| Summary: | 碩士 === 東吳大學 === 法律學系 === 99 === The most highly litigated issue in corporate law is piercing the corporate veil doctrine. The equitable doctrine of piercing the corporate veil is especially relevant in the financial crisis of 2008. The commentator calls the financial crisis as “the great recession”. Many banks and corporations collapsed after existing for decades. The failure of those corporations, those debtors want to know if they will able to recover for the wrongs they have suffered. When the corporate wrongdoer is out of money, plaintiffs often look to related individuals or corporations in an effort to recover for their loss. Although the general principal of limited liability protects parent corporations and individuals running corporations from liability in such situations, the equitable doctrine of piercing the corporate veil permits a court to set aside the corporate fiction and hold an individual or corporate shareholder responsible for the acts or debts of the corporation. The benefit of the limited liability subsidy may be to corporate shareholders and to society more generally, it should not be so broad as to protect illegitimate behavior. In particular, limited liability should not provide the occasion for shareholders to behave opportunistically toward third parties.
The premise of the piercing corporation veil is the principal of limited liability which is developed more than a century. First of all, this study justifies limited liability though cost and benefit analysis. And the trend of rapid growth of limited liability companies in America has lead to an expansion of limited liability as a standard entitlement of business. Second, it is important to know what courts actually do with veil piercing claims. The empirical studies could shed light on whether courts are relying on a consistent framework. Generally, courts have developed a number of factors, like fraud, disregard corporate formalities and inadequate capitalization, but those factors are questionable. Such an approach, requiring courts to balance many imponderables, all important but none dispositive, is quite difficult to apply because it avoids formulating a real rule of decision. One commentator argued it is highly unlikely to consistently affect socially beneficial policy outcomes. Instead, veil piercing achieves neither fairness nor efficiency, but rather only uncertainty and lack of predictability, thus increasing transaction costs for businesses. However, current regulation is not enough to deal with all of situations. Besides, considering fairness and deterrence, piercing corporate veil should be preserved.
Third, this study propose financially responsible manner in response to the inappropriate factors that courts usually applied to the veil piercing cases. In the parent-subsidiary corporations’ context, courts must consider third parties whose benefit would be harmed if the court pierce the veil. And in the regulated industries context, like banks or insurance companies, the regulatory framework of these industries act to assuage traditional veil piercing concerns such as domination and control, capitalization, questionable inter-corporate transactions, and commingling of assets. Besides, considering the purposes of the regulated industries, commentators agree that veil piercing is inappropriate and that the benefits of strict limited liability should be preserved. Last, this study examined the applicability of piercing corporate veils in Taiwan, and proposed the solution in our legal system.
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