On The Negation Of Legal Personality In The Case Of Significant Shortage Of Capital

Shareholders' limited liability is a risk allocation mechanism for the redistribution of the company's operating risks,and in order to realize the economic value behind the system,the company's operating risks that should have been borne by the shareholders are redistributed to the company's creditors.And the limited liability of shareholders and their position in the company puts shareholders at moral hazard.At the same time,there is a conflict of interest between shareholders and creditors of the company.The interests of the company's creditors need to be specially protected.In order to protect the interests of the company's creditors and achieve a balance of interests,the corporate veil was created as an exception to limited liability for shareholders.However,on a global scale,the legal community has not reached a consensus on the theory of unveiling the corporate veil,but it can be broadly divided into two directions: from the perspective of abuse of rights,unveiling the corporate veil is an equitable system to prevent shareholders from abusing limited liability;from the perspective of shareholders' limited liability achievements,unveiling the corporate veil is a state in which shareholders and companies do not maintain property and personality separation.The unmasking of the corporate veil as an exception to the limited liability of shareholders,and the realization of its institutional value by denying them limited liability.At the level of application of the system,the lifting of the corporate veil has been a challenge since its inception.In order to solve the difficulty of applying the corporate veil system,China has adopted a "typology" approach to application.Undercapitalization is what happens when the corporate veil is lifted and typified.According to the general theory of the lifting of the corporate veil in our country,undercapitalization is a circumstance in which the corporate veil is lifted,and it has been repeatedly confirmed in the provisions of the judiciary concerning the application of the lifting of the corporate veil.In our country,undercapitalization is seen as a case of lifting the corporate veil.Undercapitalization,as a situation in which the corporate veil is lifted,is the result of the design of the system,and the system can only realize its value if it is applied.Through the empirical analysis of undercapitalization cases,the author has found some problems in unveiling the corporate veil in the case of undercapitalization.Most of these issues have been addressed by the Ninth Meeting Minutes,but the Ninth Meeting Minutes focus on a uniform yardstick and do not respond to challenges to the legitimacy of lifting the corporate veil in cases of undercapitalization.Thelifting of the corporate veil in cases of undercapitalization objectively increases the responsibility of shareholders,and the judiciary should fully justify the "typology" requirement before concluding that undercapitalization is an abuse by shareholders.However,at present,it appears that the justification for the judiciary to lift the corporate veil in cases of insufficient capital comes directly from the academic community.The jurisprudence of unveiling the corporate veil in the case of insufficient capital has not been thoroughly explored in the academic and practical circles,and the general theory is still based on "shareholders' responsibility" and "externalization of corporate business risks".The problem with the application of the corporate veil in the case of undercapitalization is perhaps not a question of the scale of application,but of its own legitimacy.The legitimacy of lifting the corporate veil in the case of undercapitalization is still open to discussion.According to the theory,shareholders have the responsibility to bear a certain size of capital contribution,the size of the company's capital should match the responsibility of shareholders;the size of shareholders' contribution should be sufficient to cover the liabilities arising from the normal operation of the company,the size of the company's capital should match the company's operating risk.This is the justification for the general theory of undercapitalization as a circumstance that unveils the corporate veil.However,in fact,the size of the company's capital should not,can not be matched with the responsibility of shareholders,shareholders do not bear the responsibility of a certain size of capital;and the size of the company's capital to match with the company's operating risk can not achieve the system function,the size of the company's capital to match with the company's operating risk is meaningless.By analysing the reasons for the failure of some judges in judicial practice to properly apply and reveal the corporate veil in cases of undercapitalization,the author found that their failure to distinguish between "undercapitalization","causal conduct" and abuse of limited liability by shareholders was an important reason for the failure to properly apply and reveal "undercapitalization"."Undercapitalization" addresses the contribution of shareholders and evaluates the size of their contribution.At the same time,the application of "undercapitalization" should return to the original purpose of the system of uncovering the corporate veil,rather than applying norms mechanically because of typified application rules.The justification for "undercapitalization" is not sufficient,and it is worth considering whetherundercapitalization continues to be seen as a situation in which the corporate veil is lifted.However,the issue of externalization of corporate business risks and creditor protection remains to be resolved.Under the framework of the current company law system,we can try to reform the profit distribution rules of the company and introduce the concept of net assets into the profit distribution rules of the company,so as to solve the problem that the current profit distribution rules of the company cannot reflect the solvency of the company and achieve the purpose of maintaining a high solvency of the company.From a macro point of view,the problem of externalization of corporate business risk can be solved by a combination of three paths: reducing corporate business risk,improving corporate solvency and redistributing corporate business risk.