doi: 10.18178/joebm.2026.14.2.920
Legal Justification and Legislative Path of Reverse Piercing in China
Xingjian Yu 1,2,*
- 1 Shanghai University of International Business and Economics, International Economics and Trade Rules, Shanghai, China, 201620
- 2 <!-- end
- Manuscript received March 10, 2026
- accepted May 15, 2026
- published June 22, 2026
Abstract
In practice, many shareholders fraudulently transfer their assets to companies to evade personal debts. However, existing remedies such as the right of rescission and equity enforcement are inherently flawed in protecting shareholder creditors’ legitimate rights, which makes reverse piercing a necessary remedy. This paper elaborates on the asset partitioning theory as the theoretical foundation, combs through the global judicial practices of reverse piercing, and thus demonstrates its legal justification. It further analyzes the core dilemmas in China’s judicial application, including the imbalance of interests among multiple subjects and the absence of clear normative provisions. Drawing on domestic and foreign research, the paper argues that reverse piercing shall be confined to single-member companies. Meanwhile, it clarifies the priority of repayment for different parties in liquidation and puts forward legislative proposals for the formal establishment of reverse piercing in China. By exploring the essence of reverse piercing, this study consolidates its theoretical basis and details its implementation guidance, which is of great significance for improving China’s corporate legal system and safeguarding judicial certainty.
Keywords
- Chinese law
- reverse piercing
- alter ego
- assets partitioning
How to Cite
Xingjian Yu, "Legal Justification and Legislative Path of Reverse Piercing in China," Journal of Economics, Business and Management, vol. 14, no. 2, pp. 119-124, 2026. https://doi.org/10.18178/joebm.2026.14.2.920
Copyright & License
Copyright © 2026 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).