The Rule Of Piercing The Corporate Veil
The rule of piercing the Corporate Veil and what is its implement actuality under China company law ?
Introduction
In regardless of the jurisdictions, it is generally accepted that shareholders among a corporation are not liable for the obligations of the corporation in the circumstance where exceed their investments in the corporation. However, this limited liability is not absolute that make shareholders exempted from corporation obligations. In certain circumstances, the separate legal person of a corporation can be discharged and treat the shareholders and the corporation as one, which is known as piercing the corporation veil (Kershaw, 2009: 46). The principle of piercing the corporation veil is to examine the application of limited liability and refrain shareholders from abusing limited liability to obtain illegitimate ends. It is important to mention that this rule plays a relatively small role under British company law, while has not frequently been applied by Australian courts. And this rule is regularly criticised as vague, confused and unpredictable under United States corporate law (Xi, 2011: 413). Under the comparative background, China embraced the rule of piercing the corporation veil in 2005, in which the first national 1993 corporation law was revamped, has came as a surprise. Therefore, this essay is going to analyze the actuality of implement this rule and what challenges this new rules have been faced under Chinese jurisdictions. A profound case which have originated the rule of piercing the corporation veil will be traced back at first, followed by the legal basis of this rule, and then introduced evolvement of piercing the corporation in China’s practice, implement actuality of this rule and some proposals will be discussed at last.
Origination of piercing the corporation veil
The rule of piercing the corporation veil have undergone a quite long period to be eventually achieved, rather than created of a sudden. The decision from the
Introduction
In regardless of the jurisdictions, it is generally accepted that shareholders among a corporation are not liable for the obligations of the corporation in the circumstance where exceed their investments in the corporation. However, this limited liability is not absolute that make shareholders exempted from corporation obligations. In certain circumstances, the separate legal person of a corporation can be discharged and treat the shareholders and the corporation as one, which is known as piercing the corporation veil (Kershaw, 2009: 46). The principle of piercing the corporation veil is to examine the application of limited liability and refrain shareholders from abusing limited liability to obtain illegitimate ends. It is important to mention that this rule plays a relatively small role under British company law, while has not frequently been applied by Australian courts. And this rule is regularly criticised as vague, confused and unpredictable under United States corporate law (Xi, 2011: 413). Under the comparative background, China embraced the rule of piercing the corporation veil in 2005, in which the first national 1993 corporation law was revamped, has came as a surprise. Therefore, this essay is going to analyze the actuality of implement this rule and what challenges this new rules have been faced under Chinese jurisdictions. A profound case which have originated the rule of piercing the corporation veil will be traced back at first, followed by the legal basis of this rule, and then introduced evolvement of piercing the corporation in China’s practice, implement actuality of this rule and some proposals will be discussed at last.
Origination of piercing the corporation veil
The rule of piercing the corporation veil have undergone a quite long period to be eventually achieved, rather than created of a sudden. The decision from the