Denial Of Corporate Personality In Case Of Significant Capital Shortage

There is a legitimate basis for denial of legal personality in the case of significant shortage of capital.The significant shortage of capital constitutes the abuse of legal personality and shareholders’ limited liability,which results in the imbalance of the shareholders’ interest and creditors’ interest.The abolition of the minimum capital does not exempt shareholders from the obligation to invest appropriate property in the company.In order to maintain the company justice,the system of denial of legal personality should be applied.Significant shortage of capital refers to the fact that the amount of capital invested by shareholders in the company is not suitable for the risk of the company’s operation.The degree of significant shortage should be such that it does not have sufficient capital to bear a fair share of the risk of operation failure,and it can not encourage the shareholders engaged in operation and management to make reasonable operation decisions.The connotation of capital include the property actually contributed by shareholders,the undistributed profits,capital reserves and the creditor’s rights of shareholders applying the principle of equitable subordination.The judgment time of significant shortage of capital is when capital and operation risk change.The judgment method includes financial index analysis,industry comparison and consulting with financial analysts.The final discretion of the judge should be based on the result rather than the cause,and the trial experience should be summarized.In the case of a significant shortage of capital,other elements of denial of corporate personality are applicable.Involuntary creditors are the eligible subjects.Voluntary creditors generally should not apply to denial of corporate personality.However,when they misunderstand the company’s assets and credit due to lack of the status of obtaining symmetrical information,equal negotiation,fraud,or changes in the company’s credit after the transaction,voluntary creditors should be regarded as involuntary creditors.The shareholders who bear liability for the company’s debts are the shareholders responsible for the company’s operation and management.Serious damage means that the creditor’s rights can not be fully paid for a long time.There is a considerable causal relationship between the significant shortage of capital and the result of damage,which should be proved by presumption.Shareholders should have subjective malice,and the objective abuse theory should be used to presume the existence of subjective malice.Using the research methods of doctrine of law and literature,this paper demonstrates the above viewpoints in six parts as follows: firstly,the introduction puts forward the problems,explains the research value and significance of the problems,makes a literature review,points out the main innovations and shortcomings,and expresses the research methods.The first chapter analyzes the legal basis of the significant shortage of capital applicable to the denial of corporate personality.The second chapter analyzes the connotation of significant shortage of capital.The third chapter analyzes the time,methods and characteristics of judging the significant shortage of capital.The fourth chapter analyzes other elements of denial of corporate personality in the case of significant shortage of capital.Finally,summarizes the content of the article,that is,the legal basis,the connotation,the judgment and other applicable elements of the denial of legal personality in the case of significant shortage of capital,so as to fully analyze the system of denial of legal personality in the case of significant shortage of capital.