteristics of judicial identification are summarized,which reflects the cautious attitude of Chinese courts to the application of the system of disregard of corporate personality.The second part combines the reform of company capital system and the development of theory,and points out the problems existing in the judicial identification of "Undercapitalization" in our country through the analysis of typical cases.This part focus on the definition of "capital" is not clear,the application time node is not uniform,the identification criteria are not clear,corporate personality denial liability and shareholders liability for investment defects confusion and other issues are discussed in a typological manner,and the defects of judicial practice are analyzed and pointed out.At the same time,from three aspects: imperfection of legislation,limitation of judges' cognitive level and short-term cost of capital system reform,this paper reveals the causes of confusion in judicial practice and lays a foundation for the choice of judicial identification path below.The third part focuses on the Judgment routing of judicial recognizance of "Undercapitalization",through reflecting and summarizing the analysis of the first two parts,on the basis of drawing lessons from the mature legislative and judicial experience of the developed countries ruled by law in the west,and puts forward pertinent and feasible suggestions from three perspectives of basic principles,improvement measures and specific rules,in order to establish a unified judicial adjudication routing.Firstly,the application of "Undercapitalization" needs to abide by the basic principles of strictly adjudicating litigants claims and avoiding single application;Secondly,it needs to follow certain identification criteria.The determination of "capital" should be based on paid-in capital,the application of time nodes should be flexibly adjusted according to the company's operation status and the articles of association,and "significant deficiency" should be examined on the basis of factual judgment and value judgment to see whether the capital is reasonable in comparison with the company's operation scale and operation risk.Finally,in terms of specific rules,it is necessary to clarify the appropriate boundaries between corporate personality denial responsibility and shareholders liability for defective investment,and do a good job of transformation and cohesion between the two.At the same time,because voluntary creditors have more advantages than involuntary creditors in the investigation of corporate credit and the guarantee of creditor's rights,based on the principle of balance of interests,"Undercapitalization" is necessary to prudently applied in voluntary debt,and moderately applied in involuntary debt.