JC Master Legal News Issue 1197

Key Takeaways for This Issue

The China Securities Regulatory Commission is soliciting public comments on the disclosure standards for periodic reports of public mutual funds.

Recently, the China Securities Regulatory Commission issued a notice soliciting public comments on “Guideline No. 2 on the Content and Format of Information Disclosure for Publicly Offered Mutual Funds—Content and Format of Periodic Reports (Draft for Comments),” with the deadline for submitting feedback set for March 2, 2026.

The General Office of the Jiangsu Provincial Government has issued guidelines to support high-quality enterprises in increasing capital and expanding production.

Recently, the General Office of the People’s Government of Jiangsu Province issued the “Implementation Opinions on Supporting High-Quality Enterprises to Increase Capital, Expand Production, Enhance Quality, and Improve Efficiency.”

Three departments have clarified the “zero-tariff” policy for imported goods consumed by residents within Hainan Free Trade Port.

On February 5, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration issued the “Notice on the ‘Zero-Tariff’ Policy for Imported Goods Consumed by Residents Within Hainan Free Trade Port” (Cai Guan Shui [2026] No. 6), which shall take effect from the date of its promulgation.

Finance and Capital Markets

FINANCE & CAPITAL MARKETS

The China Securities Regulatory Commission is soliciting public comments on the disclosure standards for periodic reports of public mutual funds.

Recently, the China Securities Regulatory Commission issued a notice soliciting public comments on “Guideline No. 2 on the Content and Format of Information Disclosure for Publicly Offered Mutual Funds—Content and Format of Periodic Reports (Draft for Comments),” with the deadline for submitting feedback set for March 2, 2026.

The Draft for Comments consolidates and revises the original Standards No. 2 (Annual Report), No. 3 (Semi-Annual Report), and No. 4 (Quarterly Report), renaming them to establish a unified framework for the disclosure of periodic reports by public‑offering funds, comprising three chapters and 36 articles. The key adjustments include: integrating identical or similar disclosure items across annual, semi‑annual, and quarterly reports; setting differentiated disclosure requirements based on the functional roles of each report type; simplifying and refining certain disclosure content and formatting requirements in light of higher‑level regulations, industry practices, and the experience of mature overseas markets; and authorizing the Asset Management Association to develop Extensible Business Reporting Language (XBRL) templates in accordance with the Standards and related information‑disclosure activities.

The State Administration of Foreign Exchange has updated and released the catalog of currently effective foreign exchange regulations.

Recently, the State Administration of Foreign Exchange released the “Catalogue of Currently Effective Major Regulations on Foreign Exchange Management (as of December 31, 2025).”

The “Catalogue” includes 169 major foreign‑exchange management regulations that have been promulgated and put into effect as of December 31, 2025, organized into eight major categories—general matters, current‑account transactions, capital‑account transactions, supervision of foreign‑exchange business by financial institutions, RMB exchange rates and the foreign‑exchange market, balance of payments and foreign‑exchange statistics, foreign‑exchange inspections and the application of regulations—and several subcategories. This update introduces new provisions primarily covering areas such as multinational corporations’ integrated domestic‑and‑foreign‑currency funding pools, cross‑border investment and financing, bond repurchase agreements, and the statistical reporting system for external financial assets, liabilities, and transactions, thereby facilitating the retrieval of applicable, currently effective rules by business type.

The People’s Bank of China convened the 2026 Credit Market Work Conference.

Recently, the People’s Bank of China convened the 2026 Credit Market Work Conference.

The meeting outlined key priorities for the credit market in 2026: refining the working mechanisms for the “five major financial initiatives”; implementing incremental measures under structural monetary policy tools and strengthening coordination with fiscal policy; and stepping up financial support for science and technology finance, green finance, inclusive finance, elderly‑care finance, digital finance, and consumer‑related sectors. It also called for building a multi‑tiered financial services system to bolster domestic demand, technological innovation, and small, medium, and micro enterprises. Furthermore, efforts will continue to mitigate debt risks at local government financing platforms and support their market‑oriented transformation, with an emphasis on ensuring that financial institutions’ services adhere to market‑based and rule‑of‑law principles. Finally, the meeting stressed the need to establish a dynamic closed loop for policy implementation, evaluation, and optimization.

