Research On The Application Of ‘The Rule Of Disregarding The Corporate Personality'

Companies were created to stimulate the economy and encourage investment.The charm of a company lies in that the independent personality of a legal person and the limited liability of shareholders,which are the two cornerstones of the modern company system.So investors only need to take the responsibility for their contribution,which greatly reduces the risk of investment,stimulates the enthusiasm of investors,and makes the form of companyies extremely popular.Of course,while the company has great benefits,there are also many risks.Shareholders use the independent personality of legal person and limited liability to carry out misused behavior,which is a major risk.This risk transfers the risk of transaction from shareholders to creditors.In this case,in order to balance the interests of shareholders and creditors and to protect social public interests and creditors' interests,a new system--a rule of disregarding the corporate personality emerged.There are various terms for the rule of disregarding the corporate personality,such as "piercing the corporate veil","disclosing the corporate veil" and "directly claiming responsibility".Although different countries have different terms for the the rule of disregarding the corporate personality,they have the same meaning.This rule is not a denial of the modern corporate system,but is created to maintain the modern corporate system,from the other side of the entire legal system to improve and complement.Theemergence of the rule of disregarding the corporate personality is no doubt the "savior" of corporate creditors,but this rule is a relief system and cannot be abused.Therefore,in order to prevent the rule of disregarding the corporate personality from being abused,all countries in the world have made various regulations and restrictions on the application of the the rule of disregarding the corporate personality to prevent the system from being abused in judicial practice.China established the the rule of disregarding the corporate personality in the form of legislation in the company law reform in 2005.It is the first country in the world to stipulate the rule of disregarding the corporate personality in the form of written law.The establishment of this rule in China is undoubtedly the great significance for the maintenance of the company system.Because,if the company shareholder has the misused behavior,and seriously damages the creditor's interest,he needs to undertake the joint liability together with the company,snd is no longer protected by the limited liability of the shareholder.The establishment of the rule of disregarding the corporate personality provides legal basis for our judicial practice.However,as the system is "imported from abroad",it has experienced a hundred years of baptism in foreign countries before it continued to improve.And China,without any practice,directly applied the rule from abroad to China's company law.This kind of rigid application will undoubtedly generate many applicable problems.The regulations of Chinese company law on this system are short and concise,which cannot cover all the essence.Therefore,there must be many problems when the rule is applied in China.To analyzing the causes of these problems,and how to perfect the rule of disregarding the corporate personality at the present stage is a very close concern of the theoretical and practical circles.The first part of this paper is about the basic theory of the rule of disregarding the corporate personality.In this part,the historical and realistic background of the emergence of the rule of disregarding the corporate personality is mentioned,and the development process of the rule of disregarding the corporate personality in various countries is introduced.It also describes the connotation and characteristics of the rule of disregarding the corporate personality.The second part of this paper is about the application of the rule of disregarding the corporate personality,and illustrates theconstitutive elements together with the applicable situation.The constitutive elements include the subject elements,the behavior elements and the result elements.The subject element emphasizes that the subject who carries out the misused behavior must be the controlling shareholder of the company,and the subject who suggests the suit of denying the corporate personality must be the creditor of the company.The elements of behavior emphasize that those who misuse the independent personality of corporation must carry out the misused behavior.The result element is an emphasis on the seriously harm to the interests of creditors.As for the applicable situation,this paper discusses the common situation in practice of applying the corporate personality denial system,the obvious lack of capital and the personality confusion.The third part of this paper is about the problem of the application of the the rule of disregarding the corporate personality and their causes.This part first analyzes two real cases in practice,and through case analysis,summarizes the the rule of disregarding the corporate personality.Currently,there are problems in application such as: rules and regulations are too simple,similar cases with different judgments,unreasonable distribution of burden of proof,and objections of liability bearing.Then,it analyzes the causes of these problems,including the legislative side and the judicial practice side.The problems at the legislative side include the lack of operability of legal norms due to the limitations of written law,and the fact that no amendments have been made to the the rule of disregarding the corporate personality.At the judicial practice side,the problem is mainly that the application is too prudent and the judge's discretion is limited.The fourth part of the paper is the improving of the rule of disregarding the corporate personality.In view of the problems existing in the application of the system,the system needs to be improved urgently.This part elaborates the improcing suggestion from two aspects.One is to formulate judicial interpretation;the other is to reasonably allocate the burden of proof.In judicial interpretation,it is necessary to clarify the scope of the plaintiff and the defendant in the personality denial litigation,stipulate the application of the rule of disregarding the corporate personality,and clarify the nature of the liability of shareholders when the system is applied,so as to avoid confusion in practice.For reasonable allocation of the burden of proof,it is the first attention to analize the all onus probandi inversion,and to judge whether it should apply to the burden of proof inversion.The conclusion is that although the present unreasonable burden of proof is a major difficult point on application of the rule of disregarding the corporate personality,we can't directly apply rules of evidence of onus probandi inversion.Otherwise it will produce more disadvantages.As to how to set the burden of proof,the author believes that the burden of proof should be allocated reasonably in some cases,and should be led by the court during the trial.