China legal update: MOFCOM Further Optimizes Record-filing and Registration of Foreign Trade Operators

China legal update: MOFCOM Further Optimizes Record-filing and Registration of Foreign Trade Operators

I. Legal News

MOFCOM Further Optimizes Record-filing and Registration of Foreign Trade Operators

The Ministry of Commerce (« MOFCOM ») has recently distributed the Circular on Further Optimizing the Record-filing and Registration of Foreign Trade Operators (the « Circular »), with effect from March 1, 2019.

In China, many licenses are required for an enterprise who would like to conduct import and export business (“Import and Export Licenses”). Among these Import and Export Licenses, the very first one to apply for is the qualification of Foreign Trade Operator. According to PRC Foreign Trade Law, a company who would like to engage in import and export of goods or technologies in China shall apply for the record-filing and registration of Foreign Trade Operator. The Circular recently released aims to further cut red tape for such record-filing and registration process to reduce administrative burdens of an enterprise. We summarize below of two main changes.

First, the Circular simplifies the application process. Specifically, in addition to the traditional physical paper application, a new function that enables enterprises to apply in a digital way is newly added, which means that enterprises can upload scanned business license as well as relevant application forms through an online system when they apply for registration or make any alterations.

Second, the Circular streamlines the procedure for replacing the original certificate of Foreign Trade Operator. Upon registration as a Foreign Trade Operator, the enterprise will receive an official certificate named  Foreign Trade Operators Registration Form. Previously, it strictly regulates that if such form is lost or damaged, before applying for a new form, the enterprise shall first announce on a designated newspaper that such lost or damaged form is invalid. Now this costly and time-consuming requirement has been abolished.


SAMR Seeks Comments on Revisions of Enterprise Deregistration in Administrative Regulations on Company Registration

The State Administration for Market Regulation (« SAMR ») has recently enacted and issued the Proposal for Amending Relevant Administrative Regulations Including the Administrative Regulations on Company Registration and the Administrative Regulations on the Registration of Enterprise Legal Persons and released the completed exposure draft for public comments by April 3, 2019 (the “Proposal”). According to the Proposal, changes in relation to enterprise deregistration are proposed in the Administrative Regulations on Company Registration (“Registration Regulations”) to simplify the deregistration procedure as well as to accelerate market exit for qualified enterprise. The changes are mainly as follows:

Previously, when a company decides to cease its operations, it is then subject to a liquidation process in which a liquidation committee shall be formed. The list of members of such liquidation committee shall physically be submitted to local SAMR. The Proposal amends that the list of members shall be published through the National Enterprise Credit Information Publicity System (the “System”) instead of submitting physically to local SAMR.

As of March 1, 2017, companies legally registered as either limited liability companies or unlisted joint stock limited companies that do not have creditor and debtor relationships or have settled all claims and obligations can go through a simplified deregistration process. To make the Registration Regulation in line with the already implemented rules that are released in several normative documents, the Proposal formally adds articles concerning the current implemented simplified deregistration process in the Registration Regulation. In the meanwhile, changes are also introduced in these articles, for example, under the current rules, companies applying for the simplified deregistration process must first publish an announcement for 45 consecutive days through the System to allow for any objections. The Proposal shortens such notice period into 20 consecutive days.


II. Topic

China Uses AI to Help Manage Proceedings in a Shanghai Court

On January 23, 2019, artificial intelligence (“AI”) assistive technology was firstly used during one criminal court trial which was a robbery and murder case (the “Trial”) in Shanghai No.2 Intermediate Court to improve the accuracy and efficiency of the proceedings.

The AI technology used in the Trial was called “206 System” (the “System”), mainly relying on a series of technologies like Optical Character Recognition (OTC), Natural Language Processing (NLP), Intelligent Speech Recognition and Entity Relationship Analysis which integrates a large database on PRC Criminal Laws and Regulations, evidence standards and rules, precedents and guiding cases, etc.

During the Trial, electronic screens were placed in front of all people in the courtroom, including the judges, the prosecutor, the defender and even the public gallery. The screens can recognize the speech of the judges and the prosecutor and display the evidence as referred. For example, after the presiding judge asked “what is the defender’s name”, the System instantly retrieved the relevant defendant’s personal information, including defendant’s ID card, hukou (Household registration booklet), work experience, which were pre-stored in the System, and showed it on the screen in front of the judge, so that the judge could correspond the defendant’s statement with the evidence material. In addition, the System can distinguish the voice of the prosecutor and the defendant and precisely transfer voice into characters, so that the whole proceedings can be transcribed automatically.

Further, the System has the function of finding flaws and omissions in the chain of evidence so as to help the judges identify the facts and verify evidences as well as provide guide to the prosecutors/judges during questioning. During the Trial, the System found that there was no record for one distraint evidence. The prosecutor, at the request of the court, made a statement about the correction of the evidence.

The System is told to be a great step on the way to combine AI technology with court trial. Application of AI technology would help the judges to find facts, authentic evidence and protect the right to appeal in order to safeguard justice, promote impartial judgement and effectively prevent wrongfully convictions.


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