Research On The Application Of Reverse Denial System Of Corporate Personality

The system of reverse denial of corporate personality refers to shareholders cannot repay their debts due to the transfer of assets to companies with investment relationship.Shareholders’ creditors request the court to deny corporate personality and let the companies accepting the transfer of assets bear joint and several liabilities for the debts owed by shareholders.This system is essentially the same as the traditional system of personality denial,but there are differences in the direction of responsibility,applicable conditions and objects of denial.In addition,the system enables the entire company’s property to directly provide guarantees for shareholders and creditors and at the same time penalizes shareholders for abusing corporate personality to avoid debts.Its advantages cannot be replaced by existing laws such as equity enforcement,creditor’s right cancellation and creditor’s right subrogation.The development of the system of reverse denial in our country is a gradual process.Before the Supreme People’s Court made Case No.15,our country did not define the system of reverse denial,but expanded the application of traditional personality denial.Case No.15 clarifies the reverse denial.After case No.15,the development of the system has become more mature.Although the application of the system in our country is gradually advancing,there are still problems of unclear applicable basis,applicable standards and applicable requirements.The U.S.has formed four different opinions that affect the court’s judgment,namely,the total negation theory,the affirmation theory treated by the traditional personality denial standard,the affirmation theory treated by the equity standard,and the comprehensive judgment theory.These opinions and the research of relevant U.S.cases show that the reverse denial system is feasible.According to the reality of our country,the perfection of our country’s reverse denial system should focus on four aspects.First of all,we should pay attention to clear the basis of its application and let the application of the system have laws to follow.Secondly,we should clearly define the applicable standards,break away from the limitation of traditional confusion of personality,and make it an important basis to judge personality denial by not making financial records and not keeping separate records of the financial status of the company and shareholders.Thirdly,the applicable elements should be clearly defined and the main body,behavior,subjective and result elements of the system should be specified.Finally,the applicable procedures should be clarified,the burden of proof should be distributed,and the enforcement procedures should be improved.