Preliminary exploration of corporate personality confusion

First, what is corporate personality confusion

Corporate personality confusion refers to the fact that the personality of the company is completely mixed with that of shareholders or other companies, resulting in the fact that the shareholders are the company, or the company is the shareholder, or the legal person of the two companies cannot be substantially distinguished.

Ii. Manifestation of corporate personality confusion

From the appearance, including personnel confused, business confused, financial confused, their contact consistent (similar), propaganda content consistent (similar), etc. From the point of internal relations, namely two or more property ownership cannot discern between affiliate companies, it is difficult to distinguish, or place of incorporation, leasing business premises, same common office facilities, machinery and equipment, using the same property free calls between the company and accounting records, books, financial accounting is difficult to distinguish.

This state of confusion brings difficulties to the creditors in the identification of the subject, and finally endangers the creditors' claims.

Iii. How to identify the personality confusion of affiliated companies?

The basic premise for a corporate legal person to engage in legal business activities is to have an independent "personality". In the case of "personality confusion", multiple affiliated companies identified by the judge as being confused may assume joint and several liabilities for harming the interests of creditors. However, for the problem of "personality confusion" of corporate legal person, China's company law does not have a clear provision, and the most relevant provision is only the "veil piercing system" of the company stipulated in article 20.

According to the supreme people's court about the release of the fourth batch of guiding cases notice method (2013) no. 24 instructional cases, 15 "XCMG Construction Machinery Co., ltd. v. chengdu sichuan/sale contract dispute such as industry and trade Co., Ltd.", the case of the referee reasons tell us that two companies make the personality confusion standard mainly have three: one is the personnel confusion; Second, business confusion; Third, property confusion.

(1)

Personnel confusion is the premise of identifying "personality confusion" of corporate legal person. Most of the staff in the affiliated companies have overlapping, including the same legal representative of the company, the same senior management of the company and the cross-employment of ordinary staff. Commonly known as "two brands, a set of horse"

(2) business

Business confusion mainly refers to the affiliated companies in the process of operation. It is as if a business is sometimes conducted in the name of one company and sometimes in the name of another, so that the counterparty cannot tell which company it is dealing with.

(3) money

Financial confusion is often manifested as the sharing of the same financial department between affiliated companies, or even the same account book, the entry and exit of accounts at will and without normal reasons. It should be noted that affiliated companies shall not be regarded as financial confusion by combining financial and tax statements in accordance with the law and centralized cash management under the premise of separate accounting and withdrawal freedom.

It can be seen that when there is confusion among people, finance and business, it is highly likely to be identified as "personality confusion" in judicial practice.

But for affiliate company, the business premises of the same on the surface, or use the same common office facilities, machinery and equipment, the company funds between state such as frequent practice can't jump to conclusions, but should be a comprehensive affiliate company personnel, business and financial aspects such as whether to cross or confusion on real significance. If there is only the case of personnel overlap, or only the case of business similarity, it cannot be simply and mechanically concluded that there is personality confusion in the associated companies. Only when the personnel, business, finance and other aspects of the affiliated company have substantial overlapping or mixed simultaneously, and these overlapping and mixing lead to the inability to distinguish the property of the respective company, can the affiliated company be identified as the confused personality.

At the same time, due to the internal relations between affiliated enterprises have control and subordination relations and other significant influence relations, there are objectively more close relations between affiliated enterprises than general enterprises. Especially under the structure of group company and parent-subsidiary company, it is a regular state for the control company to conduct unified management of personnel, business and finance of its subordinate companies. In fact, an important legal feature of an enterprise group is its unified management and control over its subsidiaries, which is also the purpose of establishing an enterprise group. Therefore, to apply the rule of legal personality denial to enterprise groups, special attention should be paid to distinguish normal management and control from the abuse of the personality of affiliated companies, so as to avoid the abuse of the rule of legal personality denial and damage to the whole enterprise group system.

The above three situations are typical manifestations of mixed personality of associated companies and common manifestations of mixed personality. In practice, personality confusion is not limited to the above-mentioned three factors, but also such as the same telephone number and the same propaganda content. It should also be noted that under the structure of group companies and parent-subsidiary companies, it is a regular state for controlling companies to conduct unified management of personnel, business and finance of their subsidiaries. For example, in terms of personnel, the group will dispatch managers to its subsidiaries; In terms of business, the group will formulate unified business standards for its subsidiaries, issue unified production and operation plans, and conduct unified assessment. In terms of finance, the group will establish a unified financial management system and so on. We believe that such unified management does not belong to personality confusion as long as it is within the scope of legality and under the premise that the control company does not abuse its rights or infringe upon the independent personality of its subsidiaries.

Iv. Burden of proof for personality confusion

The creditor of the company shall bear the burden of proof for the facts involved in the above-mentioned entity elements (except for one-person company). Creditors should be able to provide preliminary evidence to prove that there is a greater possibility of personality confusion between affiliated companies, so that the judge has a reasonable doubt. At the same time, because the company personality confusion prove their interest suffered serious damage, and further the burden of proof shall be transferred to the associated company and controlling shareholder, the burden of proof can not be completed if the company or shareholders, can consider to apply the supreme people's court provisions about civil action evidence of article seventy-five of the "there is evidence to prove that one party concerned holds evidence without good reason refuses to provide, if the other party claims that the evidence against the content of the holder, this claim may be inferred and set up" regulation, corporate legal person personality. As for whether the shareholders have subjective malice such as evading debts, we can infer from the objective evidence provided by creditors. As for the judge, according to the relevant rules of evidence, according to article 3 of the company law, the associated company being sued is required to prove the independence of its legal person property, and according to article 4 of the company law, the defendant is required to prove the independence of his will.

In the existing query to many precedents, the vast majority of recognized company personality confusion cases, courts are standard with financial confusion as the core, that is to say, if the affiliate company financial confusion or financial management and use of non-standard, special seal for creditor's rights debt relations chaos is larger may be regarded as the company personality confusion, and standardize the financial work of importance.

From the perspective of scientific enterprise structure, personnel confusion in affiliated companies is not conducive to the management to make scientific decisions for the development of each company, and the business scope confusion is not conducive to the expansion of each company's business, limiting the development vitality of the company.

To sum up, whether from the perspective of avoiding legal risks or promoting the healthy development of the company, it is a wise choice for affiliated companies to remain relatively independent, which is also the objective law of enterprise development in the market economy environment.