JC Master Legal News Issue 895

Key Takeaways for This Issue

CSRC: Launches Pilot Program to Expand Stock and Stock Index Options

 On November 8, the China Securities Regulatory Commission held its regular press conference, during which spokesperson Chang Depeng addressed four key issues: expanding the pilot program for stock and stock index options, revising the rules on refinancing on the STAR Market, adjusting the issuance criteria for the ChiNext Board, and amending the Measures for the Administration of Public Companies.

Operational guidelines for the mixed-ownership reform of central state-owned enterprises have been released, encouraging companies to apply for listing on the STAR Market.

Recently, the State-owned Assets Supervision and Administration Commission of the State Council issued the “Operational Guidelines for Mixed-Ownership Reform of Central Enterprises,” which sets out the basic procedural framework and key operational points for the “mixing capital” and “reforming mechanisms” stages.

Guiding Opinions of the Ministry of Finance on Strengthening the Implementation of the National Unified Accounting System

The Ministry of Finance recently issued the “Guiding Opinions on Strengthening the Implementation of the National Unified Accounting System,” outlining eight measures—such as safeguarding the uniformity of the national accounting system, ensuring that all entities fulfill their accounting responsibilities, and enhancing internal control—to further standardize accounting practices and improve the quality of accounting information.

Notice of the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice on Urging Fugitives Involved in Organized Crime and Evil Forces to Surrender Themselves

In order to implement the criminal policy of combining leniency with strictness, punish criminal offenses in accordance with the law, safeguard social stability, and protect the lives and property of the people, while also providing fugitive suspects and defendants involved in organized crime and evil forces (hereinafter collectively referred to as “fugitives”) with an opportunity to reform themselves and seek more favorable treatment, this notice is hereby issued in accordance with the relevant provisions of the Criminal Law of the People’s Republic of China and the Criminal Procedure Law of the People’s Republic of China.

The National Integrated Government Services Platform has officially launched its trial operation.

To implement the major directives of the CPC Central Committee and the State Council on deepening the “delegation, regulation, and service” reform, and to accelerate the goal of achieving “one-stop online access and cross‑jurisdictional processing” for government services nationwide, the National Integrated Online Government Services Platform has officially launched its trial operation effective immediately.

Table of Contents

Table of Contents

Finance & Capital Markets

CSRC: Launches Pilot Program to Expand Stock and Stock Index Options

Adapting to the STAR Market’s Registration-Based System: The China Securities Association Amends the Brokerage Offices’ Information Barrier Rules

Companies listed on the Select Tier of the New Third Board may apply to transfer to a public listing after one year of trading.

SSE: On the STAR Market, issuers must clearly explain, and intermediaries must thoroughly verify, disclosure requirements.

The Shenzhen Stock Exchange is steadily and orderly advancing the launch of CSI 300 ETF options.

Corporate & Commercial

Operational guidelines for the mixed-ownership reform of central state-owned enterprises have been released, encouraging companies to apply for listing on the STAR Market.

Yili has joined forces with 13 global partners to establish the industry’s first “Global Network for Sustainable Supply Chains.”

The STAR Market continues to expand, with mid- and small-sized securities offices accelerating their transformation into boutique investment banks.

Planning to raise RMB 498 million to upgrade its artificial intelligence applications, MicroPort Network is seeking approval to list on the STAR Market.

Taxation

Notice of the State Taxation Administration and the China Banking and Insurance Regulatory Commission on Deepening and Standardizing the “Bank–Tax Cooperation” Initiative

Guiding Opinions of the Ministry of Finance on Strengthening the Implementation of the National Unified Accounting System

Relevant officials from the Taxpayer Services Department of the State Taxation Administration and the Inclusive Finance Department of the China Banking and Insurance Regulatory Commission answered questions from reporters.

The State Administration of Foreign Exchange has introduced 12 new measures, benefiting 99% of non-investment foreign-invested enterprises.

The Finance Department of Jiangxi Province has forwarded the Ministry of Finance’s Notice on Issuing the Guiding Standards for Grassroots Government Information Disclosure in the Field of Fiscal Budget and Final Accounts.

Litigation & Arbitration

Notice of the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice on Urging Fugitives Involved in Organized Crime and Evil Forces to Surrender Themselves

Strengthen the application of blockchain and artificial intelligence to comprehensively elevate the level of smart court development.

The Zhangqiu District People’s Court in Jinan, Shandong Province, has launched a new streamlined procedure for criminal cases.

The retrial of the Sun Xiaoguo case will be pronounced at a later date.

Jiangsu Courts Prevent and Crack Down on “Loan Traps” and False Litigation

Other

The National Integrated Government Services Platform has officially launched its trial operation.

Finance & Capital Markets

CSRC: Launches Pilot Program to Expand Stock and Stock Index Options

 On November 8, the China Securities Regulatory Commission held its regular press conference, during which spokesperson Chang Depeng addressed four key issues: expanding the pilot program for stock and stock index options, revising the rules on refinancing on the STAR Market, adjusting the issuance criteria for the ChiNext Board, and amending the Measures for the Administration of Public Companies.

Regarding the expansion of the stock and stock index options pilot program, Chang Depeng stated that, with the approval of the State Council, the China Securities Regulatory Commission has officially launched the initiative to broaden the pilot scope. In accordance with established procedures, it will approve the listing of CSI 300 ETF options on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, as well as the listing of CSI 300 stock index options on the China Financial Futures Exchange.

Chang Depeng stated that, in accordance with the specific requirements set forth in the “Implementation Opinions on Establishing the STAR Market at the Shanghai Stock Exchange and Piloting the Registration-Based System,” the China Securities Regulatory Commission has drafted the “Administrative Measures for the Registration of Securities Issuance by Companies Listed on the STAR Market” (Draft for Public Comment) (hereinafter referred to as the “STAR Market Refinancing Measures”) and has now solicited public feedback.

The draft “Measures for Refinancing on the STAR Market,” currently open for public comment, includes the following key provisions: First, it establishes basic issuance requirements to standardize listed companies’ refinancing activities and effectively safeguard the legitimate rights and interests of investors and the broader public. Second, it refines and adjusts the institutional framework for non‑public offerings, thereby supporting listed companies in attracting strategic investors. Third, it introduces a streamlined and efficient registration process to enhance financing efficiency. On the one hand, it significantly shortens the review and registration timelines: the Shanghai Stock Exchange’s review period is set at two months, and the CSRC’s registration period is 15 working days. On the other hand, it empowers the Shanghai Stock Exchange to, based on the overall performance of refinancing on the STAR Market and actual market needs, formulate business rules for small‑scale financings.

Regarding refinancing on the ChiNext Board, Chang Depeng stated that the CSRC plans to revise several refinancing regulations, including the Measures for the Administration of Securities Issuance by Listed Companies, the Provisional Measures for the Administration of Securities Issuance by ChiNext Listed Companies, and the Detailed Rules for the Implementation of Non‑Public Offerings of Shares by Listed Companies, and will solicit public comments.

The proposed revisions primarily include the following: First, streamlining issuance requirements to broaden the scope of refinancing services on the ChiNext Board. Specifically, the requirement that the asset‑liability ratio at the end of the most recent period exceed 45% for public offerings on the ChiNext Board has been eliminated; the two‑year consecutive profitability threshold for non‑public offerings has also been removed; and the condition that prior‑raised funds must have been substantially utilized, with utilization progress and outcomes broadly consistent with disclosed information, has been reclassified from an issuance criterion to an information‑disclosure requirement.

Second, non‑public offering arrangements will be streamlined to facilitate listed companies in attracting strategic investors. Where a listed company’s board of directors resolution pre‑determines all subscribers and identifies them as strategic investors, the pricing benchmark date may be the date of the board’s announcement of the resolution on the non‑public offering, the date of the shareholders’ meeting resolution announcement, or the first day of the offering period. The pricing and lock‑up mechanisms for non‑public offerings will also be adjusted: the requirement that the issue price not be lower than 90% of the average stock price over the 20 trading days preceding the pricing benchmark date will be reduced to 80%; the lock‑up periods will be shortened from the current 36 months and 12 months to 18 months and 6 months, respectively, and will no longer be subject to the relevant restrictions under the share‑reduction rules; furthermore, the maximum number of subscribers for non‑public offerings on the Main Board (including the SME Board) and the ChiNext Board will be unified from the current caps of 10 and 5, respectively, to a cap of 35.

Third, the validity period of approval documents will be appropriately extended to facilitate listed companies in selecting an optimal issuance window. The validity period of refinancing approval documents will be extended from six months to twelve months.

In addition, Chang Depeng stated that the CSRC plans to revise the Measures for the Supervision and Administration of Non‑Listed Public Companies (hereinafter referred to as the “Public Company Measures”) and has concurrently drafted the Measures for the Information Disclosure of Non‑Listed Public Companies (Draft for Comments) (hereinafter referred to as the “Information Disclosure Measures”).

