The independence of the corporate form and the limited liability of shareholders are two fundamental principles stipulated in the PRC Company Law (hereinafter referred to as “Company Law”). Article 3 of the Company Law reflects such principles by stating that a company shall be an enterprise legal person who possesses independent legal person property and enjoys legal person property rights, a company shall be liable for its debts to the extent of all of its assets, the shareholders of a limited liability company are liable to the company to the extent of its respective subscribed capital contribution, and the shareholders of a company limited by shares bear the liabilities of the company to the extent of their respective subscribed shares. Given this, the general understanding is that a company is liable for its debts only to the extent of its own assets, and the shareholders shall not be liable for the company's debts.