Business and Corporations

COMMERCIAL & CORPORATE

The Ministry of Commerce is seeking public input on the “Capability Maturity Assessment Model for Digital Service Enterprises.”

On February 2, 2026, the Ministry of Commerce released the “Digital Service Enterprise Capability Maturity Assessment Model” (Draft for Public Comment), with the comment period closing on March 4, 2026.

The standard applies to digital service enterprises operating within China and establishes an assessment framework based on a “five‑level maturity model plus seven capability domains.” Maturity is graded across five levels: Initial, Managed, Organized, Quantitative, and Continuously Optimized. The indicator system comprises seven capability domains, 34 sub‑domains, and 375 evaluation items. Weightings (ranging from 0 to 1) may be adjusted according to business characteristics, provided that weights at the same level are normalized and finalized prior to the commencement of the assessment, subject to written review and approval by an independent assessment body. For any capability domain assigned a weight of 0, a written explanation must be submitted. The assessment process consists of four stages: preliminary assessment, level determination, formal assessment, and periodic reassessment/upgrading. Reassessments are valid for three years and must be requested no later than three months before expiration; failure to pass entitles the organization to a six‑month rectification period. Evaluation methods include document review, questionnaires, interviews, case studies, and others. Scores are assigned on a 0–1 scale and converted to a percentage system, with overall ratings categorized as follows: 90–100, 75–89, 60–74, and below 59. The security governance domain references requirements specified in GB/T 22080‑2025, GB/T 22081‑2024, and other relevant standards.

The General Office of the Jiangsu Provincial Government has issued guidelines to support high-quality enterprises in increasing capital and expanding production.

Recently, the General Office of the People’s Government of Jiangsu Province issued the “Implementation Opinions on Supporting High-Quality Enterprises to Increase Capital, Expand Production, Enhance Quality, and Improve Efficiency.”

The Implementation Opinions clearly establish a mechanism for tracking, evaluating, and categorizing key enterprises to facilitate their expansion; they support capital increases and capacity expansion through mergers and reorganizations, technological upgrades, reinvestment of foreign‑invested profits, capitalization of reserve funds, and debt‑to‑equity swaps. A priority project pool is being developed around the “1650” industrial system, with eligible projects separately listed and managed as major provincial initiatives. The document also advocates supporting corporate R&D investment and collaborative innovation consortia, while advancing AI‑driven manufacturing, tiered development of smart factories, and new infrastructure such as computing power and the industrial internet. It further promotes green transformation, energy conservation and carbon reduction, and enhanced safety and emergency response capabilities, accelerates the replacement of outdated equipment, and aligns these efforts with the “Dual‑Priority” and “Dual‑New” policies, as well as with relending programs and special government bonds. Measures are strengthened to ensure adequate land, energy, and emissions resources, with the widespread adoption of “standard land” and “zero‑increment land” redevelopment approaches. Fiscal and financial support is refined, including guarantee subsidies, intellectual‑property‑pledge financing, green bonds, interest subsidies on accounts‑receivable factoring, and the lawful establishment of relevant funds, alongside calls for regularized oversight and one‑stop government services.

Taxation

TAXATION

The State Taxation Administration has clarified the VAT collection and administration rules, including the tax threshold.

Recently, the State Taxation Administration issued the “Announcement on VAT Administration Matters, Including the Threshold for Taxable Sales.”

The Notice clarifies that, for small-scale taxpayers whose sales do not reach the tax threshold, they may waive the tax exemption for all or part of their taxable transactions and issue special VAT invoices; where the reduced tax rate of 1% applies, VAT invoices shall be issued at the 1% rate, and taxpayers may also choose to waive the tax reduction for all or part of their taxable transactions and issue special invoices. With respect to interest on government bonds received by individuals, rental income from real estate, service income earned by platform workers, “reverse invoicing” of scrapped products, insurance agency services, and similar situations, the monthly aggregate of all taxable transaction sales shall be used to determine compliance with the monthly tax threshold. Except as otherwise provided above, individuals are generally subject to taxation on a per‑transaction basis; once the threshold is reached, taxes shall be collected through proxy invoice issuance, withholding and remittance by the withholding agent, or self‑declaration and subsequent payment in accordance with applicable regulations. This Notice shall take effect on January 1, 2026, and shall repeal State Taxation Administration Announcement No. 1 of 2023.

