[Direct answer]In the Beijing area, for contracts signed in the name of the party being affiliated in the business of affiliation, the liability shall be determined in accordance with the rules on contractual relativity and legal person disqualification in the Civil Code of the People's Republic of China. Generally, the affiliation agreement is valid internally. If the party being affiliated signs the contract in its own name with a bona fide counterparty, the party being affiliated shall bear the liability externally, and after making the payment, it may recover the payment from the actual operator in accordance with the affiliation agreement; if the legal representative is the sole shareholder and his personal property is commingled with the company's property and he fails to provide evidence of independence, he may be held jointly and severally liable in accordance with the rules on legal person disqualification. It is recommended that the actual operator sign the settlement and payment deadlines and keep the payment vouchers. For more details, please refer to the relevant provisions.Business and contract dispute resolution services for enterprises.

1. Problem background and typical scenarios

The practice of operating under the guise of a qualified enterprise is common in fields such as construction, transportation, and commerce. The actual operators conduct business under the name of qualified enterprises. Typical scenarios include: the actual suppliers settle payments through the accounts of trading companies, but the parties to whom the business is entrusted withhold and refuse to pay after receiving the money; in project subcontracting, the material payments are transferred to the accounts of the parties to whom the business is entrusted but not handed over to the actual constructors; and the sole shareholder controls both the company's accounts and personal accounts, with blurred property boundaries. When handling similar cases in Beijing, account transactions and transfer records often become the key to determining liability and joint and several liability. For cases involving the recovery of funds, it may be combined with other evidence to establish the facts.Creditor-debtor relations and enforcement case servicesAdvance.

II. Key points of contention

There are three main points of controversy. Firstly, the validity of the subcontracting agreement: subcontracting cooperation that does not violate prohibitive provisions is generally deemed valid, and the parties should settle accounts according to the agreement. Secondly, the attribution of external liabilities: if the contract is signed in the name of the subcontracted party and the counterparty acts in good faith, the subcontracted party shall bear the liability. Thirdly, the joint and several liability of shareholders: if the sole shareholder cannot prove the independence of his/her property, he/she shall bear the joint and several liability for the company's debts. For legal relationships involving multiple parties, reference can be made to the relevant provisions.Beijing Hengluo Law FirmRelated practical guidelines.

III. Professional analysis by Hengluo Lawyers

Take a contractual dispute over operating under a shell company arrangement handled by our firm as an example. Yang * supplied goods to a construction project and signed a "Shell Company Cooperation Agreement" with a trading company in February 2019 to settle payments. The agreement stipulated that the trading company would pay Yang * after receiving the construction project's payments, and Yang * would pay a management fee. The trading company settled payments with the construction company for over 1.68 million yuan in 2022, but only paid Yang * 90,000 yuan of the 260,000 yuan owed in 2023, refusing to pay the remaining 170,000 yuan. In 2023, the construction company paid over 330,000 yuan but still failed to settle the full amount. Yang * entrusted Beijing Henglu Law Firm to sue and apply for property preservation, demanding that the trading company pay the remaining funds after deducting the 3% tax point. The court partially accepted the claim: the shell company agreement was valid, and the trading company should pay after deducting the tax point. The legal representative Li * was the sole shareholder, and the funds paid to Yang * were all transferred from his personal account or WeChat. Li * failed to provide evidence that his personal assets were separate from the company's assets, and should bear joint and several liability for the disputed funds. The first-instance court ordered the trading company to pay Yang * 152,500 yuan, and Li * was held jointly and severally liable. This case was handled by Beijing Henglu Law Firm.Li YonghuiThe attorney (practice certificate number: 11101199611955812, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The core basis is the relevant provisions of the Civil Code of the People's Republic of China (implemented on January 1, 2021) on the validity of contracts, contract performance, and the denial of legal person status, as well as the provisions of the Company Law of the People's Republic of China on the joint and several liability of shareholders of one-person companies. Practical suggestions: For subcontracting, it is necessary to sign clear settlement and payment milestone agreements; retain construction settlement documents, payment vouchers, and transfer records; promptly sue and apply for property preservation when the subcontractor withholds payments; and to assert the joint and several liability of the sole shareholder, it is necessary to provide evidence of asset commingling. For cases involving the recovery of execution proceeds, it may be combined with other relevant provisions.Business and contract dispute resolution services for enterprisesDevelop a plan.

