Avoid personally guaranteeing company loans, especially with your spouse's signature
Under Chinese law, a joint-and-several guarantee lets the creditor pursue you directly when the company does not pay. An ordinary guarantee generally requires proceedings and enforcement against the company first, with you covering the remaining shortfall. A spouse's signature can expose both spouses' property, defeating the personal protection of limited liability.
What it takes
Free. Pause before signing a shareholder's joint-and-several guarantee or a spousal signature page: you are giving up protection from personal liability for company debt. Avoid signing where possible; if essential, seek an ordinary guarantee with an explicit maximum amount. Resisting “no signature, no loan” is difficult.
What you may gain
A guarantee promises that you will pay if the debtor does not. Under a joint-and-several guarantee, creditors can pursue the guarantor without first pursuing the company. Under an ordinary guarantee, they generally must sue or arbitrate and have company assets enforced against before seeking the remaining shortfall. Both spouses' signatures, or one spouse's later ratification, make the debt joint. A spouse signing can therefore commit both spouses' assets. These Chinese rules apply from 2021.
Context & considerations
Chinese banks commonly require shareholders' joint-and-several personal guarantees for small-business loans. You can still borrow, but understand exactly what that page gives up and cap exposure at the amount you can afford to lose. General loan-note and guarantee rules are in Chapter 8, entry 18.
Research & references
National People's Congress of China (2020). Civil Code, Articles 681, 687, 688 and 1064. https://www.spp.gov.cn/spp/fl/202006/t20200602_463888.shtml