China: Dispute Resolution: Arbitration (PRC Firms) Overview

The Chinese Paradigm of Piercing the Corporate Veil

Introduction

Since the 2005 revision of the Company Law of the People’s Republic of China (the “Company Law”) formally introduced the doctrine of piercing the corporate veil, its application has remained a challenging issue in judicial practice. Article 23 of the 2023 revision of the Company Law for the first time distinguishes and confirms at the legislative level two forms of veil piercing: vertical piercing and horizontal piercing. On this basis, the Supreme People’s Court, in the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Company Law of the People’s Republic of China (Draft for Comments) issued on 30 September 2025 (the “Draft Interpretation”), seeks in Articles 4 and 5 to set out the relevant tests and key considerations for adjudicators, thereby enhancing the practical applicability of the doctrine.

Vertical piercing

Vertical piercing refers to circumstances in which shareholders are held jointly and severally liable for the debts of the company. In current judicial practice, three main types of vertical piercing have been recognised: commingling of assets, excessive domination and control, and manifestly inadequate capitalisation.

With respect to whether asset commingling exists between a shareholder and a company, the Draft Interpretation identifies the following factors:

• whether the shareholder’s assets can be distinguished from the company’s assets, primarily by reference to financial records and accounting books;
• whether the shareholder has used or even misappropriated company assets without consideration; and
• whether there is concurrent commingling of personnel, business operations, or premises.

In practice, because a company’s complete financial books and records are typically internal management information, creditors often face significant difficulty in obtaining them directly. Accordingly, courts generally make a comprehensive assessment based on relevant evidence, such as whether bank accounts are shared, whether there are large and unexplained fund transfers, or whether the purposes of such transactions cannot be reasonably justified, in order to determine whether the company’s assets retain substantive independence. For example, in Representative Case No 3 published by the Fujian High People’s Court on 23 September 2025, the court found that the shareholder received company business proceeds through his personal bank account that was also used for personal spending, and failed to prove that his personal assets could still be effectively distinguished from the company’s assets. On this basis, the court held that financial commingling was established and pierced the corporate veil. Likewise, in Reference Case Civil Judgment (2016) Zhe Min Zhong No 599, which is included in the People’s Court Case Database, noting that a subsidiary had made large-scale fund transfers to its parent company without a reasonable commercial explanation, the Zhejiang High People’s Court considered that such conduct had rendered the boundaries of corporate assets difficult to distinguish, and ultimately upheld the claim for piercing the corporate veil.

As to whether a controlling shareholder has exercised excessive control over a company, the Draft Interpretation provides that the following factors may be considered in a holistic manner:

• whether multiple companies are all controlled by the same controlling shareholder and whether the companies concerned have lost their independent will;
• whether improper transfers of benefits exist among such companies; and
• whether such improper transfers are intended to evade corporate debts.

“Control” per se does not automatically justify piercing the corporate veil; rather, there must be a substantive connection between the control exercised, the improper transfer of benefits, and the purpose of evading debts.

In examining manifestly inadequate capitalisation, the focus lies on whether the capital actually contributed by shareholders is obviously disproportionate to the risks inherent in a company’s business activities, and whether shareholders have improperly shifted investment risks that should have been borne by themselves to a company’s creditors by inducing the company to incur excessive or malicious debt. This standard is inherently uncertain and must be distinguished in practice from the commonly accepted business model of “leveraging small capital for large returns” in normal commercial operations. Accordingly, it should be applied cautiously, based on a comprehensive assessment in conjunction with other factors. The final formulation and boundaries of application of “manifestly inadequate capitalisation” in the eventual judicial interpretation therefore remain to be further observed and clarified through subsequent refinement and judicial practice.

Horizontal piercing

Horizontal piercing refers to veil piercing among affiliated companies. In this regard, the Draft Interpretation further specifies that two main elements should be examined: first, whether the affiliated companies are controlled by the same controlling shareholder or de facto controller, or whether there is asset commingling between them that cannot be clearly distinguished; and second, whether such circumstances have seriously harmed the lawful rights and interests of creditors. The core focus of horizontal piercing remains the determination of whether the actual controller has carried out improper transfers of benefits through affiliated companies, thereby evading corporate debts and harming creditors.

For instance, in Guiding Case No 15 issued by the Supreme People’s Court (Civil Judgment (2011) Su Shang Zhong No 0107), the court found, among other things, that three companies controlled by the same shareholder had long shared bank accounts, and used the same individual’s signature to authorise payments. This arrangement rendered fund flows and control of funds indistinguishable and caused the substantive disappearance of asset boundaries. On this basis, the court held that financial commingling was established. The court then applied the horizontal piercing doctrine to the relevant companies. Likewise, in a recent case, the Supreme People’s Court noted that, without receiving any consideration for a share transfer, a company transferred shares worth tens of millions of yuan to an affiliated company. The court held that this conduct substantively constituted an improper transfer of benefits, harmed the interests of creditors, and satisfied the conditions for the application of horizontal piercing.

