[Direct answer]It can be traced back to the abuse and damage of corporate entities. According to Article 23 of the new Company Law, if a company's shareholders abuse the independent status of the company's legal person and the limited liability of shareholders, evade debts, and seriously damage the interests of the company's creditors, they shall bear joint and several liability for the company's debts—this is the so-called "piercing the corporate veil" legal personality denial system. The identification standard focuses on asset mixing: random transfer of funds between the company's account and the shareholders' personal accounts, confusion between the company's assets and personal assets (such as mixing housing, vehicles, and income), and lack of separate accounting for finances; supplemented by business mixing (operating two brands with the same team and the same business), personnel mixing (cross-appointment of the same group of executives to financial positions), and address mixing. The evidentiary rules favor creditors: after the creditor completes the preliminary evidence (showing signs of asset mixing), the shareholders must self-prove the independence of their assets. Special note on the new rules: if a shareholder uses two or more companies under their control to commit abuses, each company shall bear joint and several liability for the debts of any of the companies—horizontal denial is incorporated into the law, and the self-proving obligation for asset mixing between a single-member company and the actual controller is also explicitly written into the law.

I. Problem Background and Typical Scenarios

The debt-ridden company had no money in its account, yet the boss owned three houses and two new companies under his name. In the ecosystem of registered capital subscriptions and shell companies operating without real business operations, the pain point of "winning the lawsuit but not getting the money" forces the active application of the denial of personality system. Pursuing shareholders is not about overturning the table, but about bringing the abused limited liability back to the fair boundary. The core battlefield will always be whether the property boundary is clear or not.

II. Key points of contention

Firstly, the determination of property confusion and the boundary of proving the independence of property; Secondly, the applicable conditions of horizontal personality denial (joint and several liability of sister companies); Thirdly, the distribution and transfer of the burden of proof; Fourthly, the choice of path for personality denial and defects in investment, and liquidation responsibilities.

III. Professional analysis by Henglue Lawyers

The first layer concerns the identification criteria: property confusion is the essential core—such as private accounts receiving company funds, corporate accounts paying for personal expenses, unjustified related-party transactions, and the free use of company assets by shareholders—all of which are typical scenarios. Business and personnel confusion serve as corroborating evidence rather than sufficient conditions. The court's comprehensive judgment always revolves around whether the company maintains independent property and independent decision-making. The rules for single-member companies are stricter: if a shareholder cannot prove that the company's assets are separate from their own, they bear joint and several liability for the company's debts, with the burden of proof reversed onto the shareholder. The second layer focuses on evidentiary strategies: - Creditor-side evidence includes bank statements (intensive transactions between company and shareholder accounts), missing financial statements and audit records, industrial and commercial registration (cross-directorship of executives), overlapping office location footage, and transaction traces from the same phone and email. - Shareholder-side self-defense relies on continuous audit reports and standardized financial accounting. Scattered evidence cannot suffice for self-defense, and in practice, single-member company shareholders face high litigation failure rates. The third layer introduces a new pattern of horizontal denial: Article 23(2) of the new Company Law elevates previous judicial precedents (the brother company joint liability rule established by the Supreme Court's guiding cases) to legal status. When multiple companies under the same controlling shareholder engage in personnel, business, and financial confusion to evade debts, creditors can claim joint and several liability among all companies. For old-new company combinations transferring businesses and assets to evade liabilities, the scope of recovery has been greatly expanded. The fourth layer explores strategic combinations: - Personality denial lawsuits can be coordinated with enforcement procedures—first suing the company to obtain a judgment, then suing the shareholders if enforcement fails, or listing the company shareholders as co-defendants in the initial case. - This approach complements actions against unpaid shareholders, shareholders who withdraw funds, and liquidation duty holders, with evidence-based strategies tailored to each case. - Defendants' countermeasures focus on rebuilding financial norms and audit chains, as retroactively created accounting records are often discredited. The decisive factor in personality denial cases lies in "proving the absence of independence": while creditor-side evidence of mixed operations is relatively easy to obtain, the challenge lies in systematically establishing proof. Shareholder-side self-defense is feasible, but requires ongoing efforts. The system punishes not limited liability itself, but rather the exploitation of companies as cash machines. For controlling shareholders, clear-cut separation of public and private accounts serves as the cheapest firewall against legal risks.

IV. Practical suggestions and legal basis

The first step is for creditors to collect circumstantial evidence of property confusion (bank statements, employment records, business premises, and transaction traces). The second step is to evaluate the combination of vertical pursuit of shareholders and horizontal pursuit of affiliated companies. The third step is to assert denial of legal personality in litigation or enforcement and require shareholders to bear joint and several liability for debts. The fourth step is for the company to establish an independent accounting and annual audit system, and sole proprietorship companies in particular must implement proof of property separation. Main legal basis: Article 23 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024) regarding denial of legal personality and horizontal joint and several liability, and Article 23 Paragraph 3 regarding the self-evident obligation of sole proprietorship companies; the provisions on the distribution of the burden of proof in the Interpretation of the Civil Procedure Law of the Supreme People's Court; specific application shall be subject to the currently effective regulations.

5. Henglu Law Firm's Reminder

The mnemonic for distinguishing the legal personality of a company from that of its shareholders: Keep personal and business affairs separate, maintain audit records, and identify the initial evidence of mixed identities. Shareholders should provide proof of their identities—liability is determined based on the boundaries of their assets, and defense relies on daily regulatory compliance. In cases involving the denial of corporate legal personality and corporate litigation, the following measures can be taken:Business and contract disputes in enterprisesYou will receive a comprehensive service plan; if you need help with recovering compensation after the execution fails, please feel free to consult us.Creditor's rights and debts, and enforcementThe team is responsible for the corresponding business lines. For disputes involving other companies, you can refer to the relevant materials for reference.Special servicesColumn; for those related to corporate compliance and governance, they can be combined with other topics.Intellectual property protection and corporate law板块。

VI. Frequently Asked Questions

Q1: Does it count as commingling if the seller only received the payment through the shareholder's personal account?

This is a typical manifestation of property confusion, which frequently occurs and can be directly claimed; if it happens occasionally, it needs to be judged comprehensively based on the overall evidence, and the creditor has the responsibility to explain after providing evidence.

Q2: Can the two companies, with the same staff, recover the compensation from each other?

Yes. The new Company Law establishes the horizontal denial rule. If the financial and business personnel of the sibling companies controlled by the same actual controller are commingled and evade debts, they will be jointly and severally liable.

Q3: How can a shareholder of a one-person company prove their innocence?

Provide a complete annual audit report and independent accounting records covering the debt period to prove the separation of assets; the burden of proof lies with the shareholders, and failure to fulfill this obligation will result in joint and several liability.

Q4: Will personality denial affect other debts?

In response to the occurrence of individual cases, the creditor will be compensated in conjunction with the judgment; other creditors can cite the facts to make separate claims, and the reuse value of the mixed evidence is very high.

Q5: Should the original controlling shareholder of the transferred equity still be pursued?

If the abuse of rights occurs during the holding period and is intentional to evade debts, the person involved can still be held accountable; a simple transfer of equity cannot absolve the responsibility for the abuse that has already occurred.

This article is written based on the common judicial interpretation in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

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·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on current laws and regulations and publicly available adjudication rules. It is for general reference only and does not constitute formal legal advice 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.