The key revisions to the Measures for Public Companies include: First, the introduction of a public offering regime targeting unspecified qualified investors, allowing listed companies to conduct public offerings to such investors on the New Third Board and implementing a sponsorship and underwriting system. Second, the streamlining of the private placement regime by removing the 35‑investor cap for listed companies and introducing a self‑underwritten issuance option. Third, the optimization of the review mechanisms for public transfers and issuances: where administrative licensing is required, the National Equities Exchange and Quotations Company will first issue a self‑regulatory opinion, which the China Securities Regulatory Commission will then use as the basis for approval. Fourth, the innovation of regulatory approaches, including the establishment of differentiated information disclosure principles, the clarification of legal liabilities for corporate governance violations, the reinforcement of intermediary institutions’ responsibilities, and the encouragement of companies to operate in compliance with applicable standards.

The main provisions of the Measures on Information Disclosure include: First, based on the actual conditions of the New Third Board market and listed companies, the measures set out the basic requirements for information disclosure by listed companies, thereby ensuring the quality of such disclosures. Second, in line with the tiered structure, a differentiated information‑disclosure system is established, with tailored arrangements regarding disclosure formats, content, and the management of information‑disclosure matters, so as to align with the specific circumstances of SMEs at different stages of development and with investors’ information needs. Third, administrative oversight by the China Securities Regulatory Commission is coordinated with the self‑regulatory supervision of the National Equities Exchange and Quotations Company, strengthening division of labor and collaboration to create an efficient regulatory framework.

Adapting to the STAR Market’s Registration-Based System: The China Securities Association Amends the Brokerage Offices’ Information Barrier Rules

On November 8, the Securities Association of China issued the revised “Guidance on the Information Barrier System for Securities Offices” (hereinafter referred to as the “Guidance”). The revisions were primarily aimed at accommodating a series of reform measures—such as the establishment of the STAR Market and the pilot registration-based IPO system, as well as the co‑investment by affiliated subsidiaries of sponsoring institutions—and the evolving dynamics of the securities industry.

The guidelines require securities offices to manage sensitive information in accordance with the principle of need-to-know, ensuring that such information is disclosed only to those employees who have a legitimate business need or a corresponding management responsibility. Employees of securities offices are under a strict duty of confidentiality with respect to any sensitive information they come into possession of by any means and may not use such information to obtain improper benefits for themselves or others.

When a securities company engages an external service provider, it shall stipulate in the agreement that the provider is obligated to maintain the confidentiality of any sensitive information obtained in the course of providing services.

Furthermore, when securities offices engage in business innovation or collaborative business initiatives, they shall, in advance, assess whether there is a risk of improper flow or use of sensitive information and establish or refine measures for managing information barriers.

The guidelines stipulate that the board of directors and the principal operating officers of a securities office bear ultimate responsibility for the overall effectiveness of the office’s information barrier system, while the heads of each business unit and branch office assume managerial accountability for the effective implementation of the information barrier system within their respective departments and institutions. Furthermore, all employees of the securities office are directly responsible for ensuring compliance with the information barrier system in the course of their professional activities.

The compliance director and the compliance department of a securities office assist the board of directors and senior management in establishing and implementing an information barrier system, and are responsible for review, oversight, inspection, advisory services, and training.

Companies listed on the Select Tier of the New Third Board may apply to transfer to a public listing after one year of trading.

On November 8, the China Securities Regulatory Commission had already mobilized a dedicated team to conduct an in-depth study and analysis of the transfer mechanism from the Select Tier of the New Third Board, resulting in a preliminary proposal.

First, the eligibility criteria for transferring to another board: To ensure a steady and orderly transition, companies that have been listed on the Select Tier of the New Third Board for at least one year may apply to transfer to a stock exchange for listing.

Second, the conditions for transferring to a public listing. A company listed on the over-the-counter market that applies to transfer to a public listing must meet the basic listing requirements stipulated in the Securities Law and by the China Securities Regulatory Commission, and must also satisfy the specific listing criteria set forth by the stock exchange.

Third, the transfer‑listing procedure. A company listed on the New Third Board that seeks to transfer to a stock exchange for listing must first complete its internal decision‑making process, obtain sponsorship from a securities office, and submit a transfer‑listing application to the exchange. The exchange will review the application and decide whether to approve the listing; no approval from the China Securities Regulatory Commission is required.

Fourth, risk prevention. The China Securities Regulatory Commission will strengthen oversight and supervision, urge stock exchanges to rigorously fulfill their review responsibilities, hold intermediary institutions accountable, and reinforce accountability mechanisms.

Going forward, the China Securities Regulatory Commission will convene relevant parties to promptly draft the necessary regulatory rules and issue them for implementation in accordance with established procedures.

SSE: On the STAR Market, issuers must clearly explain, and intermediaries must thoroughly verify, disclosure requirements.

Recently, while steadily advancing the review process for IPOs on the STAR Market, the Shanghai Stock Exchange has, based on relevant facts and rules, imposed a series of self-regulatory measures on issuers and their intermediaries found to have engaged in improper information disclosure during the earlier review stage. According to reports, this round of actions involves STAR Market application projects submitted by Beijing Papaya Mobile Technology Co., Ltd., Shanghai Xinshu Network Technology Co., Ltd., Amlogic (Shanghai) Co., Ltd., Guizhou Baishan Cloud Technology Co., Ltd., and others.

Among them, Muguawa Mobile and Xinshu Network had previously withdrawn their applications for issuance and listing, and the Shanghai Stock Exchange has terminated the review process. Based on the severity of the violations, the Shanghai Stock Exchange issued regulatory warnings to the issuers Xinshu Network and Baishan Technology, and sent regulatory work letters to Muguawa Mobile and Jingchen Shares. It also issued regulatory work letters to the three sponsoring institutions involved—Zhongtian Guofu Securities Co., Ltd., Tianfeng Securities Co., Ltd., and Guotai Junan Securities Co., Ltd.—and issued regulatory warnings to the sponsor representatives Chen Jia and Chen Dongyang of Muguawa Mobile, Xu Gang and Wang Yugui of Xinshu Network, and Xun Guoliang and Li Dong of Jingchen Shares. Additionally, it sent regulatory work letters to the sponsor representatives Lü Pin and Song Guican of Baishan Technology.

In accordance with relevant regulations, regulatory work letters are directly sent to the relevant market entities, identifying existing issues and requiring them to rectify any improper conduct and promptly submit a follow-up report to the SSE; regulatory warning letters are publicly disclosed on the SSE website and recorded in the integrity archive.

According to the announcement, the improper conduct targeted by the SSE’s recent coordinated self-regulatory measures primarily involves irregular, imprecise, and negligent practices by relevant market participants in preparing and reviewing application documents such as the STAR Market prospectus, as well as in responding to inquiry requests. For example, Muguay Mobile’s prospectus (draft for filing) failed to objectively reflect the issuer’s principal business activities, did not adequately disclose the basis for its industry classification, did not sufficiently highlight risk factors that could materially affect the company’s going‑concern status, and omitted explanations for discrepancies between certain business data and publicly available information. Similarly, Xinshu Network’s prospectus (draft for filing) did not disclose the prior changes in the actual controller or the shareholding details of related shareholders as previously disclosed on other public markets, nor did it provide a reasonable explanation. In addition, Jingchen Shares’ prospectus (draft for filing) and its responses to review inquiries contained repeatedly adjusted domestic and overseas revenue figures, with inconsistent disclosures of rebate‑related sales amounts across different filings, and the revisions to the prospectus were not reported to the SSE as required. Furthermore, Baishan Technology failed to promptly report significant litigation matters during the project review process. These improper practices contravene the information‑disclosure standards and specific procedural requirements set forth in the SSE’s STAR Market issuance and listing review rules and related regulations, thereby hindering investors’ understanding of the issuer’s relevant information and, to some extent, impeding the smooth conduct of the review process.

The Shanghai Stock Exchange stated that, under the registration-based system, its review process for issuance and listing remains centered on information disclosure, aiming to present only genuine companies to the market. This requires issuers to “explain clearly” while also obliging intermediary institutions to “verify thoroughly.” While conducting rigorous, public, inquiry‑driven reviews, the Exchange will continue to hold issuers accountable for ensuring that their disclosures are truthful, accurate, and complete, assigning them primary responsibility. It will also strengthen and enforce the duties of intermediary institutions, urging them to rigorously verify the truthfulness, accuracy, and completeness of disclosed information and fulfill their gatekeeping role. At the same time, throughout the review process, the Exchange adheres to an early‑stage, proactive approach to addressing inappropriate conduct by relevant market participants, seeking to prevent minor issues from escalating into more serious problems. Since the launch of the STAR Market’s issuance and listing review, the Exchange has promptly employed measures such as scheduled inquiries, cautionary talks, and regulatory letters to urge issuers to enhance the quality of their disclosures and intermediary institutions to improve their professional standards—actions that have totaled more than 50 instances. For market participants whose improper behavior persists despite such guidance, the Exchange will further intensify accountability. In cases involving suspected material violations of information disclosure laws, including financial fraud, the Exchange will, in accordance with applicable procedures, take strict enforcement actions in line with the law.

