The Legal Entity System Has Profoundly Affected The Process Of Human Economic And Social Development

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1.0 Introduction The legal entity system has profoundly affected the process of human economic and social development. Needless to say, the connotation of the legal entity system is very rich, and that the company has an independent personality and shareholders bear the limited liability is the two basic features (Tweedale, G., Flynn, L., 2007). Of course, the company 's independent personality is based on the separation of corporate property and shareholder property. Under this circumstance, the company shall enjoy their rights, fulfil obligations, and independently bear civil liability in its own name (L.C.B., 1992). However, with the development of commodity economy, and the deepening and extensive use of the legal entity system, the…show more content…
3.1.1 Fraud or misrepresentation Fraud or misrepresentation is one of the most frequent factors in piercing the corporate veil. Fraud is a deliberate concealment of the truth and a false statement leading the other party to engage in certain acts and causing loss or injury, which can be seen in the case” GILFORD MOTOR Co. v HORNE Ltd. (1933)”. Fraud includes civil fraud and criminal fraud, and fraud is often associated with misrepresentation. Inaccurate statements in the litigation of piercing the corporate veil generally include misrepresentation of the company 's assets and financial conditions, as well as misrepresentations of paying to the parties. Professor Thompson is of the opinion that when the act is found to be "fraud" by the court, the act is often used as evidence to support the "misrepresentation" if the fraud claim cannot be substantiated (Hodge, L., Sachs, A., 2008). 3.1.2 Shareholders’ control and domination In order to pierce the company veil, the plaintiff needs not only to prove the "domination and control" behaviour, but also to prove that there is fraud or abuse unfair form of corporate. In order to pierce the company veil, that shareholders only control/dominate the company is not enough, and there must be "fraud or misrepresentation" evidence. In this regard, the standard of piercing the veil of the company is also particularly stringent. If there is only the fact that the shareholder is a
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