Legal News: Criminal Law: China released Amendment to PRC Criminal Law (XI)

Legal News: Criminal Law: China released Amendment to PRC Criminal Law (XI)

I. Legal News

Criminal Law: China released Amendment to PRC Criminal Law (XI)

On December 26, 2020, the Amendment to PRC Criminal Law (XI) was passed by the PRC National People’s Congress, which will take effective as of March 1, 2021 (the “Amendment”).

We hereby summarize some of the following changes in the Amendment for your reference:

1. Lowering criminal liability age from 14 to 12 under certain circumstances

According to the Amendment, children aged between 12 to 14 will be held criminally liable when they meet the following two circumstances simultaneously:

2. Increasing maximum prison term from 7 years to 10 years for certain IP infringements

Before the Amendment, subject to the severity of the circumstances, infringers of the trademark/copyright/trade secrets crimes shall be sentenced to fixed-term imprisonment of not more than 7 years. Under the Amendment, the maximum prison term has been raised to 10 years.

3. Clarification on legal application of crime of throwing objects from high places

People who intentionally throw objects from high-rise buildings or other high places that cause serious consequences shall be sentenced to fixed-term imprisonment of not more than 1 year, criminal detention, public surveillance and/or be fined. Those who constitute other crimes at the same time shall be punished on a heavier punishment.

4. Detailing Crime of Obstructing the Prevention and Treatment of Epidemic

Under the Covid-19 epidemic, one more situation was added to be considered as Crime of Obstructing the Prevention and Treatment of Epidemic in the Draft Amendment seeking public comments. The added situation was passed in the Amendment, which is “Selling or transporting goods contaminated by or likely to be contaminated by pathogens of infectious diseases in epidemic areas without conducting any disinfection treatment”.

Foreign Investment: China Unveils Security Review for Inbound Foreign Investment

On December 19, 2020, the National Development and Reform Commission together with the Ministry of Commerce issued the Measures for the Security Review of Foreign Investment, which will enter into force as of January 18, 2021 (the “Measures”). The Measures are mainly based on the new Foreign Investment Law implemented as of January 1, 2020, which explicitly states that China will establish a safety review mechanism for inbound foreign investment, under which the safety review shall be conducted for any foreign investment affecting PRC national security.

The Measures contain 23 articles which clarifies the definition of foreign investment subject to PRC security review as well as the scope of security review:

1. Definition of foreign investment subject to security review

The Measures define foreign investment as direct or indirect investment activity conducted by a foreign investor in the territory of China, through the following three ways:

2. The scope of security review

According to the Measures, the following industries/fields are subject to the PRC security review:

The above scope is vague and will raise concerns among Foreign investors on the interpretation of the Measures. Said Measures, also stipulate that, before making any declaration, the party concerned may first conduct a consultation at Working Mechanism Office2 to check if its business to be conducted is within the above scope of security review. Should you want to know more details above the security review/Working Mechanism Office, please feel free to contact asiallians@asiallians.com.

(https://www.ndrc.gov.cn/xxgk/zcfb/fzggwl/202012/t20201219_1255025.html)

II. Case:

Administrative Fine Imposed on CHANEL China for False Advertising

In December 2020, Administration for Market Regulation in Shanghai Jingan District (“Shanghai AMR”) imposed an administrative fine amounting to RMB 200,000 yuan on CHANEL Shanghai3 for publishing a false advertisement on its non-special purpose cosmetics.

In China, special purpose cosmetics, which are subject to strict licensing systems, include but not limited to hair dye, spot removal, skin whitening and sunscreen products,. Non-special cosmetics are generally other ordinary cosmetics that are not subject to any licensing. According to Shanghai AMR, in a recent advertisement of two CHANEL non-special purpose cosmetics, spot removal and skin whitening functions are clearly published which are inconsistent with the ingredients’ functions. Thus, such advertisement is defined as false advertisement subject to an administrative fine.

This case exemplifies the risks that can occur when publishing an advertisement. Pursuant to PRC Advertisement Law4, an advertisement will be regarded as a false advertisement if the information of products appeared are inconsistent with the actual situations in terms of the function, place of origin, purpose, quality, specification, ingredients, etc., and such inconsistency has a substantial influence on purchase. In addition, for a false advertisement, the following administrative fines shall be imposed:

Under serious circumstances, the business license of the company may be revoked as well. Should you want to know more details above the advertisement law, please feel free to reach asiallians@asiallians.com.

(http://www.jingan.gov.cn/xwzx/002007/002007002/20201208/dbd3ffce-7c99-48aa-bd91-fb7b21f17c35.html)

III. Hot Topic:

Easier Access to Employment Market for Certain Foreign Graduates

According to one of our newsletters released last year5, an announcement was made during a press conference of PRC Ministry of Public Security (the “2019 Announcement”) in which foreign outstanding students graduated within two years from internationally renowned universities who want to start a business in China are entitled to apply special visas as of August 1, 2019. Due to the Covid-19 epidemic, foreign graduates abroad are generally blocked to enter China and this preferential policy was not implemented well in 2020.

However, according to the 2019 Announcement, for international students who currently still stay in China, another special visas valid for 2-5 years can also be obtained once the following two conditions are met:

(1) International students graduated from a renowned Chinese university and obtained a bachelor diploma or above;

(2) International students who want to engage in entrepreneurship activities.

Although no detailed rules have been released recently, in practice, relevant department of the public security organ will check many items, including but not limited to the following:

(1) Whether the Chinese university is a “target university”;

(2) Whether the entrepreneurship activities are encouraged; and

(3) Whether the business plan is valuable.

Asiallians can assist you in conducting a preliminary check on your credentials/business plan to see if you are entitled to apply for such visa. Should you need any more details, please feel free to contact us via asiallians@asiallians.com.

(http://www.mps.gov.cn/n6557558/c6613913/content.html)

Should you have any inquiry, please contact us at asiallians@asiallians.com. As always, Asiallians remains at your service and our team are currently mobilized in our offices in China, Hong Kong and Taipei.

 

1.The “actual control” shall include the following circumstances:
(1) The foreign investor holds more than 50% of shares
(2) The foreign investor has a material effect on the resolutions of board of directors or shareholders’ meeting even holding less than 50% of shares
(3) The foreign investor has a material effect on the business decision making, personal recruitment, finance issues, etc.

2. A working mechanism office shall be further established under the National Development and Reform Commission and led by the National Development and Reform Commission and the Ministry of Commerce to undertake routine work on the security review of foreign investment.

3. CHANEL Shanghai is a wholly foreign invested enterprise invested by Chanel International B.V. (Dutch)

4. Article 28 and article 55 of PRC Advertisement Law

5. See our previous newsletter: 
http://asiallians.com/china-legal-update-china-adopts-first-vaccine-administrative-law-including-tough-penalties-faulty-vaccine-producers-sellers/

 


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