The Shenzhen Stock Exchange is steadily and orderly advancing the launch of CSI 300 ETF options.

On November 8, the China Securities Regulatory Commission announced the launch of an expanded pilot program for stock and index options, and will, in accordance with established procedures, approve the listing of CSI 300 ETF options on the Shenzhen Stock Exchange. Under the guidance of the CSRC, the Shenzhen Stock Exchange will comprehensively initiate the stock options pilot, ensuring the smooth introduction of CSI 300 ETF options—whose underlying asset is the Harvest CSI 300 ETF, ticker symbol 159919. Launching the Shenzhen market’s stock options pilot and expanding the range of futures and options products are key measures to support Shenzhen’s development as a pioneering demonstration zone for socialism with Chinese characteristics and to advance the implementation of the tasks outlined in the comprehensive deepening of capital market reform. They also represent an intrinsic requirement for further improving the market’s foundational institutional framework, guiding medium- and long-term capital into the market, enhancing the market’s inherent stability, and strengthening the capacity of financial services to support the real economy.

The CSI 300 Index is the core broad-based index of China’s A-share market, with constituent stocks representing approximately RMB 30 trillion in market capitalization—about 60% of the total A-share market cap. Assets tracking the CSI 300 exceed RMB 150 billion, underscoring its strong market representativeness, broad coverage, and significant influence. The Shenzhen Stock Exchange’s launch of CSI 300 ETF options marks an important step toward the goal of building a comprehensive exchange characterized by a well‑rounded product suite, fully realized functionality, and safe, efficient operations. This development will help investors in both Shenzhen and Shanghai engage in hedging and risk management, while enhancing market pricing efficiency, liquidity, and stability.

Since January 2015, when the Shenzhen Stock Exchange launched full‑scale live‑market simulations for stock options, it has received active cooperation and strong support from all market participants. After more than four years of steady progress, the Exchange is now fully prepared to commence options trading. At present, the Shenzhen Stock Exchange has completed drafting the rules governing stock options and developing the requisite technical systems; operational, technical, and market preparations are in place, and feedback on the key regulatory provisions has been sought from the market. Moving forward, the Exchange will conduct system‑wide testing, finalize and issue the applicable rules, launch investor education initiatives, strengthen communication with the media, and actively recruit market makers, thereby ensuring the safe and stable operation of the CSI 300 ETF options business.

Since the beginning of this year, the CPC Central Committee and the State Council have successively issued the Outline Development Plan for the Guangdong–Hong Kong–Macao Greater Bay Area and the Opinions on Supporting Shenzhen in Building a Pilot Demonstration Zone for Socialism with Chinese Characteristics. The launch of the Shenzhen Stock Exchange’s stock options pilot program will help refine the Greater Bay Area’s financial market product suite, address the shortcomings in the SZSE’s risk‑management toolkit, better meet market needs for risk management, and foster a one‑stop platform that promotes the healthy development of both the futures and spot markets while satisfying global asset‑allocation and management demands.

Commercial & Corporate

Operational guidelines for the mixed-ownership reform of central state-owned enterprises have been released, encouraging companies to apply for listing on the STAR Market.

Recently, the State-owned Assets Supervision and Administration Commission of the State Council issued the “Operational Guidelines for Mixed‑Ownership Reform of Central Enterprises” (hereinafter referred to as the “Guidelines”). The Guidelines set out the basic operational procedures and key steps for such measures as “mixing capital” and “reforming mechanisms.” Experts believe that the Guidelines are highly directive and practical, playing a crucial role in fostering the organic integration of state‑owned and non‑state‑owned capital while mitigating transaction risks, and they anticipate a mini‑boom in mixed‑ownership reform among state‑owned enterprises.

Exploring Mixed-Ownership Reform in State-Owned Enterprises in the Commercial Sector

The Guidelines stipulate that, when subsidiaries at all levels of central enterprises introduce non‑state capital and collective capital through equity transfers, capital increases and share expansions, initial public offerings (IPOs), or asset restructurings of listed companies to implement mixed‑ownership reform, the relevant procedures shall be conducted in accordance with these operational guidelines.

The Guidelines propose that mixed‑ownership reform of commercial state‑owned enterprises whose principal businesses operate in fully competitive industries and sectors should be advanced in a proactive yet prudent manner, with state capital exercising controlling interests where appropriate and participating as an investor where suitable. For commercial SOEs whose principal businesses are in vital industries and key areas, mixed‑ownership reform should maintain state capital’s controlling position while encouraging participation by non‑state capital. Based on the specific characteristics of each business, mixed‑ownership reform of public‑service‑oriented SOEs that meet the requisite conditions should be advanced in an orderly fashion. Furthermore, the market‑oriented, professional platforms of state‑capital investment and management companies should be fully leveraged to actively promote mixed‑ownership reform among their subsidiaries. During the feasibility study phase, enterprises shall, in accordance with relevant regulations, conduct an assessment of social stability risks associated with the implementation of mixed‑ownership reform.

The Guidelines stipulate that, during the formulation of reform plans, the equity structure of mixed‑ownership enterprises must be designed in a scientifically sound manner, with ample equity stakes allocated to non‑state capital, and efforts made to enable such investors to nominate directors or supervisors. For subsidiaries whose primary business falls within industries and critical sectors vital to national security and the lifeline of the national economy, or that are entrusted with major special projects, their mixed‑ownership reform plans shall be reviewed by the central enterprise and then submitted to the SASAC for approval. For subsidiaries with other functional positioning, their mixed‑ownership reform plans shall be approved directly by the central enterprise.

Appropriately select the timing of restructuring

The Guidelines clarify that mixed‑ownership reform through the issuance of securities may be carried out via initial public offerings (IPOs), the issuance by state‑owned shareholders of exchangeable corporate bonds using their holdings in listed companies, the issuance of shares by listed companies to acquire equity held by non‑state‑owned shareholders, additional share issuances, and the issuance of convertible corporate bonds. Enterprises that align with national strategies, possess critical core technologies, demonstrate outstanding capabilities in scientific and technological innovation, conduct production and operations primarily based on core technologies, maintain stable business models, enjoy high market recognition, project a positive public image, and exhibit strong growth potential may actively apply for listing on the STAR Market.

The Guidelines stipulate that the transfer price of shares in a centrally‑owned enterprise listed company shall not be lower than the higher of: (i) the arithmetic average of the daily weighted‑average prices over the 30 trading days preceding the date of the listed company’s preliminary announcement; and (ii) the audited net asset value per share for the most recent fiscal year. In cases of asset restructuring involving state‑owned shareholders and a listed company, the state‑owned shareholder shall, in accordance with principles that align with its strategic development objectives and enhance the quality and core competitiveness of the listed company, carefully design the restructuring plan through thorough consultation with the listed company and select an appropriate timing for the transaction. The issue price of shares issued in the course of such asset restructuring shall be determined, subject to compliance with securities regulatory requirements, in a manner that safeguards the rights and interests of all shareholders, including the state‑owned shareholder.

Two categories of listed companies receive preferential treatment.

The Guidelines clearly stipulate that priority support shall be given to technology‑based enterprises in which human capital and technological inputs account for a significant share of value creation, enabling them to implement employee stock ownership. For mixed‑ownership enterprises engaging in employee stock ownership, the following conditions must be met: the enterprise’s principal business must operate in a commercially oriented sector or field characterized by robust competition; its equity structure must be sound, with non‑state‑owned shareholders holding a specified minimum shareholding ratio and the board of directors including directors nominated by non‑state‑owned shareholders; its corporate governance framework must be well‑established, featuring market‑oriented systems for labor, personnel, and compensation, as well as performance appraisal and evaluation mechanisms, thereby fostering a market‑driven operating model in which management positions are subject to both promotion and demotion, employees can be hired and dismissed, and remuneration is adjusted upward or downward in response to performance; moreover, more than 90% of the company’s revenue and profits must originate from markets external to its corporate group. In principle, the total amount of shares held by employees shall not exceed 30% of the company’s total share capital, and no single employee’s shareholding shall exceed 1% of the total share capital.

The Guidelines clarify that, for centrally‑administered state‑owned enterprises’ listed companies with small and mid‑cap market capitalizations and for technology‑innovation‑driven listed companies, the proportion of equity granted under their first equity‑incentive plan may be increased from a maximum of 1% to 3% of the company’s total share capital. In general, the cumulative number of equity awards granted over two complete fiscal years should not exceed 3% of the company’s total share capital; however, in cases involving major strategic transformations or other special circumstances, this cap may be appropriately relaxed to no more than 5% of the total share capital. Furthermore, there will be no regulatory cap on the actual benefits received by equity‑incentive participants.

The Guidelines stipulate that central enterprises should scientifically and reasonably delineate the boundaries of rights and responsibilities with mixed‑ownership enterprises, avoid “administrative” or “bureaucratic” forms of governance, and accelerate the shift from “control” to “allocation.” They should explore negotiating specific governance approaches based on the differing shareholding ratios of state‑owned and non‑state‑owned capital. State investors are to strengthen governance mechanisms anchored in their investment amounts and equity stakes and supported by appointed shareholder‑directors, clearly defining regulatory boundaries and ensuring that shareholders do not interfere in the day‑to‑day operations of the enterprise.

