Protection of Corporate Creditors’ Interests under Subscription System

At the end of 2013, the reform of China’s corporate capital system established the full subscription system design. This reform, however, is far from ideal. It also introduces new issues, such as bogus companies, which have a new impact on the market economy. The reason for this is that it only eliminates the minimum registered capital and first capital contribution requirements, leaving other systems that are actually matched with the paid-in system unchanged, resulting in the old and new systems forcibly grafted together being unable to adapt to each other in practice. In the real world, such a corporate capital arrangement is certain to have issues. Given the company’s debt repayment problem, which is caused by the current full subscription system, it is advisable to establish and improve the company’s credit and information publicity system, appropriately expand the application scope of the disregard of corporate personality system, and constantly improve the company’s registered capital urging system, in order to ensure the enrichment of the company’s capital, better safeguard the interests of the company’s creditors, and avoid the company’s debt repayment problem.

Review of Richard W. Sterling, Ethics in a World of Power: The Political Ideas of Friedrich Meinecke (Princeton, New Jersey: Princeton University Press, 1958; London, Oxford University Press, 1959)

Meinecke’s student and friend, Richard Sterling, composed this intellectual biography concerning Meinecke’s political ideas. Born in 1862, Meinecke was raised to venerate Hegel, Ranke, and Bismarck as pillars of the German State and conservative nationalism. Wight summed up Meinecke’s political evolution as follows: ‘In the first World War he justified the ultimatum to Serbia and the invasion of Belgium, he approved of unrestricted submarine warfare, and he explained to the minority peoples of the Central Powers that though the nation-state had been the proper goal for the Germans, it was their duty to remain content with the multi-national state. The shock of defeat started him on an assiduous criticism of his old beliefs. The moral autonomy of the State, the primacy of foreign policy, international relations as the fruitful competition of vigorously egotistic Powers, all gradually dissolved. He moved nearer to Goethe, and as an old man came to find the ultimate truth of politics not in the ideal, super-individual corporate personality of the nation-state, but in the martyrdom of the individual rebel against Hitler’s Reich.’

Corporate Personality

This chapter discusses how separate legal personality can be explained as a solution developed by company law to address the problem that organizations are social rather than brute facts. For a company to come into existence, certain documents need to be registered. These contain information that facilitates the interaction between the company and third parties. Registration as a company then gives an organization a public legal manifestation. The Companies Act does not limit the corporate form to organizational action. The corporate form can therefore be used for other purposes and organizational boundaries do not align with legal personality. But this does not undermine the observation that company law is designed for the operation of organizations.

3. Corporate personality

This chapter discusses the concept of corporate legal personality. This fundamental principle of company law—that the company on incorporation becomes a separate legal entity in its own right—was established by the House of Lords in Salomon v Salomon & Co Ltd. The Salomon principle and its consequences for individual companies and for groups of companies are considered. In limited circumstances, the court may disregard or pierce or lift the corporate veil and the narrow jurisdiction to do so is explained. The chapter also considers corporate groups in the light of Salomon, particularly with regard to the liability of parent companies for the actions of subsidiary companies.

Research on the Perfection of Disregard of Corporate Personality in Enforcement

China's current disregard of corporate personality system has several prominent problems in the mandatory enforcement procedures, such as different identification standards, difficulty in starting the enforcement procedures, and lack of supporting systems. Perfecting the application of the disregard of corporate personality system in the enforcement process can effectively alleviate the "execution difficulty" problem to a certain extent. In judicial practice, to solve the problem of difficult implementation of the main body of the company caused by the control of shareholders' abuse of the company's independent personality, on the one hand, it is necessary to improve China's company law and other related legal systems, formulate supporting standards, and incorporate the common circumstances of corporate legal personality denial into judicial interpretation. On the other hand, we should strictly grasp the scale in the execution procedure and deny the person who abuses the company's independent personality.

3. Registration

This chapter discusses the process of registration for the incorporation of companies under the Companies Act 2006. It considers the distinction between private and public companies, the meaning of limited liability and the significant characteristics of the company created by the registration procedure at Companies House, such as a company’s separate corporate personality (which is highly artificial), its members, shareholding, directors, secretary, name, constitution and its registered office and domicile. To deter misuse of companies, the registration process involves disclosing much information about a company which is then available for public inspection. This process of public disclosure continues throughout a company’s existence.

5. Corporate personality

This chapter deals with the legal personality of a company which is separate from its members, capable of owning property, entering into contracts and being a party to legal proceedings. It considers the case Salomon v A Salomon and Co Ltd [1897] AC 22, in which the House of Lords affirmed separate corporate personality by rejecting attempts, on behalf of creditors, to impose liability for a failed company’s debts on its controlling shareholder. The consequences of separate corporate personality are also discussed, particularly with respect to a company’s human rights (or personal rights). In addition, the chapter examines the process known as ‘piercing the corporate veil’ in relation to the evasion principle; how an artificial entity can have legal personality; and a number of particularly significant court cases. Finally, it looks at corporate law theory and considers whether companies are grammatically singular or plural.