[Direct answer]In the Beijing area, where the personalities of related companies are conflated, the denial of legal person status can be used to deny the independent personalities of each related company and order them to bear joint and several liability for debts. According to Article 23 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024), if a shareholder abuses the independent status and limited liability of the company to evade debts and seriously harm the interests of creditors, they shall bear joint and several liability for the company's debts. Articles 10 and 11 of the "Notes on Civil and Commercial Judicial Work of the National Court" (November 8, 2019) specify the criteria for identifying the conflation of the personalities of related companies. The core lies in the conflation of personnel, business, finance, and especially assets. It is recommended to fix evidence of conflation in accounting, personnel, and operations. For more details, please refer to the following link:Creditor-debtor relations and enforcement case services.

I. Problem background and typical scenarios

Personality confusion often occurs in situations where the same controlling person controls multiple companies. Typical scenarios include: random transfer of funds, mixed use of accounts, and multiple brands under the same management team; cross-appointment of personnel, shared office and business qualifications; using one company to accept orders and another to collect payments to evade enforcement; and transferring assets through related-party transactions. Creditors often find that "the company that owes money is a shell company, and the company that makes money disclaims any connection with it". In practice, such confusion is often hidden, and it is necessary to scrutinize the financial accounts of multiple companies to identify it. This can be combined withBusiness and contract dispute resolution services for enterprisesReview them together.

II. Key points of dispute

It was determined that the disputes focused on three points. Firstly, the core of the type of confusion is the confusion of property, with the confusion of personnel and business as supplementary. The mere cross-over of personnel is usually not enough to deny legal personality. Secondly, the consequence element: it must seriously damage the interests of creditors, rather than just having the appearance of confusion. Thirdly, the form of liability: the interconnected companies are jointly and severally liable, which is different from the joint and several liability of shareholders in the case of shareholders' abuse. When handling similar cases in Beijing, the review of the mixed use of account funds and unclear ownership of assets has become stricter, and the plaintiff is required to provide evidence of property confusion and damage consequences. For reference only.Special services and other case-related services.

III. Professional analysis by Hengluo Lawyers

Based on our practical experience in handling disputes involving affiliated companies, the most crucial factor in determining whether there is identity confusion is whether the assets of the companies are intermingled. Hengluo Lawyers typically conduct in-depth reviews of the companies' bank transactions, inter-company payments, joint accounts, and the ownership of fixed assets, while comparing the personnel appointments, social insurance records, and the parties to the business contracts. A common misconception is that plaintiffs simply allege identity confusion and claim joint and several liability without providing evidence. Courts typically require proof that the identity confusion has caused serious harm to the creditor's interests. We recommend first securing evidence of fund transfers and asset ownership before claiming that the companies' legal personalities are intermingled, to avoid having the request dismissed. For controlling shareholders, the second-tier joint and several liability path under Article 23 of the Company Law can also be applied concurrently.

IV. Practical suggestions and legal basis

The core basis is Article 23 (Disregard of Legal Personality) of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024); Articles 10 and 11 of the Summary of the National Court's Civil and Commercial Trial Work Conference (November 8, 2019) (confusion of legal personality, excessive domination, and significant insufficiency of capital); and the provisions on evidence collection in the Civil Procedure Law. Practical suggestions: Sort out the transaction records and dealings of each related company; verify the unpaid transfer of funds or asset confusion; list the related companies as co-defendants in the lawsuit to claim joint and several liability; and apply for preservation of the transferred assets in a timely manner. For issues involving property rights, relevant evidence may be combined with other materials to prove the ownership of the property.Real estate sales and construction project services.

5. Henglu Law Firm's Advice

The denial of personality confusion is an exception to the rule, and strict evidence must be provided. It cannot be claimed solely on the basis of personnel overlap or the same controlling person. It is recommended to fix the confusion of accounts and ownership of assets, and prioritize proving the confusion of property and serious damage consequences; the controlling shareholders may also be subject to joint and several liability. Never use petitioning to put pressure on others instead of providing legal evidence. Evidence should be systematically organized through litigation. If professional support is needed, you can seek help from professionals.Business and contract dispute resolution services for enterprisesEvaluate the overall plan.

VI. Frequently Asked Questions

Q1: If there is identity confusion between related companies, can I successfully determine their joint and several liability and make them repay the money together?

There's a high possibility, but it depends on the strength of the evidence. The law clearly stipulates that if a related company's personalities are confused, its independent personality can be denied, and it can be ordered to bear joint and several liabilities. The core issue is to prove property confusion and serious damage to the interests of creditors. Whether the case can be successful and whether you can be compensated depends on whether you can prove the unpaid transfer of funds, asset confusion, account misuse, and whether the other party has enforceable assets. Lawyers will help you analyze the financial records and organizational confusion of multiple companies, but they cannot guarantee a victory. The outcome will depend on the evidence and the status of the assets.

Q2: To prove the identity confusion of affiliated companies, what evidence do I need to prepare?

The core evidence includes: the bank statements and transaction vouchers of all related companies, confirming the unpaid transfer of funds; materials showing the confusion of ownership of shared accounts, fixed assets, and intangible assets; records of cross-appointments of personnel, social insurance, and wage payments; proof of shared business qualifications, contract parties, and operating premises; and clues indicating that the controlling shareholders directed the transfer of funds. The materials should be organized around the three key elements of "property confusion - debt evasion - harmful consequences", and if necessary, applications should be made to the court to retrieve the accounts of related parties.

Q3: How much does it generally cost to hire a lawyer to deal with the confusion between affiliated companies?

The attorney's fees are negotiated between the law firm and the client. They are typically charged on a contingency basis or based on a percentage of the litigation value, with the specific fees determined by the engagement contract. There is no nationwide standard pricing. Due to the need to investigate the financial records of multiple companies, the possibility of adding multiple defendants, and the need for investigation and evidence collection, the fees are usually higher than those for ordinary sales disputes. It is recommended to request a detailed fee breakdown, clarify the stages of representation and whether it includes litigation fees, preservation guarantee fees, and other third-party expenses. Then, the cost should be weighed against the scale of the claimable debt.

Q4: How long does it usually take from filing a lawsuit to determining the existence of confusion and requiring joint and several liability for repayment?

The first-instance ordinary procedure is concluded within six months, and the summary procedure within three months, with appeals handled separately; investigations into the accounts of multiple companies, judicial audits, or the addition of parties will correspondingly extend the timeframe. Overall, it often takes several months to over a year from case filing to judgment, with the recovery of execution proceeds handled separately. It is recommended to fix clues of commingling and property clues before litigation, and urgently preserve transferred assets to avoid delays that could result in a reduction of enforceable assets.

Q5: I suspect that multiple affiliated companies are colluding to evade debts. What should I do first?

It is recommended to proceed in four steps: First, retrieve the internal business files and bank statements of all related companies to identify the same controlling person and fund transfers; Second, sort out clues of personnel overlapping, shared assets, and contract entities; Third, entrust a lawyer to determine whether the denial of legal personality can be applied, and apply for an investigation order to supplement the accounting records; Fourth, list the related companies as co-defendants in the lawsuit to claim joint and several liability, and promptly preserve the transferred assets. Throughout the process, keep all relevant evidence and, if necessary, enlist the help of a professional team to advance the work.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm for specific situations.

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. →Legal services for creditor-debtor disputes·Beijing Hengluo Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is provided 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. In the event of a dispute, please consult a practicing lawyer in a timely manner.