Why Veil Piercing Differs: Reassessing Judicial Trends under China’s New Company Law

Abstract China is often characterized as an outlier in veil piercing, with courts perceived as being more willing than their common law counterparts to disregard corporate personality. This article reassesses that claim by examining the newly codified recognition of horizontal veil piercing among sibling companies under common control. Article 23(2) of the 2023 Company Law provides an express statutory basis for intra-group liability where corporate personality is abused to evade debts and seriously harm creditors. Drawing on an empirical study of published judgments involving sibling-company claims decided before and after the reform entered into force, and supported by doctrinal and comparative analysis, the article finds that codification has not narrowed judicial intervention. On the contrary, post-reform decisions display a higher piercing rate and a greater willingness to extend liability where documentary evidence of cross-company commingling is established. Judicial reasoning has become more standardized and increasingly formalistic, with courts in some cases applying a lower evidential threshold once key indicia of commingling are established. From a comparative perspective, these findings challenge the assumption that statutory clarification necessarily constrains a doctrine framed as exceptional in common law systems. The article argues that codification may instead facilitate more routine application when it aligns with adjudicative incentives and broader policy priorities. It concludes by proposing doctrinal and evidential benchmarks to better balance creditor protection with limited liability and entity shielding in corporate groups.