5. Henglu Law Firm's Reminder

In the context of operating under a subcontracting arrangement, if the subcontracting company withholds and refuses to pay the funds after receiving the payment, the actual supplier may claim payment based on the subcontracting agreement; if the sole shareholder's assets are commingled, the supplier may claim joint and several liability. A reminder to the actual operators: when signing the contract, clarify the settlement process, and keep the construction payment vouchers and transfer records on a daily basis. If the funds are withheld, promptly hire a lawyer to sue and preserve the evidence to avoid the creditor's rights being lost due to delay or asset transfer.

VI. Frequently Asked Questions

Q1: Is the subcontracting agreement valid, and can I use it to claim back the money?

A cooperation agreement involving "ghost registration" that does not violate prohibitive provisions is generally considered valid. Both parties should settle payments according to the agreement, and the actual operator can claim rights based on this. However, the validity of the agreement does not necessarily exempt the parties from liability to third parties. When signing the contract in the name of the "ghost-registered" party, the external liabilities may still fall on the "ghost-registered" party. Whether the money can be recovered depends on whether the "ghost-registered" party has received the payment, whether there has been any embezzlement, and whether the evidence is complete. It is recommended to first fix the settlement and payment vouchers, and then decide on the litigation path. It is not advisable to make subjective judgments based solely on the agreement.

Q2: What evidence do I need to prepare for disputes over operating under a false name?

The core evidence includes: the cooperation agreement for subcontracting (proving the settlement and payment agreements), the construction settlement documents and payment vouchers (proving that the funds have been transferred to the subcontracted party), the transfer records and WeChat screenshots (proving the actual delivery and commingling of assets), as well as the communication records for collecting payments. For claims of joint and several liability of shareholders, it is necessary to collect evidence of payments to the shareholder's personal account and evidence of non-separation of company assets. The more complete the materials are, the better they can support the payment requests and claims of joint and several liability.

Q3: How much do lawyers' fees and litigation costs cost to sue for disputes over subcontracting?

The litigation fees shall be calculated in accordance with the "Measures for the Payment of Litigation Fees" based on the amount of the litigation request, and shall be borne by the losing party; the higher the subject matter amount, the lower the fee rate. The attorney's fees are related to the complexity of the case and the subject matter amount, and are usually negotiated on a per-case or per-subject basis, with no standard pricing. It is recommended to clarify the charging method and upper limit before entrusting, and to weigh the recovery of funds against the cost. For obviously undisputed withheld funds, it is preferable to negotiate or apply for preservation measures first to reduce the cost of protecting rights.

Q4: How long does it usually take to resolve disputes over operating under someone else's name?

The first-instance ordinary procedure is concluded within six months, and the simplified procedure is concluded within three months; for small-amount disputes with clear facts, the simplified procedure may be applicable. If the defendant's whereabouts are unknown and need to be served by public announcement, or if it involves an investigation into the shareholders' property, the timeframe will be extended. After the judgment takes effect, if the other party fails to perform its obligations, it is necessary to apply for compulsory enforcement. Overall, it often takes several months to a year from filing a lawsuit to recover the money. It is recommended to apply for property preservation simultaneously during the litigation to prevent the party being affiliated with from transferring account funds.

Q5: The company I'm being "ghosted" by owes me money. What should I do first?

There are four steps recommended: First, organize the subcontracting agreements, construction settlement documents, and all payment vouchers to confirm the unpaid amounts received by the subcontracted party; Second, collect evidence of payments and withdrawals from the shareholder's personal account to determine whether joint and several liability can be claimed; Third, file a lawsuit and apply for property preservation within the statute of limitations to freeze the accounts of the subcontracted party and the shareholder; Fourth, sort out the settlement nodes and collection records before the trial, and, if necessary, hire a lawyer to develop an integrated litigation and enforcement plan.

The above Q&A is mainly based on the judicial practice in Beijing. There may be differences in the adjudicative guidelines in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Business and commercial legal services·Attorney Li Yonghui·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.