Taihe Legal News, Issue 1214

The China Securities Regulatory Commission is advancing coordinated central–local efforts to prevent and punish financial fraud in the capital market.

On June 30, the China Securities Regulatory Commission announced the convening of a meeting on advancing the coordinated central–local efforts to establish a comprehensive system for preventing and punishing financial fraud in the capital market.

The National People’s Congress is soliciting public comments on draft laws, including the draft Financial Law.

Recently, the National People’s Congress released the Draft Financial Law of the People’s Republic of China, with public comments being solicited until July 25, 2026.

The Supreme People’s Court has promulgated the Second Judicial Interpretation on Disputes over Construction Project Contracting.

On June 29, 2026, the Supreme People’s Court promulgated the “Interpretation (II) of the Supreme People’s Court on Several Legal Issues Concerning the Adjudication of Disputes over Construction Project Contracting.”

Finance and Capital Markets

FINANCE & CAPITAL MARKETS

The China Securities Regulatory Commission is seeking public input to establish a shelf registration system for private placements in the context of refinancing.

On July 3, the China Securities Regulatory Commission amended the Measures for the Registration Administration of Securities Issuance by Listed Companies, the Measures for the Registration Administration of Securities Issuance by Listed Companies on the Beijing Stock Exchange, and their accompanying rules. The revisions are now being made public to solicit comments from the general public. Key amendments include: establishing a shelf registration system for targeted share placements in refinancing; optimizing the small‑amount, fast‑track refinancing regime; implementing a unified market‑price‑based pricing mechanism for issuances; simplifying the conditions for listed companies to conduct private placements to controlling shareholders; strengthening regulatory requirements for convertible bonds; and further clarifying supervisory stipulations regarding the use of raised funds for core business activities.

The China Securities Regulatory Commission is advancing coordinated central–local efforts to prevent and punish financial fraud in the capital market.

On June 30, the China Securities Regulatory Commission announced the convening of a meeting on advancing the coordinated central–local efforts to establish a comprehensive system for preventing and punishing financial fraud in the capital market.

The meeting reported that, since July 2024—when the General Office of the State Council forwarded the “Opinions on Further Strengthening Comprehensive Measures to Prevent and Punish Financial Fraud in the Capital Market”—three rounds of special campaigns have been launched. To date, a total of 247 cases of financial fraud have been investigated and prosecuted, 156 administrative penalties have been imposed, and fines and confiscations exceeding RMB 9.051 billion have been collected. Additionally, 21 companies found to have engaged in serious fraud have been forcibly delisted. A mechanism has been established for third-party cooperation in referring fraud-related leads, under which more than 1,500 leads have been submitted. Furthermore, 134 leads involving suspected criminal offenses have been referred to public security authorities, and the procuratorial organs have instituted public prosecution in 95 cases, targeting 267 individuals. The meeting called for continued efforts to refine joint punitive measures, strengthen regulatory coordination and information sharing, and improve the mechanisms for reporting and providing feedback on leads. It also emphasized enhancing central–local collaboration in areas such as upstream screening, coordinated law enforcement, risk management, and investor protection.

The National People’s Congress is soliciting public comments on draft laws, including the draft Financial Law.

Recently, the National People’s Congress released the Draft Financial Law of the People’s Republic of China, with public comments being solicited until July 25, 2026.

The draft Financial Law proposes to unify the scope of application of this law to financial activities within China, explicitly bringing all financial activities under comprehensive regulatory oversight and implementing stringent market access requirements, as well as tiered and category‑based,穿透式 (penetrative), and ongoing supervision. It sets forth provisions governing the establishment of financial institutions, material changes to their operations, equity and paid‑in capital, related‑party transactions, information disclosure, and exit mechanisms; mandates that financial products and services undergo approval, registration, filing, or recordal; strengthens suitability management, information disclosure, and personal data protection; refines rules on the establishment of financial market trading venues, prohibits certain types of trading activities, and clarifies the liability of listed companies for damages. Furthermore, it specifies requirements for the establishment and operation of financial infrastructure and for data security, while detailing measures for regulatory inspections, early corrective actions, risk resolution, prevention and crackdown on illegal financial activities, and associated legal liabilities.

Business and Corporations

COMMERCIAL & CORPORATE

The State Administration for Market Regulation has imposed fines of RMB 1.75 million each on Torch Group and Dinghui Baifu for unlawfully implementing a concentration.

Recently, the State Administration for Market Regulation announced its administrative penalty decision in the case of illegal implementation of operator concentration involving Zhongshan Torch Group Co., Ltd. and Shanghai Dinghui Baifu Investment Management Co., Ltd.

