Piercing the corporate veil of Chinese “husband-and-wife” companies or how do a husband and wife become one flesh?

Zhou Congning (周聪宁), STL 4L student

Limited liability in Chinese corporate law helps the shareholders to reduce the risk of running a company because a company will use its assets to reimburse the debt instead of shareholders’ personal property. However, the shield of the company will be pierced when the shareholder abuses his rights. In 2019, the Supreme People’s Court (SPC) issued two different judgments concerning a special rule – reversing the burden of proof in a one-person limited liability company in Chinese Company Law.

The facts of both cases involve a married couple who set up a limited liability company to operate a business and protect their personal and family property from creditors. In the 2019 appeal case, Wuhan Read the rest