Subsidiary Liability of Controlling Persons

The general purpose of the graduate paper is to assess the effectiveness of the legal regulation of subsidiary liability under the Bankruptcy Law. The main tasks of the research are 1) to define a legal nature and goals of subsidiary liability; 2) to consider the concept of controlling person and define subjects of subsidiary liability; 3) to analyze the elements of offences, which cause subsidiary liability. Based on conducted research, it was made the following conclusions. In the theory of law effectiveness is understood as the ratio between the result of legal regulation and its goal. The goal of subsidiary liability is to protect creditors’ interests through the replenishment of the bankruptcy asset at the expense of property of persons on whom subsidiary liability is imposed. On the one hand, the current regulation of subsidiary liability allows successfully replenishing the bankruptcy asset. On the other hand, the means of achieving this goal contradicts principles of legal certainty and limited liability. Firstly, in accordance with attributes of the notion of controlling person stipulated in the Bankruptcy Law and explanations of the Supreme Court of RF the range of subjects of subsidiary liability is indefinite. Secondly, not all conditions which are required to hold accountable are clearly formulated, formulations of the relevant provisions of the Bankruptcy law give a possibility for extensive judicial interpretation. Thirdly, numerous presumptions shift almost all burden of proof on the person, who is holding accountable. Thus, the goal to protect creditors’ interests is achieved by the means of eliminating limited liability in case of bankruptcy and infringement of interests of persons connected with the legal entity in formal or informal way that is why the regulation of subsidiary liability should be recognized ineffective.