Yili has joined forces with 13 global partners to establish the industry’s first “Global Network for Sustainable Supply Chains.”

On November 8, during the Second China International Import Expo, the International Cooperation Forum on Agriculture and Food, hosted by the China Council for the Promotion of International Trade and co-organized by the China Chamber of International Commerce and Yili Group, was held. At the forum, Yili signed agreements with 13 global strategic partners, including Tetra Pak, Cargill, Fonterra, DuPont, Wilmar International, and Rousselot, to jointly establish the industry’s first “Global Network for Sustainable Supply Chains.” This initiative also represents a key step in Yili’s implementation of Chairman Pan Gang’s vision to “leverage our core strengths and build a global health ecosystem.”

At the forum that day, Zhang Jianqiu, Executive President of Yili Group, stated that economic globalization has created the conditions for pooling global resources and advancing cooperation in the global health industry. To better meet the health needs of people worldwide, it is essential to coordinate global efforts, leverage our strengths, continuously strengthen the global industrial chain, proactively build a “global smart supply chain,” steadily optimize the “global value chain,” and jointly foster a “global health ecosystem.”

Another highlight of this year’s China International Import Expo is that on November 6, Yili entered into a strategic partnership with Rousselot, the world’s largest polyol producer, formally signing a strategic cooperation agreement. Going forward, the two parties will further deepen their collaboration in areas such as new product development, technological innovation, and food safety.

Since the beginning of this year, Yili has steadily accelerated its international collaborations. In July, it signed a strategic cooperation agreement with Conaprole, South America’s largest dairy exporter; in August, it completed the full acquisition of Westland, New Zealand’s second-largest dairy cooperative. In November, Yili entered into a strategic partnership with France’s Roquette, marking another significant milestone in its efforts to build a “global health ecosystem.” As a result, Yili’s global footprint in the health sector continues to expand and grow increasingly robust. At this year’s China International Import Expo, Yili’s wholly owned subsidiary, Oceania Dairy, showcased eight products—including Jinlingguan Ruihu and Jin Dian New Zealand Pure Milk—highlighting the company’s substantial progress in advancing global innovation and collaboration.

Meanwhile, just days before the opening of the China International Import Expo, Yili Co., Ltd. (600887.SH) released its third-quarter 2019 report. The report showed that in the first three quarters, Yili’s total operating revenue reached RMB 68.677 billion, up 11.98% year on year, while net profit stood at RMB 5.648 billion, a year-on-year increase of 11.73%, achieving strong double-digit growth.

Analysts note that Yili has been able to sustain robust growth, thanks to its ability to leverage its strengths and deepen global partnerships. The positive signals of “further opening up and cooperation” conveyed during this year’s China International Import Expo will also provide fresh momentum for the rapid development of the global dairy industry.

The STAR Market continues to expand, with mid- and small-sized securities offices accelerating their transformation into boutique investment banks.

On November 5, five new stocks—Pumen Technology, Medicilon, China Electric Power Research Institute, Jiuri New Materials, and Anheng Information—simultaneously began trading on the STAR Market. With this addition, the number of companies listed on the STAR Market has risen to 46. These 46 companies were underwritten and sponsored by 28 securities offices. Notably, five offices accounted for the underwriting and sponsorship of 30 of these companies, highlighting a pronounced “Matthew effect” in the industry. Industry insiders note that, in addition to providing high‑quality listing opportunities, the STAR Market is generating incremental underwriting and sponsorship revenue for securities offices. In an increasingly competitive securities sector where the strong grow stronger, the STAR Market is emerging as one of the key avenues for small and mid‑size offices to transform their investment banking businesses.

The “Matthew effect” is evident.

The structure of investment banking business among securities offices underscores the industry’s “winner-takes-all” dynamic. According to data compiled by a China Securities Journal reporter, the 46 stocks that have successfully listed and begun trading on the STAR Market were underwritten and sponsored by 28 different securities offices. Notably, five offices collectively handled the underwriting and sponsorship for 30 companies. Specifically, CITIC Securities Investment ranks first with eight assignments, followed closely by CITIC Securities with seven; CICC, Guosen Securities, and GTJA Securities tie for third place, each handling five listings.

Industry insiders believe that leading securities offices enjoy significant inherent advantages in underwriting STAR Market projects, with relatively robust capabilities across project selection and risk control, as well as sales and pricing. These top-tier offices are poised to capture more business opportunities and wield greater influence in the STAR Market arena; at the same time, this trend is intensifying the “Matthew effect” in the investment banking sector.

Data show that the underwriting and sponsorship fees for the 46 companies that have successfully listed on the STAR Market totaled RMB 3.26 billion. Overall, each of these 46 companies incurred underwriting and sponsorship expenses of at least RMB 25 million, with 34 offices reporting costs exceeding RMB 50 million. Among them, China Railway Signal & Communication Co., Ltd., Nanwei Medical, Jiuri New Materials, Jiayuan Technology, Espressif Systems, and Transsion Holdings each recorded underwriting and sponsorship fees surpassing RMB 100 million, amounting to RMB 149 million, RMB 141 million, RMB 128 million, RMB 114 million, RMB 108 million, and RMB 104 million, respectively.

Notably, data show that since July 22, a total of 80 new stocks have been listed, with aggregate underwriting and sponsorship fees amounting to RMB 4.819 billion. Of this sum, RMB 3.260 billion—accounting for nearly 70% (67.65%)—was generated by 46 new listings on the STAR Market.

Although the industry as a whole is characterized by high concentration, several specialized securities offices have managed to carve out a share of the market in STAR Market underwriting. For instance, offices such as Huajing Securities, Zhongde Securities, and Zhongtian Guofu Securities—each of which has made rapid strides in investment banking in recent years—have also entered the STAR Market underwriting arena. Analysts note that, beyond providing the market with high-quality listing opportunities, the STAR Market has generated additional underwriting and sponsorship revenue for securities offices. In an investment banking sector where the strong grow stronger, the STAR Market is emerging as one of the key pathways for mid- and small-sized securities offices to transform their investment‑banking businesses.

IPOs on the STAR Market are gradually becoming routine.

Following the listing of the aforementioned five new stocks on the STAR Market on November 5, another five new issues are set to debut on the exchange on the 6th. Analysts note that, while adhering to market‑based and rule‑of‑law principles and maintaining stringent gatekeeping at the capital market’s entry point, the STAR Market’s expansion has entered a normalized pace—creating opportunities for securities offices while also posing significant challenges.

“Major investment banks have the capacity to transform into full‑service financial institutions. With the implementation of the registration‑based IPO system, the market‑driven nature of stock listings and delistings, the rationalization of pricing, and the erosion of shell‑value, corporate financing is no longer primarily aimed at public equity offerings; instead, it increasingly reflects industry needs, the company’s stage of development, and capital‑allocation considerations. This calls for securities offices to integrate their business chains, ramp up resource allocation to non‑IPO activities, and offer clients a comprehensive suite of services—including capital incubation, equity financing, debt financing, M&A and restructuring, and bridge loans.” According to Tian Liang, an analyst at CITIC Securities, going forward, large investment banks will position themselves as industry‑wide, fully diversified players, while smaller and midsize investment banks will become increasingly niche‑focused, potentially evolving into boutique offices that specialize in specific industries, regions, or service categories.

Meanwhile, market participants also noted that future IPO regulation will place greater emphasis on enhancing the quality of listed companies at the source, scrutinizing whether prospective issuers meet issuance requirements, and ensuring legal compliance and financial integrity. They will require transparent and self‑disciplined disclosure of material information, as well as truthful, accurate, and complete filing materials. For companies planning an IPO, it is essential to develop a sound corporate strategy, strengthen their ability to sustain operations, and ensure the reliability of their financial data. At the same time, they must approach the regulatory process with diligence and prepare their documentation thoroughly.

Planning to raise RMB 498 million to upgrade its artificial intelligence applications, MicroPort Network is seeking approval to list on the STAR Market.

On November 6, MicroPort (Shanghai) Network Technology Co., Ltd. submitted its application to list on the STAR Market and received acceptance from the Shanghai Stock Exchange.

On November 5, Weichuang Network disclosed its prospectus for a listing on the STAR Market, proposing to issue no more than 20 million shares and raise approximately RMB 498 million. The proceeds will be allocated to new areas of technological innovation, including upgrades to the WISE platform, enhancements to the Live800 customer service software, and the expansion of its Artificial Intelligence Application Research Institute, among other projects.

According to the prospectus, all of the projects that Micro‑Innovation Network plans to fund through this offering represent upgrades and enhancements to the company’s existing initiatives. The WISE platform is a technologically innovative, distributed‑architecture development platform focused on digital transformation, comprising four core layers: the foundational core layer, the artificial intelligence technology layer, the application tools layer, and the external systems layer. It consists of more than twenty functional modules, including an intelligent customer service module, a marketing module, a workflow module, a business management module, and a natural language processing algorithm engine. Meanwhile, the Live800 customer service software is an intelligent customer‑service solution developed on the WISE platform, offering enterprises across all industries online human‑agent support combined with AI‑powered chatbot services, as well as online marketing services and tailored solutions.

