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Abstract

When a sole shareholder of a one-person limited liability company cannot prove that their personal property is separate from the company's property, they are required to bear joint liability for the company's debts. In such cases, is the spouse of the sole shareholder also obligated to bear joint liability for the company's debts?

In judicial practice, if the creditor provides evidence that the spouse of the sole shareholder of a one-person limited liability company actively participated in the company's management and there is clear commingling of personal and company assets, then the company's debts may be considered joint debts of the shareholder and their spouse. If the creditor fails to prove the spouse's involvement in the business or that the debt is a joint obligation, the spouse of the sole shareholder is not required to bear joint liability for the company's debts.

Typical Cases

Case 1:

After the mediation agreement was reached between Lai family, Lei, and Suzhou Liangyuchen Metal Products Co., Ltd., the company failed to fully fulfill the agreement. The creditors applied to the court for enforcement, seeking payment of RMB 790,000 from Suzhou Liangyuchen Metal Products Co., Ltd. As the court found no available assets for execution, the court terminated the enforcement proceedings.

During the execution, the applicant argued that the original shareholder, Qiu Liang, transferred his equity to Qiu Yongjin without the applicant's consent. Qiu Liang, who is the spouse of Gu Na, should also share the debt responsibility. The court supported the addition of Qiu Yongjin as a party responsible for the debt due to his role as a contributing shareholder. However, the court rejected the request to add Qiu Liang, stating that he had transferred his equity, and there was no legal basis for including him as a respondent. As Gu Na and Zhu Xiufang were not individual one-person company entities, and no evidence suggested joint liability for the debt, their addition as respondents was also rejected.

Case 2:

In a case involving a purchase and sale contract between plaintiff Company A and defendant Company B, the one-person limited liability company, after the death of shareholder Zhang Moumou, his spouse Lin Moumou paid several outstanding debts to Company A from January to August 2021. Due to poor business management, multiple outstanding debts remained unsettled, leading Company A to file a lawsuit against Company B, seeking joint liability from the legal heirs of Zhang Moumou and his spouse Lin Moumou.

The dispute focuses on whether Lin Moumou, the spouse of the shareholder of Company B, should bear joint liability for the debts.

The court held that, as Zhang Moumou's legal heirs could not provide evidence proving the independence of Zhang Moumou's personal property from the company's assets, they should bear joint liability for the company's debts within the scope of inherited property. Additionally, Lin Moumou, the spouse, was found to be jointly responsible for repayment based on extensive financial transactions and active involvement in the company's operations.

Risk Warnings

1. The personal property of a one-person limited liability company's shareholder should be independent of the company's assets, and annual financial audit reports should be comprehensive, truthful, and accurate.

2. The spouse's property should be separate from the company's assets, and commingling personal and company assets may result in joint liability for the company's debts.