Three departments have clarified the “zero-tariff” policy for imported goods consumed by residents within Hainan Free Trade Port.

On February 5, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration issued the “Notice on the ‘Zero-Tariff’ Policy for Imported Goods Consumed by Residents Within Hainan Free Trade Port” (Cai Guan Shui [2026] No. 6), which shall take effect from the date of its promulgation.

Within the limits of the duty‑free quota and the approved product list, residents of the island are exempt from import duties, as well as value‑added tax and consumption tax at both the import and domestic stages, when purchasing imported goods at designated retail outlets. Island residents include Chinese nationals holding a Hainan Province ID card, residence permit, or social security card, as well as foreign nationals who work and reside in Hainan and hold valid residency permits. Goods are subject to a positive‑list regime: eligible purchasers may make unlimited purchases at qualified duty‑free stores by presenting valid identification and collect their items on the spot; the annual cumulative duty‑free purchase limit per person is RMB 10,000, with the list subject to dynamic adjustments. Operators are required to pay a franchise fee for duty‑free goods; approval procedures for operators and the establishment of retail outlets will be separately specified by the Hainan Provincial Government and filed with three relevant departments. Customs shall exercise oversight over duty‑free stores and products in accordance with applicable regulations, and all related import licensing, registration, or filing requirements shall be strictly complied with. Products are intended for personal use only and may not be resold. Individuals found engaging in reselling, proxy purchasing, or smuggling will be barred from making duty‑free purchases for three years and their violations will be recorded in their credit histories. Cases involving smuggling or breaches of customs supervision will be handled by customs authorities, with criminal liability pursued where appropriate. Any operator found to have engaged in unlawful sales will be subject to lawful penalties imposed jointly by the Hainan Provincial Government and the relevant departments.

Shanghai: Extends the validity period of the “Notice on Several Issues Concerning the Pilot Program for Levying Property Tax on Certain Residential Properties in This Municipality”

The Shanghai Municipal Finance Bureau, the Shanghai Municipal Tax Service of the State Taxation Administration, and the Shanghai Municipal Housing Administration recently issued the “Notice on Extending the Validity Period of the ‘Notice on Several Issues Concerning the Pilot Program for Levying Property Tax on Certain Individual Residential Properties in This Municipality’” (Shanghai Finance Issuance [2026] No. 1).

The Notice clarifies the implementation guidelines and specific administrative measures for the pilot program on the personal housing property tax, covering ten key areas: the calculation of the number and area of residential units owned by households, the determination of the taxable value of residential properties, the computation of the tax liability, the filing and payment deadlines, and the handling of changes to relevant information. The validity of the Notice has been extended until January 27, 2031.

Litigation and Arbitration

LITIGATION & ARBITRATION

The Supreme People’s Court has released typical cases involving crimes related to narcotic and psychotropic drugs.

On February 2, the Supreme People’s Court released typical cases involving crimes related to narcotic and psychotropic drugs.

This release features seven cases, covering scenarios such as pharmacies, clinics, community-based drug maintenance treatment facilities, systemic vulnerabilities in medical institutions, cross-border parcel delivery, and “errand‑running and purchasing on behalf of others.” Key points of the cases include: treating the sale of controlled psychotropic drugs to drug users and traffickers as a drug‑related crime in accordance with the law; imposing strict penalties for offenses involving sales to minors, cross‑border smuggling, and repeated trafficking; distinguishing between principal and accomplice roles in “errand‑running and purchasing on behalf of others” cases and handling them accordingly; classifying driving under the influence of psychotropic drugs—resulting in a dangerous collision—as the crime of endangering public safety by dangerous methods; prosecuting money laundering when drug‑related funds are transferred via QR‑code payments or converted into virtual currencies; and, through judicial recommendations, addressing vulnerabilities in hospital information systems and medication‑administration procedures related to controlled psychotropic drugs.

