Study On The Judicial Application Of The System Of Disregarding Corporate Personality

Paragraph 3,Article 20 of the Company Law of China stipulates that: if a company shareholder abuses the independent status of the company legal person and the limited liability of the shareholder to avoid debts and seriously damages the interests of the company's creditors,he shall be jointly and severally liable for the company's debts.This article stipulates the system of disregarding corporate personality in the form of written law with only a few lines,which is the first codification of this important principle of case law,and is actually one of the major innovations of the Company Law.However,Paragraph 3,Article 20 of the Company Law only limits the subject of liability to shareholders.With the prominent problem that the personality confusion of affiliated companies damages the interests of creditors,this clause has shown obvious limitation.In response to this problem,the Supreme People's Court issued the No.15 Guiding Case in 2013,which extended the liability subject of the system of disregarding corporate personality to the field of affiliated companies.In November 2019 in the Minutes of the National Courts' Civil and Commercial Trial Work Conference(hereinafter referred to as the “Conference Minutes”),the Supreme People's Court made a cultural provision on the application of the system of disregarding corporate personality to affiliated companies.They are of great guiding value for judicial trials to change the situation that such problems are not regulated.However,in China,the Guiding Case and the Conference Minutes are not judicial interpretations and cannot be quoted directly as legal provisions.Moreover,the Paragraph 3,Article 20 of the Company Law is a provision on the traditional system of disregarding corporate personality.However,there are differences between the traditional system of disregarding corporate personality and the system of disregarding corporate personality to affiliated companies in the aspects of the subject of behavior,the subject of responsibility and the regulation behavior.Therefore,it is not proper to use the provision of Paragraph 3,Article 20 of the Company Law as the judgment basis of such problems through the application by analogy and expanded interpretation.Therefore,the provision of the system of disregarding corporate personality in the Company Law cannot meet the needs of judicial practice,and the application of the system of disregarding corporate personality in affiliated companies is still facing a dilemma.In the face of this situation,this paper explores the relevant theories,cases and foreign legal systems,so as to make a contribution to remedy the legal loopholes and improve the system of disregarding corporate personality.At first,this paper expounds the connotation and applicable elements of the system of disregarding corporate personality,and analyzes the affiliated companies and their associated relationships,and explores the applicability of the system of disregarding corporate personality in affiliated companies,which make some unclear theories clearer.On this basis,this paper points out that the applicability of the system of disregarding corporate personality in the affiliated company breaks through the traditional system of disregarding corporate personality limitations in applicable subject,and extends the scope of the behavior regulated by the system of disregarding corporate personality,and strengthens the legal value of system of disregarding corporate personality.The study of judicial application also should be based on judicial practice and cases analyses.Through analyses of cases,it can be found that the judicial application of the system of disregarding corporate personality in the field of affiliated companies is rather chaotic under the background of the lack of legislation.Firstly,there are many versions of the legal reasons for the court's reasoning,including Paragraph 3,Article 20 of the Company Law or Article 20 of the Company Law and Article 3 of the Company Law,the Guiding Case No.15,legal theories and mainstream legal views.Secondly,the identification standards are inconsistent.Before the publication of the Conference Minutes,from the perspective of the overall application elements,there are mainly three identification standards: personality confusion that constitutes disregarding of corporation personality,personality confusion with serious damage that constitutes disregarding of corporation personality,and personality confusion with serious damage to creditors and causal relationship that constitute disregarding of corporation personality.From the perspective of the specific application elements,different courts have different identification standards for the personality confusion of the affiliated company and the identification standards for the serious damage.Although the Conference Minutes clarifies the recognition standard of the personality confusion and the importance and recognition standard of the important requirement of seriously damaging the interests of creditors,but since the Guiding Case No.15 in the judicial practice still plays a powerful role in guiding,and this Guidance Case focuses on the external representational factors of personality confusion,while the Conference Minutes focuses not only on personality confusion but also on the reasons behind personality confusion.In the guidance of the Guiding Case No.15 and the Conference Minutes,at present,identifications of such cases in the judicial standard are difficult to unity,and compared with the Guiding Case No.15,the Conference Minutes' relevant regulation on the subject of responsibility is vague.Finally,on the whole,the distribution of burden of proof obviously violates the principle of fairness,and the distribution of burden of proof is not uniform in judicial practice.However,the Conference Minutes fails to respond to the issues of burden of proof.Faced with the problems in law and judicial practice,it is imperative to improve the relevant laws.Through comparative study,it can be concluded that China's legislation can learn from the complete system design of the United States and the special chapter legislation model of Germany,and introduce the system of disregarding corporate personality about parent-subsidiary corporations,the reverse disregarding corporate personality system and the triangle disregarding corporate personality system in the United States by making separate provisions to improve the system of disregarding corporate personality in China.In addition,it is necessary to issue relevant judicial interpretations in order to respond to the identification standard,the subject of responsibility and the burden of proof in the judicial application and to enhance the feasibility of the application of the system in affiliated companies.In the future,China should combine legislation with judicial interpretations to regulate the application of the system of disregarding corporate personality in the affiliated companies to provide a clear and complete legal basis for the application of the system of disregarding corporate personality in the affiliated companies.