The case involves Huoju Group and Dinghui Baifu, which, through concerted action, acquired control over Zhongju High‑Tech. On July 2, 2023, the relevant entities jointly proposed convening an extraordinary general meeting to reconstitute the board of directors, and on July 3 they filed a notification of operator concentration with the State Administration for Market Regulation. However, during the review period, Zhongju High‑Tech had already completed the board reshuffle, and the two companies effectively obtained control, thereby constituting a case of implementing the concentration prior to approval. Following assessment, the transaction was found not to have the effect of excluding or restricting competition. Taking into account factors such as the parties’ and their affiliates’ prior lack of penalties for unlawful implementation of operator concentrations, their active cooperation with the investigation, their truthful statements and timely provision of crucial evidence, as well as the establishment and effective implementation of antitrust compliance management systems, the State Administration for Market Regulation, in accordance with the Anti‑Monopoly Law and relevant discretionary provisions, imposed fines of RMB 1.75 million on each of the two companies.

The State Council has promulgated the Regulations on Promoting Employment and Entrepreneurship of Veterans, which will take effect in August.

On June 30, the State Council promulgated the Regulations on Promoting Employment and Entrepreneurship for Veterans.

The Regulations comprise six chapters and 48 articles, stipulating that employment and entrepreneurship for veterans shall combine universal benefits with preferential treatment and clearly delineating the responsibilities of relevant entities. They integrate veteran education and training into the broader policy framework, covering educational examinations, preferential policies and financial assistance for academic qualifications, as well as orientation training, free vocational skills training, and training subsidies. The Regulations also specify that government agencies, mass organizations, public institutions, and state-owned enterprises may appropriately relax age and educational requirements in recruitment and hiring, giving priority to veterans under otherwise equal conditions, and provide preferential treatment for entry-level civil service positions and specialized roles. Furthermore, they set forth targeted support measures—such as tax incentives, financing, credit facilities, and entrepreneurship training—for veteran entrepreneurs, while prescribing corresponding legal liabilities.

The Ministry of Industry and Information Technology and seven other departments have issued the Implementation Opinions on Promoting the High-Quality Development of the Industrial Internet.

On June 30, the Ministry of Industry and Information Technology and seven other departments released the “Opinions on Promoting the High-Quality Development of the Industrial Internet.”

The Implementation Opinions set forth the goal of building 50,000 industrial 5G private networks by 2030, developing approximately five comprehensive platforms with international influence, achieving full coverage of 207 industrial sub‑sectors through integrated applications, driving the added value of core industries beyond RMB 2.5 trillion, and attaining an 80% penetration rate of safety classification and grading among large-scale industrial enterprises in key sectors. The document outlines 18 tasks across infrastructure, technological innovation, integrated applications, security safeguards, and industrial ecosystem development, including building next‑generation industrial networks, launching independent 5G private network deployments for industry, deploying converged industrial equipment, establishing technology‑innovation pilot test centers, and promoting platform‑based design, intelligent manufacturing, and personalized customization models.

Notice from Four Departments on the 2025 Passenger Vehicle Fuel Consumption and New Energy Credit Status

On June 29, 2026, the Ministry of Industry and Information Technology, the Ministry of Commerce, the General Administration of Customs, and the State Administration for Market Regulation jointly issued the “Announcement on the Average Fuel Consumption and New Energy Vehicle Credit Status of Chinese Passenger Vehicle Enterprises for 2025.”

The announcement disclosed that, in 2025, 108 passenger vehicle manufacturers operating within China produced or imported a total of 24.629 million passenger vehicles. The industry average curb weight was 1,719 kg, the actual average fuel consumption stood at 3.38 liters per 100 kilometers, and the average CO₂ emissions were 80.22 grams per kilometer. Positive fuel‑consumption credits totaled 53.553 million points, while negative credits amounted to 9.412 million points; positive new‑energy‑vehicle (NEV) credits reached 21.940 million points, with negative NEV credits at 1.599 million points. Of these, 87 domestic manufacturers produced 24.164 million vehicles, and 21 importers supplied 465,000 vehicles. The annex also includes tables detailing the credit‑accounting results for both compliant and non‑compliant enterprises.

The General Office of the Ministry of Human Resources and Social Security has launched a targeted campaign to boost employment services for college graduates in 2026.

On July 1, 2026, the General Office of the Ministry of Human Resources and Social Security issued the “Notice on Launching the 2026 Intensive Action for Employment Services for College Graduates and Other Young People.”