The Supreme People’s Procuratorate has released the Top Ten Legal Supervision Cases for 2025.

Recently, the Supreme People’s Procuratorate released the Top Ten Legal Supervision Cases for 2025.

The cases cover criminal public prosecution and appeals for acquittal, administrative prosecutorial supervision, civil prosecutorial supervision, and public-interest litigation, among others. Key highlights include: bringing public prosecution against the “Four Major Families” criminal syndicate in Kokang, northern Myanmar, and securing death sentences and life imprisonment; filing an appeal on the issue of “work‑related injuries sustained in traffic accidents during commuting,” leading the Supreme People’s Court to grant a retrial, overturn the original ruling, and prompt the human resources and social security authorities to recognize the injury as work‑related; lodging an appeal regarding the scope of directors’ liability for urging capital contributions, with the Supreme People’s Court reversing the lower court’s decision to hold only certain directors liable at 10%; handling a case involving infringement of trade secrets, finding 14 individuals guilty and imposing criminal penalties and fines; promoting full coverage of text‑based emergency‑call functionality for pre‑hospital first aid; adjudicating a civil public‑interest lawsuit concerning overtreatment, ordering triple punitive damages and closing the case; and addressing other landmark scenarios, such as pursuing accountability for omissions in electronic evidence, revisiting old cases of “false‑name‑taking” in traffic‑accident prosecutions, and securing acquittals following public prosecution and the exclusion of illegally obtained evidence.

The Supreme People’s Procuratorate has released typical cases of criminal prosecution supervision.

Recently, the Supreme People’s Procuratorate released typical cases under the theme “Strengthening Criminal Prosecutorial Oversight and Advancing the Building of a Safer China at a Higher Level.”

This release highlights five cases, covering such supervisory scenarios as the in-depth investigation of “protective umbrellas” for organized crime, cyberbullying and crimes involving citizens’ personal information, retrial protests in drug‑related offenses, oversight of the delivery and execution of custodial sentences, and accountability for bending the law out of personal favoritism. In the organized‑crime cases, the procuratorial organs submitted over 200 evidentiary‑gathering recommendations, initiated investigations into eight instances involving judicial personnel acting as “protective umbrellas” and brought two protest appeals; in the “opening the box” case, full‑scale electronic data from Telegram was secured, and, in coordination with the Cyberspace Administration, the Ministry of Industry and Information Technology, and the platform itself, accounts were blocked, involving more than 900 sets of information and over 600 sets of text content; in the drug‑smuggling case, GPS tracking, call‑record audio and voiceprints, along with re‑identified driver images, supported both the protest appeal and the retrial; in the case concerning the delivery and execution of sentences, supervision was exercised in accordance with the guidelines issued by the Supreme People’s Court and the Supreme People’s Procuratorate, together with the Ministry of Public Security and the Ministry of Justice, leading to the proper detention of suspects and the issuance of prosecutorial recommendations; and in the case of bending the law out of personal favoritism, accountability was pursued against five individuals, while more than 300 cases were reviewed and over 200 were corrected.

The Supreme People’s Court has released an update on the progress of a special campaign to standardize law enforcement and judicial practices involving enterprises.

On February 4, a responsible official from the relevant department of the Supreme People’s Court answered questions from reporters on the progress of the special campaign to standardize law enforcement and judicial practices involving enterprises.

Press Release Summary: In the area of administrative adjudication, cases involving enterprises are heard impartially and in accordance with the law; ten landmark administrative litigation cases related to market access have been published; a “3+N” mechanism for preventing and substantively resolving administrative disputes has been advanced, accompanied by feedback derived from judicial big‑data analysis. In enforcement, the principle of proportionality and civilized enforcement practices are emphasized, with priority given to “dynamic sealing and freezing” and targeted, tiered sanctions, while mechanisms for credit rehabilitation of defaulters have been refined. Efforts are underway to promote settlement‑based enforcement and market‑oriented asset disposal, standardize procedures for seizure, detention, and freezing, and prevent overreach in scope, duration, or extent. Cross‑jurisdictional enforcement and review of appeals and objections have also been strengthened. With respect to criminal‑justice oversight, by 2025, 55 wrongful criminal convictions affecting corporate property rights—implicating 88 individuals—will be rectified; five typical retrial cases have been released, and mechanisms for identifying, correcting, restoring, and reporting the causes of miscarriages of justice have been improved. In civil and commercial matters, 25 judicial guidelines on promoting the private sector have been issued; continued application of the “back-to-back” clause has been endorsed; and work is progressing on drafting judicial interpretations of the new Company Law and normative documents governing bankruptcy adjudication.