Conclusion

Although the 2025 judicial interpretation of the Company Law is still in the consultation stage, its element-based and enumerative approach to piercing the corporate veil represents a systematic consolidation of existing adjudicatory experience. It is expected that this approach will further unify adjudication standards, enhance the transparency and predictability of judicial application, and provide institutional guidance for market participants in reasonably assessing the boundaries of legal risk.

刺破公司面纱制度的中国范式

介绍

自2005年《中华人民共和国公司法》（“公司法”）修订正式引入刺破公司面纱制度以来，其具体适用一直是司法实践中的难点问题。2023年《公司法》修订第23条首次在立法层面区分并确认了纵向刺破与横向刺破两种形态。在此基础上，最高人民法院于2025年9月30日发布的《关于适用〈中华人民共和国公司法〉若干问题的解释（征求意见稿）》（“《征求意见稿》”）第四条和第五条，尝试对相关认定要素和审查重点作列举和说明，推动该制度向更具操作性的方向发展。

纵向刺破

关于纵向刺破，即特定情况下令公司股东对公司债务承担连带责任，目前司法实践主要包括三种人格纵向刺破的情形：财产混同、过度支配和控制以及资本显著不足。

关于股东与公司之间是否构成财产混同，《征求意见稿》所列的要素包括：

• 股东财产与公司财产是否能够区分，主要看是否作了财务记载；
• 股东是否存在无偿使用甚至侵占了公司财产；
• 是否同时存在人员混同、业务混同、住所混同等情形。

在司法实践中，由于公司的完整财务账册通常属于内部管理信息，债权人往往难以直接取得。对此，法院通常会结合相关事实，例如是否存在共用银行账户、用途不明或无法合理解释的大额资金往来等情形，以综合判断公司财产是否已实质性丧失独立性。例如，在福建省高级人民法院于2025年9月23日发布的典型案例三中，法院查明股东以其个人名下账户收取公司业务款项，该账户还同时用于个人消费支出，且股东未能举证证明其个人财产与公司财产之间仍可有效区分，遂据此认定构成财务混同，进而刺破面纱。又如，在人民法院案例库收录的参考案例（2016）浙民终599号民事判决中，法院注意到子公司向母公司进行数额较大且缺乏合理商业解释的资金划转，认为该行为已导致公司财产边界难以区分，最终支持了刺破面纱的主张。

关于控股股东是否构成对公司的过度控制，《征求意见稿》提出可以综合考量以下因素：

• 数个公司是否都受同一控股股东控制，相关公司自身是否丧失独立意志；
• 数个公司之间是否存在不当利益输送；
• 上述不当利益输送行为是否意在逃避公司债务。

“控制”本身不是刺破公司面纱的当然依据，控制行为、不当利益输送以及逃避债务目的之间必须具有实质关联。

资本显著不足的考察重点在于股东实际投入公司的资本是否与公司经营活动所内含的风险明显不相匹配，以及股东是否通过促使公司过度举债、恶意举债等方式，将本应由其自行承担的投资风险不当转嫁给公司债权人。这一判断标准本身具有较大的不确定性，且在实践中需要与公司正常经营中普遍存在的“以小博大”商业模式加以区分，因此在适用时应当保持审慎立场，并结合其他因素进行综合判断。因此，资本显著不足在最终司法解释中的表述及适用边界，仍有待在后续制度完善与司法实践中进一步观察。

横向刺破

关于横向刺破，即关联公司之间的面纱刺破，《征求意见稿》作出了进一步的具体化规定：一是关联公司是否受同一控股股东或者实际控制人支配，或者关联公司之间是否存在财产混同且无法区分；二是该等情形是否已严重损害公司债权人的合法权益。横向刺破的审查重点，仍然在于判断实际控制人是否通过关联公司实施不当利益输送，从而达到逃避公司债务、损害债权人利益的目的。

例如，在最高人民法院发布的指导案例第15号（（2011）苏商终字第0107号）中，法院查明三家受同一控股股东控制的公司长期共用银行账户，以相同人员签字作为用款依据，导致资金及支配无法区分、财产边界实质消失，遂据此认定构成财务混同，并最终判决对相关公司适用横向刺破规则。又如，在我们最近代理的一起案件中，最高人民法院注意到在未收到股权转让对价的情况下，公司将其持有的价值上千万的股份转让至关联公司名下，并认定该行为实质上构成不当利益输送，损害了债权人利益，符合横向刺破的适用条件。

总结

2025年公司法司法解释虽尚在征求意见过程中，但其对刺破公司面纱要素化、列举式的表述方式，是对既有裁判经验进行系统整理。我们期待这一做法进一步统一裁判尺度，提升司法适用的透明度和可预期性，也为市场主体合理评估风险边界提供制度参考。