Although, throughout its development, the WISE platform’s innovative architecture and cutting-edge core technologies—coupled with its platform‑based, modular development approach—have propelled MicroPort Network’s core business, granting the company unparalleled advantages in development efficiency, service scope, and overall service capabilities, MicroPort Network is clearly looking ahead to the future.

In its prospectus, MicroPort Network has outlined medium‑term, long‑term, and far‑term strategic development goals for the WISE platform, including adding functional modules such as marketing and resource management to the WISE ecosystem, intensifying R&D on AI‑driven capabilities like speech recognition, speech synthesis, big data analytics, and intelligent data analysis, and enhancing the WISE platform’s technological sophistication and market coverage in areas such as big data analytics and artificial intelligence—ultimately aiming to meet the needs of digital transformation solutions across all industries.

Software products belong to a rapidly evolving, high‑velocity‑iteration industry, and sustained R&D investment is one of the key sources of competitive advantage. In addition to seeking fundraising to bolster its R&D capabilities, MicroPort Network has demonstrated a steady upward trend in R&D spending across the reporting periods disclosed. From 2016 through the first half of 2019, the company’s R&D expenditures were RMB 8.48 million, RMB 15.76 million, RMB 26.53 million, and RMB 14.01 million, respectively, accounting for 12.05%, 16.24%, 17.56%, and 14.95% of its respective period’s operating revenue.

Taxation TAXATATION

Notice of the State Taxation Administration and the China Banking and Insurance Regulatory Commission on Deepening and Standardizing the “Bank–Tax Cooperation” Initiative

To thoroughly implement the decisions and arrangements of the CPC Central Committee and the State Council on optimizing the business environment, deepening the “delegation, regulation, and service” reform, and advancing the construction of a social credit system, and to fully leverage the critical role of tax compliance in building an inclusive financial system and better support the development of the private sector and small and micro enterprises, the State Taxation Administration and the China Banking and Insurance Regulatory Commission recently jointly issued the “Notice on Deepening and Standardizing ‘Bank–Tax Collaboration’,” thereby actively promoting the sustained and sound development of such collaboration.

“Tax‑Bank Collaboration” refers to a cooperative initiative among tax authorities, the banking and insurance regulatory commission, and commercial banks, aimed at helping enterprises convert their tax compliance records into financing creditworthiness and thereby alleviating financing challenges faced by private and small‑and‑micro enterprises. Since its launch in 2015, it has been widely embraced by numerous law‑abiding, tax‑compliant businesses.

The Notice stipulates that the scope of eligible enterprises will be expanded, gradually extending eligibility for “tax‑bank interaction” loans from taxpayers with A‑ and B‑level credit ratings to those with M‑level ratings; it also calls for actively promoting a direct data‑connection model between tax and banking authorities, encouraging banks to develop innovative credit products and implement one‑stop online processing; furthermore, it urges the widespread adoption of proven, well‑suited credit products to enhance the quality and effectiveness of “tax‑bank interaction” initiatives.

The Notice emphasizes that third-party partner institutions may not, under the guise of “bank‑tax collaboration,” charge any fees—of any kind—to enterprises applying for loans. If a bank engages a third-party partner to assist in processing tax‑related information under the “bank‑tax collaboration” framework, the cooperation agreement must stipulate that the third-party institution shall neither impose fees on enterprises nor pass on any costs to them. Should a bank discover that a third-party partner is charging enterprises or otherwise artificially inflating financing costs, it must terminate its cooperation with that partner.

The Notice requires that tax authorities, banking and insurance regulatory agencies, and banks at all levels clearly define the data security management and confidentiality responsibilities of each party in their “Bank–Tax Interaction” cooperation agreements. Access rights to tax-related data must be granted on a need-to-know basis, with due diligence to safeguard enterprises’ trade secrets and prompt responses to their feedback on the “Bank–Tax Interaction” initiative. When banks seek to use enterprise invoice data in providing financing services, they shall obtain such data in compliance with applicable laws and regulations and rigorously protect the information security of both upstream and downstream partners.

The Notice stipulates that the tax authorities and the China Banking and Insurance Regulatory Commission shall establish an evaluation system for the effectiveness of “bank–tax cooperation,” enhance the demonstration effect of incentives for law-abiding entities, and further improve the business environment.

Guiding Opinions of the Ministry of Finance on Strengthening the Implementation of the National Unified Accounting System

The Ministry of Finance recently issued the “Guiding Opinions on Strengthening the Implementation of the National Unified Accounting System,” outlining eight measures—such as safeguarding the uniformity of the national unified accounting system, ensuring that all entities fulfill their accounting responsibilities, and enhancing internal control systems—to further standardize accounting practices and improve the quality of accounting information.

The Guiding Opinions state that the nationally unified accounting system, formulated in accordance with the Accounting Law, serves as an essential standard for the generation of accounting information and a crucial basis for regulating accounting practices and maintaining accounting order. All regions and departments shall strictly comply with the Accounting Law’s provision that “the State shall implement a unified accounting system,” and may not, on their own initiative, amend, adjust, supplement, or interpret the policy guidelines set forth in the provisions of the nationally unified accounting system.

The guiding opinions clearly stipulate that all entities shall establish accounting books in accordance with the law, conduct accounting based on genuine economic transactions, and prepare financial accounting reports; they must not maintain off-the-books accounts or submit false financial accounting reports. The head of each entity is required to strengthen organizational leadership over accounting work and bear legal responsibility for the authenticity and completeness of financial accounting reports. At the same time, enterprises, administrative institutions, and public institutions are expected to strictly implement the Basic Norms for Internal Control of Enterprises and its accompanying guidelines, as well as the Provisional Standards for Internal Control of Small Enterprises, and to reinforce internal controls over economic and business activities.

With regard to effectively enhancing the audit quality of accounting offices, the guiding opinions emphasize that, in accordance with applicable laws and regulations, enterprises and other entities required by law to have their financial statements audited by an accounting office shall engage such a office to conduct the audit, cooperate fully with its independent audit work, and promptly and comprehensively provide all documents, materials, and other relevant information necessary for the audit. Furthermore, no entity may instruct, direct, or coerce certified public accountants or their accounting offices to issue false audit reports. The fiscal authorities shall strengthen oversight of the certified public accountant profession and promote continuous improvements in the audit quality of accounting offices.

The guiding opinions stipulate that routine oversight of the implementation of the national unified accounting system must be strengthened. Financial authorities and relevant competent departments shall intensify monitoring of how large and medium-sized state-owned enterprises, listed companies, unlisted public companies, administrative institutions, and other entities comply with the national unified accounting system. Targeted inspections should be conducted to assess compliance with the national accounting system and the professional quality of accounting intermediary agencies, and illegal acts—including falsifying accounts, submitting false financial reports, engaging in cut‑throat price competition, and issuing misleading audit reports—must be punished in accordance with the law. It is essential to effectively transform functions and improve service delivery, actively implement a system of accounting work liaison points, and proactively explore the establishment of an expert advisory and guidance mechanism.

The guiding opinions also set out measures to strengthen publicity and training, enhance the development of accounting integrity, and reinforce organizational leadership.

Q&A with officials from the Taxpayer Services Department of the State Taxation Administration and the Inclusive Finance Department of the China Banking and Insurance Regulatory Commission

Recently, the State Taxation Administration, in conjunction with the China Banking and Insurance Regulatory Commission, issued the “Notice on Deepening and Standardizing ‘Bank–Tax Collaboration’ Work.” Could you please explain the main background behind the issuance of this notice?

The “Bank‑Tax Collaboration” initiative, launched jointly by the State Taxation Administration and the China Banking and Insurance Regulatory Commission in July 2015, aims to alleviate information asymmetry in credit financing for small and micro enterprises by enabling tax authorities to share taxpayer credit ratings and other relevant data with banking and financial institutions, thereby encouraging banks to increase lending support for law-abiding, tax‑compliant small and micro businesses. Over the past four-plus years, tax authorities, banking regulators, and financial institutions across the country have worked in close coordination, resulting in rapid growth of “Bank‑Tax Collaboration” loan products. According to tax authority statistics, from the program’s inception in 2015 through the end of September this year, banking and financial institutions nationwide have extended a cumulative total of 1.609 million loans amounting to RMB 1.57 trillion to trustworthy small and micro enterprises. In the first three quarters of this year alone, 690,000 such loans totaling RMB 393.9 billion were granted—up 157.5% and 18.6%, respectively, compared with the same period in 2018. Recently, the State Taxation Administration and the China Banking and Insurance Regulatory Commission issued another joint notice, seeking to build on existing achievements, further promote the sound development of the “Bank‑Tax Collaboration” model, unlock its full potential, and provide greater financing support to more enterprises.

