Application of the Legal Personality Denial System in Chinese Law in Parent-Subsidiary Companies

DOI

10.2991/aebmr.k.220603.140How to use a DOI?

Keywords

Denial of legal personality; Parent-subsidiary company; Protect the interests of creditors; application of the law

Abstract

The system of denying the personality of the juridical person, also known as “piercing the corporate veil”, refers to a legal measure that is set up to prevent the abuse of the independent personality of the company and protect the company’s creditors and social public interests. The independent personality of the company and the shareholders behind it and the limited liability of shareholders according to specific facts in specific legal relations are denied to order the shareholders of the company to be directly responsible for the company’s creditors or public interests and achieve the goal of fairness and justice. As a highly related parent-subsidiary company, in practice, the parent company often takes advantage of its controlling position to conduct unfair transactions with its subsidiaries, thus infringing on the interests of creditors. This paper mainly uses the method of case analysis, through inductive judgments, it is found that in the trial of related cases of affiliated companies, the proportion of supporting the denial of legal personality is high, the applicable requirements are not uniform, the refereeing basis is confusing, and there is a phenomenon of over-reliance on the denial of legal personality system. There are two reasons behind this. One point is that the abstraction of the current law is high, and the other one is the denial of horizontal legal personality faces the problem that is the lack of judgment basis. This paper argues that it is necessary to study the application of the system of disregard for legal personality in related transactions of parent-subsidiary companies. China should continue to refine its standards and learn from international cases in the future, one possible way is to change from a separate entity model to a single enterprise model.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article distributed under the CC BY-NC 4.0 license.

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TY  - CONF
AU  - Xingyang Yu
PY  - 2022
DA  - 2022/07/01
TI  - Application of the Legal Personality Denial System in Chinese Law in Parent-Subsidiary Companies
BT  - Proceedings of the 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022)
PB  - Atlantis Press
SP  - 854
EP  - 859
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220603.140
DO  - 10.2991/aebmr.k.220603.140
ID  - Yu2022
ER  -