A Study on the Corporate Entity and Doctrine of Disregard of Corporate Entity: Comparison the Doctrine of Disregard of Corporate Entity System between China and Korea

Abstract

Purpose – Through the analysis of many problems, we can see the two countries will then compare and comprehensively review their corporate personality denial systems to find out their strengths and weaknesses and complementarity. Finally, improvement and development of the two countries’ corporate personality denial systems are proposed. Design/Methodology/Approach – Independent corporate personality and limited liability of shareholders are the two basic principles of the corporate system, which can support the superiority of the corporate system. A legal umbrella was placed between shareholders and creditors based on the company’s independent corporate character and limited liability, but the relationship between shareholders and companies was not severed. Findings – Although the legislation of Korean and Chinese companies stipulates the denial of corporate status, there are many problems in practical interpretation and application. This paper begins with the theory of the actual existence of corporate personality and interprets the essence of corporate personality. At the same time, this paper discusses the legal principles of the denial of corporate character and expounds the characteristics of the two countries. Research Implications – Shareholders actively participate in management to ensure the best interests of the company to avoid losses and restrictions caused by the separation of the company from personality. Sometimes, however, shareholders have to abuse their corporate credentials in the process of pursuing these interests.