2. We note that the Notice addresses two key areas—deepening and standardizing “bank‑tax cooperation”—and would like to outline the main considerations and specific measures in this regard.

We have put forward specific measures from two perspectives—“deepening” and “standardizing”—to steer the “bank‑tax collaboration” initiative onto a path of standardized improvement, enabling an increasing number of enterprises to reap the benefits of honest tax compliance.

First, we will continue to broaden the scope of eligible enterprises. Banks are encouraged to gradually expand the eligibility for “Bank–Tax Collaboration” loans—from taxpayers with A‑ and B‑level credit ratings to those with M‑level ratings—and to strengthen financing support for newly established businesses.

Second, we will actively promote direct data connectivity between tax authorities and banks. The “province-to-province” direct data‑linkage mechanism between tax authorities and banks will be accelerated, and the data‑exchange model will be transitioned to a more secure and efficient direct‑connection approach.

Third, continuously enhance the efficiency of “bank‑tax collaboration” credit services. Tax authorities and banking and insurance regulatory agencies at all levels should guide banks to focus on the distinctive characteristics of small and micro enterprises, constantly innovate and refine their credit products, and actively leverage online banking and other digital channels to enable one‑stop online loan processing. They should also conduct performance assessments of “bank‑tax collaboration” initiatives aimed at reducing corporate financing costs and, where appropriate, promote proven, well‑suited credit product design principles and operational models.

Fourth, standardize the orderly conduct of “bank‑tax cooperation.” The Notice explicitly prohibits third‑party partner institutions from charging enterprises applying for loans any fees under the guise of “bank‑tax cooperation,” in any form. If a third‑party partner is found to be levying charges or otherwise artificially inflating financing costs, banks must terminate their cooperation and promptly notify the banking and insurance regulatory authorities as well as the tax authorities.

3. At present, information security has become a focal point of concern for all stakeholders. The Notice underscores the need to strengthen credit information security and safeguard the legitimate rights and interests of enterprises. Please provide an overview of its key provisions.

Tax-related information directly reflects an enterprise’s production and operational conditions; it constitutes both a critical commercial secret for the enterprise and vital economic data for the state. For example, invoices record transaction details between buyers and sellers, and their contents are not only relevant to the seller but also to the buyer, serving as essential data for tax administration and bearing on national economic information security. In the course of “bank‑tax collaboration,” tax authorities, the banking and insurance regulatory authorities, and banks have consistently placed great emphasis on safeguarding the security of enterprises’ tax‑related information, conducting the transmission, storage, and use of credit information strictly in accordance with applicable laws and regulations. The Notice stipulates that local tax authorities, banking and insurance regulatory agencies, and banks shall promptly address enterprises’ feedback on “bank‑tax collaboration” and effectively protect their legitimate rights and interests; moreover, the banking and insurance regulatory authorities will incorporate the implementation of “bank‑tax collaboration” into the regulatory evaluation framework for financial services to small and micro‑enterprises, thereby encouraging banks to proactively serve private and small‑and‑micro‑enterprises.

The State Administration of Foreign Exchange has introduced 12 new measures, benefiting 99% of non-investment foreign-invested enterprises.

The State Administration of Foreign Exchange has issued the “Notice on Further Facilitating Cross-Border Trade and Investment” (hereinafter referred to as the “Notice”), which aims to deepen reforms in foreign-exchange management for cross-border trade and investment, streamline relevant operational procedures, and enable banks, enterprises, and other market entities to conduct foreign-exchange transactions in compliance with regulations.

The Notice outlines 12 measures to facilitate cross-border trade and investment, including six initiatives in the area of cross-border trade—such as expanding pilot programs for streamlined foreign-exchange settlement and payment in trade, and simplifying procedures for small and micro cross-border e‑commerce enterprises to handle related trade‑related fund receipts and payments—and six measures in the realm of cross-border investment and financing—such as permitting non‑investment‑type foreign‑invested enterprises to engage in domestic equity investments using their capital contributions in accordance with the law.

The Notice permits eligible enterprises in pilot regions, when using capital‑account proceeds—such as capital contributions, foreign‑currency borrowings, and proceeds from overseas listings—for domestic payments, to do so without having to submit, on a case‑by‑case basis, documentation verifying the authenticity of each transaction to the bank in advance. Such funds must be used in a genuine and compliant manner and in accordance with the prevailing regulations governing the use of capital‑account income. Pilot banks are required to manage risks associated with pilot operations in line with the principle of prudent business development, while the local foreign‑exchange authorities shall strengthen monitoring, analysis, and ongoing and post‑event supervision.

In addition, reforms to the external debt regime have streamlined the procedures for borrowing foreign funds: first, the cancellation registration of external debt has been shifted from the State Administration of Foreign Exchange to direct processing at banks; second, a pilot program has been launched to abolish the requirement for enterprises to register each individual external‑debt transaction.

Under the current regulations, enterprises are required to complete foreign‑debt cancellation registration with the local foreign exchange bureau within one month after each outstanding foreign debt has been fully repaid. Following this reform, such registration can now be handled directly at the bank.

With respect to cross-border investment and financing, the Notice permits non‑investment‑oriented foreign‑invested enterprises to engage in domestic equity investments using their capital contributions in accordance with the law.

Prior to the issuance of the Notice, investment‑type foreign‑invested enterprises were permitted, in accordance with applicable laws and regulations, to use their capital contributions to make equity investments within China and to reinvest domestically the lawful profits they had earned in China. Starting in 2015, the State Administration of Foreign Exchange abolished the approval requirement for the reinvestment of profits by foreign‑invested enterprises. Furthermore, if other non‑investment‑type foreign‑invested enterprises include the term “investment” in their business scope, they may also transfer their capital contributions in their original currency or convert them into RMB to engage in domestic equity investments. However, if their business scope does not contain the word “investment,” they are prohibited from undertaking domestic equity investments.

　Following the reform, non‑investment‑type foreign‑invested enterprises may, provided they do not violate the existing special administrative measures governing foreign investment access and that their domestic investment projects are genuine and compliant, engage in domestic equity investments—either in the original currency of their capital contributions or through foreign‑exchange settlement—regardless of whether the term “investment” appears in their business scope.

This means that all types of foreign-invested enterprises may, in accordance with applicable laws and regulations and provided that they comply with the special administrative measures for foreign investment access and ensure that their domestic investment projects are genuine and compliant, engage in equity investments.

Statistical data show that there are currently more than 370,000 registered foreign-invested enterprises nationwide, of which fewer than 3,000 are investment‑type foreign‑invested enterprises, while non‑investment‑type foreign‑invested enterprises account for over 99%. Accordingly, this policy is expected to benefit a broad range of enterprises, significantly facilitating the use of capital by non‑investment‑type foreign‑invested offices and enabling them to engage in domestic equity investments—particularly providing substantial support to companies investing in upstream and downstream segments of industrial value chains.

The Finance Department of Jiangxi Province has forwarded the Ministry of Finance’s Notice on Issuing the Guiding Standards for Grassroots Government Information Disclosure in the Field of Fiscal Budget and Final Accounts.

Recently, the Finance Department of Jiangxi Province issued the “Notice of the Ministry of Finance on the Issuance of the Standard Guidelines for Grassroots Government Information Disclosure in the Field of Fiscal Budgeting and Final Accounts” (Cai Ban Fa [2019] No. 77, hereinafter referred to as the “Notice”), and set forth the following requirements:

I. Attach great importance to this matter and take swift action.
Municipal and county financial departments must attach great importance to budget preparation and execution. Building on the existing central and provincial requirements for budget transparency, they should thoroughly study and fully grasp the spirit of the Notice, and rigorously align their practices with the “Standard Catalogue of Grassroots Government Information Disclosure in the Budget and Final Accounts Field” attached to the Notice, ensuring one-to-one correspondence. They should also supplement and refine the content and format of budget and final accounts disclosures to ensure full compliance with the requirements set forth in the Notice, thereby continuously enhancing the standardization and regularization of budget preparation and execution.
II. Supervision and Guidance to Ensure Full Implementation
Municipal and county financial departments shall ensure the transparent disclosure of government budgets and final accounts within their respective jurisdictions, formulate local regulations on such disclosure, be responsible for making government budgets and final accounts publicly available, and provide guidance and oversight to all budgetary units at their level as well as to lower-level financial departments in carrying out budgetary and final‑account disclosure. Municipal and county financial departments must convey the spirit of this Notice to all budgetary units under their jurisdiction, strengthen supervision and guidance over their budgetary and final‑account disclosure efforts, and ensure that all requirements set forth in the Notice are effectively implemented.
III. Establishing a Platform and Ensuring Unified Public Disclosure
Municipal and county financial departments should further strengthen the development and refinement of a unified platform for the public disclosure of budgetary and final accounts. They should establish dedicated sections for such disclosures in prominent locations on government websites or their own departmental websites, ensuring that budgetary and final‑account information is centrally published on the platform in a standardized format and remains publicly available on a long-term basis.

