Attorney Jin Bingyi's Commentary

At present, China has a large number of limited liability companies. A considerable portion of these are "development zone companies" established through specialized "registration companies." Despite having documents such as capital verification reports issued by accounting firms, the registered capital of these companies is temporarily borrowed from the "registration companies," subsequently withdrawn, with falsified annual inspections—this has become an open secret.

Currently, in economic litigation against companies, one often encounters situations where the defendant company is a shell, making it difficult to enforce valid judgments. Although shareholders can be held liable for inadequate capital contributions, in such cases, the shareholders have typically long since fled.

Following the introduction of judicial interpretations, a large number of accounting firms will inevitably become co-defendants in economic litigation involving limited liability companies, causing their risk exposure to increase dramatically. However, since accounting firms themselves have relatively small registered capital, it is imperative to promptly introduce a mandatory insurance system for accounting firms in order to prevent and distribute risks, so that even when related compensation lawsuits occur, interested parties can receive compensation promptly, and accounting firms will not be easily driven to bankruptcy by litigation.