I. Compensation Liability to the Company

Civil Code

Article 84 Controlling shareholders, actual controllers, directors, supervisors, and senior management personnel of for-profit legal persons shall not use their affiliated relationships to harm the interests of the legal person; those who cause losses to the legal person by using their affiliated relationships shall bear the liability for compensation.

Supreme People's Court Provisions on Several Issues Concerning the Application of the Company Law of the People's Republic of China (V)

Article 1 If a related transaction harms the interests of the company, and the plaintiff company requests compensation for the resulting losses from the controlling shareholder, actual controller, director, supervisor, or senior management personnel based on Article 84 of the Civil Code and Article 21 of the Company Law, and the defendant merely argues that the transaction has followed the procedures stipulated in laws, administrative regulations, or the company's articles of association, such as information disclosure and approval by the shareholders' meeting or general meeting of shareholders, the People's Court shall not support such a defense.

If the company does not file a lawsuit, a shareholder who meets the conditions stipulated in Article 151, Paragraph 1 of the Company Law may file a lawsuit with the People's Court based on the provisions of Article 151, Paragraphs 2 and 3 of the Company Law.

II. Liability to Creditors under Specific Circumstances

Supreme People's Court Provisions on Several Issues Concerning the Application of the Company Law of the People's Republic of China (II)

Article 18 If the shareholders of a limited liability company, the directors and controlling shareholders of a joint-stock limited company fail to establish a liquidation team to commence liquidation within the legally prescribed time limit, resulting in the devaluation, loss, damage, or destruction of the company's property, and the creditor claims that they should bear the liability for the company's debts within the scope of the loss caused, the People's Court shall support it according to law.

If the shareholders of a limited liability company, the directors and controlling shareholders of a joint-stock limited company, due to neglect of their duties, cause the loss of the company's main property, accounts, important documents, etc., making it impossible to conduct liquidation, and the creditor claims that they should bear joint and several liability for the company's debts, the People's Court shall support it according to law.

If the aforementioned situation is caused by the actual controller, and the creditor claims that the actual controller should bear the corresponding civil liability for the company's debts, the People's Court shall support it according to law.

Article 19 After the dissolution of the company, if the shareholders of a limited liability company, the directors and controlling shareholders of a joint-stock limited company, and the actual controller of the company maliciously dispose of the company's property, causing losses to the creditors, or without legal liquidation, use a false liquidation report to deceive the company registration authority into handling the deregistration of the legal person, and the creditor claims that they should bear the corresponding compensation liability for the company's debts, the People's Court shall support it according to law.

Article 20 A company should apply for deregistration after the completion of liquidation according to law. If a company handles deregistration without liquidation, resulting in the inability to conduct liquidation, and the creditor claims that the shareholders of a limited liability company, the directors and controlling shareholders of a joint-stock limited company, and the actual controller of the company should bear the liability for the company's debts, the People's Court shall support it according to law.

If a company handles deregistration without legal liquidation, and the shareholder or third party promises to bear the company's debts when handling the deregistration with the company registration authority, and the creditor claims that they should bear the corresponding civil liability for the company's debts, the People's Court shall support it according to law.

Article 21 If the shareholders of a limited liability company, the directors and controlling shareholders of a joint-stock limited company, and the actual controller of the company who should bear responsibility according to Article 18 and Paragraph 1 of Article 20 of these provisions are two or more persons, and after one or several persons bear civil liability according to law, they claim that other persons should share the responsibility according to the degree of fault, the People's Court shall support it according to law.

III. Cooperating with the Court's Investigation and Interrogation

Supreme People's Court Interpretation on the Application of the Civil Procedure Law of the People's Republic of China

Article 484 For the obligor who must accept investigation and interrogation, the legal representative, person in charge, or actual controller of the obligor, who, after being legally summoned, fails to appear without justifiable reason, the People's Court may issue a summons for their appearance. The People's Court shall promptly investigate and interrogate the summoned person, and the time for investigation and interrogation shall not exceed eight hours; if the situation is complex and detention measures may be legally taken, the time for investigation and interrogation shall not exceed 24 hours. When the People's Court takes summons measures outside its jurisdiction, it may summon the summoned person to the local People's Court, and the local People's Court shall assist.

According to Article 15 of the Supreme Court's Provisions on Several Issues Concerning Property Investigation in Civil Enforcement, the actual controller of the obligor may be summoned to the People's Court to accept investigation and interrogation in order to ascertain the property status and ability to perform obligations of the obligor; if the actual controller of the obligor who must accept investigation and interrogation fails to appear without justifiable reason after being legally summoned, the court may issue a summons for their appearance;

IV. Subject to Dishonesty Sanctions

According to Article 12 of the Guiding Opinions of the General Office of the State Council on Accelerating the Promotion of Social Credit System Construction and Building a New Regulatory Mechanism Based on Credit, the actual controllers of market entities included in the list of dishonest joint punishment objects shall be subject to dishonest punishment according to law and regulations, and their relevant dishonest conduct shall be recorded in their personal credit records.

V. Criminal Liability under Specific Circumstances

For some companies, if the actual controller establishes the company to commit crimes, manipulates the company's decision-making process, causing the company to completely lose its independence and become a tool or shell for the actual controller, seriously harming the interests protected by the Criminal Law, in practice, the actual controller may be found to bear corresponding criminal liability.