LITIGATION & ARBITRATION

Notice of the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Justice on Urging Fugitives Involved in Organized Crime and Evil Forces to Surrender Themselves

In order to implement the criminal policy of combining leniency with strictness, punish criminal offenses in accordance with the law, safeguard social stability, and protect the safety of people’s lives and property, while also providing fugitive suspects and defendants involved in organized crime and evil forces (hereinafter collectively referred to as “fugitives”) with an opportunity to reform themselves and seek more favorable treatment, and in accordance with the relevant provisions of the Criminal Law of the People’s Republic of China and the Criminal Procedure Law of the People’s Republic of China, the following notice is hereby issued:

I. Any fugitive who, from the date of issuance of this notice until January 31, 2020, voluntarily surrenders and truthfully confesses to their crimes shall be deemed to have surrendered themselves. Such individuals may, in accordance with the law, receive a lighter or reduced punishment; if the circumstances of the crime are relatively minor, they may, in accordance with the law, be exempted from punishment.

II. Where, due to objective reasons, the offender is unable to surrender to the judicial authorities within the prescribed time limit, he or she may entrust another person to do so on his or her behalf. An offender who, after committing a crime, flees and, during the period of being wanted or pursued, voluntarily surrenders; or who, upon verification, is found to have already been preparing to surrender or was en route to surrender when apprehended by the public security organs, shall be deemed to have surrendered voluntarily.

III. Relatives and friends of fugitives shall actively urge them to surrender themselves as soon as possible. Where a fugitive surrenders upon the persuasion and accompaniment of relatives or friends, or where relatives or friends, after voluntarily filing a report, escort the fugitive to turn themselves in, such cases shall be deemed to constitute voluntary surrender.

IV. Fugitives who, upon investigation, are found to have reported or exposed the criminal acts of others, or who have provided crucial leads that led to the solving of other cases, or who have actively assisted judicial authorities in apprehending other fugitives—thus demonstrating meritorious conduct—may, in accordance with the law, receive a lighter or reduced punishment; those who have made particularly significant contributions may, in accordance with the law, have their punishment reduced or exempted.

V. Fugitives must recognize the situation, seize the opportunity, and promptly turn themselves in to seek lenient treatment. Those who refuse to surrender within the prescribed time limit will be prosecuted in accordance with the law. No one may provide fugitives with hiding places, funds, or means of transportation; assist them by tipping them off; fabricate false testimony to shield them; or furnish any other facilitative conditions to help them evade capture. Once verified as true, such acts shall be subject to criminal liability in accordance with the law.

VI. Any citizen who becomes aware of information or circumstances pertaining to fugitives is obligated to report such information to the judicial authorities. The judicial authorities shall, in accordance with the law, afford protection and maintain confidentiality for those who make such reports. Anyone who threatens or retaliates against whistleblowers or accusers, thereby committing a criminal offense, shall be held criminally liable in accordance with the law. To report leads on organized crime and gang-related offenses or to provide information on fugitives, please scan the QR code to access the National Anti-Organized Crime Office’s 12337 Intelligent Reporting Platform.

Strengthen the application of blockchain and artificial intelligence to comprehensively elevate the level of smart court development.

On the afternoon of November 8, Zhou Qiang, Secretary of the Party Group and President of the Supreme People’s Court and Head of the Leading Group for Cybersecurity and Informatization, presided over and addressed the second plenary meeting of the Supreme People’s Court’s Leading Group for Cybersecurity and Informatization in 2019. The meeting reviewed and approved in principle the “Report on Cybersecurity and Informatization Work for the First Half of 2019 and the Work Plan for the Second Half,” the “Progress Report on the Development of China Mobile Micro-Court,” the “Report on the Construction of the Smart Court Laboratory,” the “Overall Approach to Comprehensively Advancing the Development of Judicial Artificial Intelligence,” the “Evaluation Indicator System for Smart Court Construction (2019 Edition),” as well as 14 information‑technology standards for the people’s courts. The meeting also examined the “Overview of the Information‑Technology Construction Needs of the Supreme People’s Court for 2020.”

Zhou Qiang emphasized the need to ensure rigorous implementation of all tasks, accelerate the development of smart courts, and promote the modernization of the judicial system and adjudicatory capabilities. It is essential to seize the historic opportunities presented by the construction of smart courts, earnestly implement the requirements set forth in documents such as the “Fifth Five-Year Reform Outline” and the “Five-Year Plan for Informatization in the People’s Courts (2019–2023),” accurately assess the current state of informatization achievements, strengthen the integration of information systems and overall system design, break down information silos and data barriers, address shortcomings in intelligent services, and expedite the establishment of smart court laboratories. Efforts must be redoubled to elevate the level of informatization and intelligence in litigation services, with the goal of building a modern litigation service system. This entails comprehensively advancing the development of one-stop, diversified dispute-resolution mechanisms and one-stop litigation service centers, fostering complementary and seamless integration between online and offline services, and achieving one-stop processing, online access, and single-window handling. The intelligentization of trial and enforcement work must be comprehensively enhanced. Deep progress should be made in the simultaneous generation and in-depth application of electronic case files; applications such as courtroom speech recognition, intelligent document error correction, and mandatory retrieval of similar cases should be widely promoted. Vigorous efforts must be devoted to overcoming a number of key technologies centered on artificial intelligence, promoting the use of intelligent case-handling support systems for criminal cases, and undertaking a comprehensive upgrade of enforcement case-handling platforms. Focusing on the improvement of the national unified judicial blockchain platform, the level of refined judicial administration must be raised. Active exploration of smart contract adoption is required, along with the construction and refinement of data centers and big-data management and service platforms, the optimization of office and case-handling systems, and the accelerated development of the National People’s Court Information Network and the National People’s Court Work Platform. Strengthening critical information infrastructure, quality‑oriented operations and maintenance management, and security defense capabilities is imperative. This includes optimizing the structure of court‑specific networks, enhancing network reliability, establishing a comprehensive visualized operational‑efficiency management platform, improving quality‑oriented O&M support and management systems, and bolstering information security safeguards, thereby ensuring the steady and orderly advancement of smart court development.

The Zhangqiu District People’s Court in Jinan, Shandong Province, has launched a new streamlined procedure for criminal cases.

Recently, at a press briefing on the implementation of the summary criminal procedure held by the Zhangqiu District People’s Court, a series of statistics highlighted how the “criminal detention followed by direct prosecution” approach has continuously accelerated the court’s handling of minor criminal cases. Li Li, Director of the Court’s Trial Management Office, explained that this mechanism—known as the “3+2+2” system for resolving minor criminal cases within seven days—enables public security organs to complete investigations, the procuratorate to file charges, and the people’s court to conclude proceedings all within seven days for offenses such as dangerous driving.

Furthermore, to expedite the execution of sentences, the Zhangqiu District People’s Court has coordinated with the Judicial Bureau such that, for cases eligible for probation, it no longer commissions the Bureau to conduct pre-sentence social investigations. Instead, defendants who meet the statutory requirements for probation are granted probation directly in court, thereby reducing the time required for pre-sentence social investigations by more than ten days.

The Zhangqiu District People’s Court, guided by the principle of “expediting simple cases and meticulously adjudicating complex ones,” has vigorously implemented a case‑sorting system. It has assembled dedicated trial teams for criminal cases, establishing new specialized groups that handle simple cases swiftly and complex cases with thorough scrutiny. Ordinary cases are assigned to the meticulous‑review team, while plea‑bargaining and summary‑procedure cases are rotated among the various trial teams. This arrangement has essentially established a case‑distribution framework in which one-third of the trial teams adjudicate two-thirds of the simpler criminal cases, while the remaining two-thirds of the trial teams handle one-third of the more complex criminal cases.

Through prudent resource allocation, the Zhangqiu District People’s Court has maximized the overall efficiency of its limited judicial resources. At present, the court operates four adjudicatory teams that rotate on a regular schedule to handle summary‑procedure cases, with each team assigned to handle such cases intensively for three months, thereby ensuring their swift disposition. This year, the number of newly filed criminal cases at the Zhangqiu District People’s Court has doubled compared with the same period last year, reaching a record high; yet, despite an unchanged level of criminal trial staffing, the case‑closure rate for criminal matters remains above 80%.

To further enhance the efficiency of summary criminal proceedings, the Zhangqiu District People’s Court, leveraging the Zhangqiu District Criminal Law Enforcement and Case-handling Center, has established a regular schedule to hold集中 hearings for summary cases in the Criminal Summary Trial Court every Thursday. The court has also developed a standardized, streamlined trial template to simplify procedural steps. Pre-trial verification of the defendant’s basic information is completed prior to the hearing; at the time of case filing, a notice of litigation rights is served, eliminating the need to read these rights aloud during the trial. Given that the defendant raises no objection to the facts of the offense or the charges, and that the facts are clear and the evidence is solid and sufficient, the court dispenses with both courtroom investigation and oral argument, focusing instead on verifying the authenticity and voluntariness of the defendant’s guilty plea and acceptance of punishment. Following the hearing, a judgment is drafted immediately, utilizing a unified, simplified template that reduces the length of the document and omits the enumeration of specific evidentiary items, thereby ensuring rapid preparation of judicial documents and significantly improving trial efficiency.