The Supreme People’s Court has released the 37th batch of Q&A on enforcement issues on the Legal Answers Website.

On February 5, the Supreme People’s Court released “Selected Q&A from the Legal Answers Website (Batch No. 37) — Special Topic on Enforcement Work.”

This batch of cases addresses issues such as enforcement and bankruptcy, the freezing of matured claims, liability for capital contributions in equity transfers, jurisdiction over reconsideration of preservation measures, and third-party liability in enforcement proceedings. It clarifies that, following the issuance of a bankruptcy acceptance order, individual repayments must cease; even if the enforcing court has not yet formally received the acceptance order but has already rendered an order to satisfy debt through property, the property used for such satisfaction must nonetheless be brought within the bankruptcy proceedings. An objection raised by a secondary debtor against the freezing of a matured claim does not automatically lift the freeze; it merely precludes compulsory execution against the debtor’s assets. The applicant for enforcement may bring a subrogation action, and the freeze may be lifted in accordance with the law if the applicant fails to initiate such action or if the claim itself does not exist. In cases involving multiple equity transfers, the enforcement procedure may only add former shareholders who have failed to fulfill their capital contribution obligations or promoters bearing joint and several liability; the liability of transferees must be pursued separately through litigation. For reconsideration proceedings concerning preservation measures initiated prior to a change in jurisdiction, it is more appropriate that the court system responsible for enforcement at the time the objection was filed continue to review the matter. Where a third party, in the course of enforcement settlement, makes a written commitment to the court to assume the debt, that party may be added as an enforced party within the scope of the commitment; if the arrangement constitutes an enforcement guarantee, its assets may be directly subject to enforcement, but no further parties may be added.

The Supreme People’s Court has released seven exemplary cases of high-quality handling of deputies’ proposals.

On February 5, the Supreme People’s Court held a press conference on “Typical Cases of High-Quality Handling of Deputies’ Proposals,” releasing seven exemplary cases that cover areas such as the development of a case database, the system of seizure, impoundment, and freezing of assets, oversight of case filing, intellectual property protection, governance of minors’ online consumption, maritime adjudication and foreign-related talent cultivation, and the crackdown on telecommunications and cyber fraud.

The typical cases released this time include: First, advancing the high-quality development of the People’s Courts’ case database by refining admission criteria, improving incentive and identification‑and‑cultivation mechanisms, and expanding mobile‑app functionality. Second, in relation to seizure, impoundment, and freezing, proposals are being made to standardize enforcement procedures and establish clear protocols for determining seizure and calculating related measures. Third, enhancing oversight of case filing by issuing standardized guidelines for litigation services, establishing procedures for handling complaints regarding “non‑filing,” improving guidance on clarification and remedies, and promoting model texts based on key elements. Fourth, strengthening judicial protection of intellectual property rights through optimizing jurisdictional arrangements and advancing institutional frameworks such as special procedural rules for IP litigation. Fifth, addressing online gaming top-ups and virtual‑gift gifting by minors, with proposed dedicated provisions in the working guidelines for cases involving minors. Sixth, focusing on maritime adjudication and foreign‑related legal talent, by publishing typical cases involving foreign‑related commercial and maritime mediation, promoting one‑stop dispute‑resolution centers on waterways, and establishing a pool of elite judges and experts in foreign‑related commercial and maritime matters. Seventh, tackling telecom fraud by reinforcing asset disposal, imposing occupational bans, clarifying the law through landmark cases, and advancing comprehensive governance measures.