Laws of the People's Republic of China

Whole documentDecision on Punishment over Crimes against the Company Law(Adopted at the 12th Session of The standing Committee of The 8thNational People's Congress and promulgated on February 28, 1995)

With a view to maintaining the social and economic order, protectingthe legal rights and interests of a company, punishing the crimes againstthe company Law, the following provisions are formulated as a supplementto the Criminal Law.

   Article 1

Anyone who falsely reports the registered capital of a company whenapplying for registration to the competent authorities by using fakecertificate documents or taking other fraudulent methods to acquire theregistration of the company, if to a huge amount, resulting in a seriousconsequence or other grave effects, shall be sentenced to less than 3years' imprisonment or criminal detention, and may, together, be finedamounting to no more than 10 percent of the registered capital falselyreported.

The unit applying for registration, who commits the offence providedfor in the preceding paragraph, shall be fined amounting to less than 10percent of the registered capital falsely reported; the person(s) directlyin charge and others directly obliged shall be sentenced to less than 3years' imprisonment or criminal detention in accordance with theprovisions stipulated in the preceding paragraph.

   Article 2

The promoters, shareholders of a company who, in violation of theCompany Law, do not deliver the currencies or property in kind or do noteffect the transfer of property rights, falsely deliver the capitalcontributions or withdraw the capital contributions after the company hasbeen established, if to a huge amount, resulting in a serious consequenceor other grave effects, shall be sentenced to less than 5 years'imprisonment or criminal detention, and may, together, be fined amountingto less than 10 percent of the capital falsely delivered or withdrawn.

The unit, committing the offence provided for in the precedingparagraph, shall be fined amounting to less than 10 percent of the capitalfalsely delivered or withdrawn by the unit; the person(s) directly incharge and others directly obliged shall be sentenced to less than 5years' imprisonment or criminal detention according to the provisionsstipulated in the preceding paragraph.

   Article 3

Anyone who issues stocks or corporate bonds by making up fakeprospectus, share subscription applications or corporate bond offerprocedure, if to a huge amount and resulting in a serious consequence orother grave effects, shall be sentenced to no more than 5 years'imprisonment or criminal detention, and may, together, be fined amountingto no more than 5 percent of the fund illegally raised.

The unit, committing the offence provided for in the precedingparagraph, shall be fined amounting to less than 5 percent of the fundillegally raised; the person(s) directly in charge and others directlyobliged shall be sentenced to no more than 5 years' imprisonment orcriminal detention according to the provisions stipulated in the precedingparagraph.

   Article 4

If a company provides the shareholders and the solo public with afalse financial and accounting report or conceals important information inits financial and accounting report, thus seriously infringing upon theinterests of shareholders or others, the person(s) directly in charge andothers directly obliged shall be sentenced to less than 3 years'imprisonment or criminal detention, and may, together, be fined amountingto no more than RMB 200,000 yuan.

   Article 5

In liquidation, if a company hides its assets, makes a false accountin its balance sheet or inventory of property sheet, or allocates itsassets before clearing off its debts, thus seriously infringing upon theinterests of the creditors or others, the person(s) directly in charge andothers directly obliged shall be sentenced to no more than 5 years'imprisonment or criminal detention, and may, together, be fined amountingto RMB 200,000 yuan.

   Article 6

The personnel in charge of valuation of assets, examination ofcapital, verification and audit, who deliberately submit falsedocumentation, thus resulting in a grave effect, shall be sentenced to nomore than 5 years' imprisonment or criminal detention, and may, together,be fined amounting to no more than RMB 200,000 yuan.

The unit, committing the offence provided for in the precedingparagraph shall be fined amounting to no more than fivefold illegal gains;the person directly in charge and others directly obliged shall besentenced to imprisonment or criminal detention of no more than 5 yearsaccording to the provisions specified in the preceding paragraph.

   Article 7

Anyone who issues stocks or corporate bonds without approval of therelevant competent authority regulated by the Company Law, if to a hugeamount and resulting in a serious consequence or other grave effects,shall be sentenced to less than 5 years' imprisonment or criminaldetention, and may, together, be fined amounting to less than 5 percentof the fund illegally raised.

The unit, committing the offence provided for in the precedingparagraph shall be fined amounting to less than 5 percent of the fundillegally raised by the unit; the person directly in charge shall besentenced to less than 5 years' imprisonment or criminal detentionaccording to the provisions specified in the preceding paragraph.

   Article 8

The state personnel of relevant competent authorities, who grantapproval or registration to a company which does not meet the conditionsrequired by the law in the application for its establishment andregistration, or for listing or issuance of stocks or corporate bonds,thus seriously infringing upon the public property and the interests ofthe state and people, shall be punished according to Article 187 of theCriminal Law.

Where the higher-level authority forcefully orders the registrationauthority and its personnel to take the actions stipulated in thepreceding paragraph, the person in charge who is directly responsibleshall be punished according to the provisions in the preceding paragraph.

   Article 9

A company's director, supervisor or staff member who exploits hisoffice to extort and accept bribery, if to a fairly large amount, shall besentenced to no more than 5 years' imprisonment or criminal detention,and, if to a huge amount, to no less than 5 years' imprisonment, and hisproperty may, together, be forfeited to the state.

   Article 10

A company's director, supervisor or staff member who exploits hisoffice to seize the company's property, if to a fairly large amount, shallbe sentenced to no more than 5 years' imprisonment or criminal detention,and, if to a huge amount, to no less more than 5 years' imprisonment, andhis property may, together, be forfeited to the state.

   Article 11

A company's director, supervisor or staff member who exploits hisoffice to embezzle the public fund of his unit for his private use or forlending it to others, if to a fairly large amount and having not returnedit for over 3 months, or using it for profits-seeking purpose or otherunlawful activities although having returned it within 3 months, shall besentenced to no more than 3 years' imprisonment or criminal detention,and, if to a fairly large amount and never returning it, shall bepunished as the offence of embezzling-public-funds as provided for inArticle 10 of this Decision.

   Article 12

State personnel who commit a crime against the provisions as providedfor in Article 9, Article 10 and Article 11 of this Decision, shall bepunished according to the provisions stipulated in the SupplementaryProvisions on Punishment over Crime of Corruption and Bribery.

   Article 13

Illegal gains, if any, from the crimes as provided for in thisDecision shall be confiscated.

Those who commit crimes against this Decision, with their illegalgains to be confiscated, a fine imposed, their property forfeited and acivil compensation assumed, shall be liable for the civil compensation inpriority in case they are insufficient of the assets for payment of allthe above items.

   Article 14

This Decision shall as well be applicable to the crimes committedagainst Article 9, Article 10 and Article 11 of this Decision by the staffand workers of enterprises other than limited liability companies andcompanies limited by shares.

   Article 15

This Decision shall enter into force from the date of itspromulgation.