Meanwhile, the Zhangqiu District People’s Court has established an expedited procedure for handling summary‑procedure cases, giving priority to accepting such cases referred by the People’s Procuratorate. This approach enables summary‑procedure cases to be separated from the bulk of criminal cases, ensuring that they are filed, tried, and served on the same day.

To standardize case adjudication and enhance the quality of case handling, the Zhangqiu District People’s Court, in collaboration with the public security, procuratorial, and judicial authorities, has jointly formulated documents such as the “Detailed Rules for the Implementation of Cases Applying the Plea Bargaining System (Trial)” and the “Guidelines on Evidentiary Standards for Common Offenses in Criminal Cases Involving Plea Bargaining,” thereby clarifying the respective duties of the public security, procuratorial, judicial, and legal administration organs, strengthening interagency coordination and cooperation, and ensuring uniformity in case-handling standards, thus providing a guiding framework for the implementation of plea bargaining.

In accordance with the “Detailed Rules for the Implementation of Cases Applying the Plea Bargaining and Leniency System,” the Zhangqiu District People’s Court, in light of the practical work of its Law Enforcement and Case-handling Center, has formulated the “Work Flow for Summary Criminal Proceedings,” further clarifying the scope of cases eligible for the summary procedure and the time limits for trial, thereby ensuring the quality of case handling. To safeguard the rights of defendants in accordance with the law, the document stipulates that legal aid agencies shall establish legal aid workstations at the Law Enforcement and Case-handling Center and, based on actual operational needs, assign on‑duty lawyers to participate throughout the investigation, prosecution, trial, and enforcement stages of summary criminal proceedings, providing legal assistance to criminal suspects and defendants.

In 2018, the Zhangqiu District People’s Court concluded 107 cases under the summary procedure, all within 15 days. Since 2019, the court has resolved 177 cases through the summary procedure, including 85 dangerous‑driving cases adjudicated in just two days; none of these cases were appealed, and the rate of acceptance of the verdicts and withdrawal of litigation reached 100%.

The retrial of the Sun Xiaoguo case will be pronounced at a later date.

On November 8, the Intermediate People’s Court of Yuxi City, Yunnan Province, continued to hold a public trial and delivered its first-instance verdict in the case involving Sun Xiaoguo and 12 other defendants accused of organizing, leading, or participating in a triad-like criminal organization. Defendant Sun Xiaoguo was found guilty of organizing and leading a triad-like criminal organization, running a gambling house, provoking trouble, unlawful detention, intentional injury, obstructing testimony, and bribery. Considering all charges together, he was sentenced to 25 years’ imprisonment, with deprivation of political rights for five years, and confiscation of all his personal property. The remaining 12 defendants, including Gu Hongbin and Yang Chaoguang, were convicted of participating in a triad-like criminal organization and other offenses; taking all charges into account, they were each sentenced to fixed-term imprisonment ranging from 15 years to 2 years and 6 months, along with fines.

The Intermediate People’s Court of Yuxi City, after conducting a trial, found that a triad-like organization had been established, with the defendant Sun Xiaoguo as its organizer and leader, Gu Hongbin, Cao Jing, Luan Haocheng, and Yang Chaoguang as active participants, and Feng Junyi, Zhao Jie, Wang Ziqian, and others as other participants. This organization repeatedly engaged in criminal activities, including operating casinos, provoking trouble, unlawful detention, intentional injury, affray, obstructing testimony, and bribery, as well as other unlawful acts.

The Intermediate People’s Court of Yuxi City held that the defendant Sun Xiaoguo organized and led a triad‑type criminal organization, seriously disrupting economic and social management order; in pursuit of illegal financial gain, he established and operated casinos under aggravating circumstances; to expand the organization’s unlawful influence and collect usurious loans, he assembled others to repeatedly assault individuals in an organized manner, illegally gather in public places while armed, vandalize vehicles, and hire others to engage in unlawful debt collection, thereby infringing upon citizens’ personal and property rights and severely undermining social order; furthermore, in seeking repayment of usurious debts, he hired persons to unlawfully deprive others of their personal liberty, with additional elements of humiliation; he also orchestrated mass brawls in public spaces, causing grievous bodily harm. To shield other co‑defendants from prosecution and mitigate his own culpability, he bribed others to fabricate false testimony; and in order to secure lenient treatment and avoid detention for other implicated individuals, he offered bribes to judicial officers, constituting a serious offense. The defendants Gu Hongbin, Yang Chaoguang, and ten others participated in the triad‑type criminal organization and each took part in the illegal and criminal acts perpetrated by it. In light of the facts, nature, circumstances, degree of social harm, and the defendants’ admissions of guilt and expressions of remorse, the court rendered the above‑mentioned verdict in accordance with the law. People’s Congress deputies, members of the Chinese People’s Political Consultative Conference, some family members of the defendants, media reporters, and members of the public attended the sentencing as observers.

On the same day, the People’s Court of Jiangchuan District, Yuxi City, convicted 22 defendants, including Li Shuang, in the Sun Xiaoguo case of the crimes of running a casino, provoking trouble, affray, illegal detention, fraud, and intentional injury. Applying cumulative sentencing for multiple offenses, the court sentenced them to fixed-term imprisonment ranging from nine years and six months to one year and six months.

With regard to the retrial of the case involving Sun Xiaoguo’s rape, forcible indecent assault on women, intentional injury, and provoking trouble, which was heard by the Yunnan Provincial Higher People’s Court on October 14, 2019, the court will render its judgment at a date to be determined in accordance with the law.

Jiangsu Courts Prevent and Crack Down on “Loan Traps” and False Litigation

To effectively prevent and combat the illegal and criminal practice of “routine loan” schemes, the Jiangsu Provincial Higher People’s Court recently, in light of the province’s judicial work, formulated and issued the “Guidelines on Combating and Preventing False Litigation Related to ‘Routine Loan’ Schemes in the Special Campaign to Eradicate Organized Crime and Evil Forces.”

The Guidelines set forth specific provisions regarding key cases that require heightened scrutiny and the measures for preventing and identifying fraudulent litigation involving “routine loan” schemes during case adjudication, mandating strengthened review at every stage—filing, trial, and enforcement—to prevent and combat such fraudulent litigation.

The Guidelines stipulate that scrutiny of key cases shall be strengthened. They identify 15 categories of such cases— including instances where the plaintiff is a suspected professional loan shark or an affiliated party, P2P online‑lending litigation, the plaintiff has acquired claims from a suspected professional loan shark or its affiliates, the plaintiff seeks to enforce rights against third parties (such as guarantors in the underlying loan) without suing the borrower, or where the parties have engaged in numerous financial transactions yet the plaintiff relies solely on selectively presented evidence to assert its claims—and require particular attention to determine whether these cases constitute “scheme‑based” fraudulent litigation.

The Guidelines stipulate that substantive review of the facts of cases shall be strengthened. At every stage—filing, adjudication, and enforcement—in cases involving private lending, assignment of credit rights, transfer of equity interests, and sale of real estate, the mandatory retrieval system for related cases and the roster of suspected professional loan sharks must be strictly implemented, and the intelligent early-warning system for “routine loan”–related fraudulent litigation must be used without exception. The requirement that parties personally appear in court to participate in proceedings is to be reinforced, and substantive scrutiny of the facts and evidence underlying the loans must be intensified, so as to prevent “routine loan”–related fraudulent litigation from succeeding.

The Guidelines stipulate that the method of settling cases involving private lending through mediation and withdrawal should be applied with utmost caution. The review of applications for judicial conofficeation of mediation agreements or for the issuance of mediation judgments in such cases shall be strengthened; any case suspected of “routine loan” schemes shall be categorically rejected. Furthermore, scrutiny of pre‑litigation and during‑litigation preservation applications in private‑lending and similar cases shall be intensified; any application involving suspected “routine loan” practices shall likewise be denied. Where a plaintiff seeks to withdraw the lawsuit on the grounds of suspected “routine loan” activity, such request shall not be granted.

Other

The National Integrated Government Services Platform has officially launched its trial operation.

To implement the major directives of the CPC Central Committee and the State Council on deepening the “delegation, regulation, and service” reform, and to accelerate the goal of achieving “one‑stop online access and cross‑jurisdictional processing” for government services nationwide, the National Integrated Online Government Services Platform has officially launched its trial operation as of today. Enterprises and the public can access the platform through the dedicated entry point on the homepage of the Chinese Government Website (www.gov.cn). At present, the platform is connected to the government service platforms of all 31 provinces, autonomous regions, municipalities directly under the central government, and the Xinjiang Production and Construction Corps, as well as more than 40 State Council departments. It also integrates over 3 million local government service items and a wide array of high‑frequency, popular public services. Leveraging this national integrated platform, businesses and citizens can directly access government services across all regions and departments nationwide. We welcome your use of the platform and invite you to share your feedback; we will continue to refine its content and enhance its functionality.

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