The Notice specifies that the initiative will run from July to December 2026, targeting college graduates of the class of 2026 who remain unemployed upon graduation, as well as registered unemployed youth aged 16 to 24. Key measures include the centralized release of five lists outlining policies and services; the transfer of information on unemployed graduates and the establishment of a real-name registration ledger by July; provision of policy briefings, career guidance, job referrals, and opportunities for skills training or internships to those listed in the ledger; organization of specialized recruitment events, with support for live‑streamed job postings and the application of artificial intelligence; and strengthened paired assistance for disadvantaged youth, along with psychological counseling and safeguards for employment rights. Priority will be given to addressing illegal and non‑compliant practices such as fraudulent recruitment, employment discrimination, “training loans,” and “token hiring.”

The Ministry of Finance has issued the Guidelines for the Application of Management Accounting to Standardize Financial Shared Services.

On July 1, the Ministry of Finance issued the “Notice on the Issuance of Management Accounting Application Guideline No. 804—Financial Shared Services.”

The Guidelines clearly define the scope of application, service content, construction principles, and foundational requirements for financial shared services. They stipulate that adopting this model does not alter the statutory responsibilities of the entity or its principal, and require the explicit delineation of responsibility boundaries, approval authorities, record‑keeping procedures, error‑correction mechanisms, and accountability frameworks. The document, focusing on planning and construction, operational evaluation, and digital‑intelligence development, elaborates on a standardized system, business process reengineering, organizational structure and job roles, information systems, security safeguards, quality management, and performance appraisal. It also sets forth provisions regarding the intelligent transformation of business processes, data governance, algorithmic compliance and interpretability, as well as intelligent monitoring and early warning systems.

Taxation

TAXATION

The Ministry of Commerce and the General Administration of Customs have launched a pilot program for bonded inspection outside comprehensive bonded zones.

Recently, the General Office of the Ministry of Commerce and the General Office of the General Administration of Customs issued the “Notice on Launching Pilot Programs for Bonded Inspection and Testing Outside Comprehensive Bonded Zones.”

The Notice clarifies that, outside comprehensive bonded zones, a pilot program will be launched to conduct bonded testing of integrated circuits and consumer electronic products under a “both ends abroad” model—namely, goods are imported from overseas for testing and then re-exported. Bonded testing of consumer electronics shall not cover used parts, refurbished units, failed components, or defective products, nor may it be used as a pretext for repair, dismantling, or scrapping. Applying enterprises must possess dedicated facilities and equipment, sound management systems, and appropriate computerized systems, and must not have been listed as untrustworthy or seriously untrustworthy by customs authorities. The pilot program will operate under a mechanism involving enterprise applications, preliminary review at the prefectural level, provincial-level submission, and joint assessment by the Ministry of Commerce in coordination with the General Administration of Customs. Enterprises found in violation may be ordered to make rectifications, have their participation suspended, or have their pilot status terminated.

Litigation and Arbitration

LITIGATION & ARBITRATION

The Supreme People’s Court has promulgated the Second Judicial Interpretation on Disputes over Construction Project Contracting.

On June 29, 2026, the Supreme People’s Court promulgated the “Interpretation (II) of the Supreme People’s Court on Several Legal Issues Concerning the Adjudication of Disputes over Construction Project Contracting.”

The Interpretation comprises twenty-three articles and shall enter into force on June 30, 2026. It clarifies the validity of contracts for projects that were required to undergo tendering but, at the time of litigation, no longer fall within the scope of such requirements; it further specifies the criteria for determining collusive bidding, the lending of qualifications, and illegal subcontracting and assignment, as well as the rules governing claims for payment. The Interpretation also provides for adjustments to fixed‑price contract sums, valuation of work already performed upon contract termination, coordination between audit reviews and judicial appraisals, the return of quality bonds, and the allocation of repair costs. Moreover, it delineates the scope, conditions for exercise, and commencement date of the priority right to payment in construction projects, and addresses the applicability of insurance proceeds, indemnity payments, and compensation awards.

Draft Amendment to the Lawyers Law Opens for Public Comment to Refine Practice Regulations

Recently, the National People’s Congress released the “Law of the People’s Republic of China on Lawyers (Draft Amendment)” and has invited public comments until July 25, 2026.

The draft introduces new provisions stipulating that lawyers’ work must uphold the leadership of the Communist Party of China and that law firms are to carry out Party-building activities. It revises the requirements for legal practice to include exemplary compliance with the law, honest professional conduct, and the fulfillment of social responsibilities, while explicitly calling on courts, procuratorates, public security organs, state security agencies, and judicial administration bodies to improve systems for safeguarding lawyers’执业 rights. The draft also adds provisions to develop foreign-related legal services and to support law firms in enhancing their capacity to provide such services. Furthermore, it supplements the conditions for practicing law to require adherence to the leadership of the Communist Party of China and to the socialist rule of law in China, and proposes advancing full coverage of lawyer defense in criminal cases. It clarifies that personnel of relevant institutions who take up legal practice after leaving office or retiring must comply with civil service regulations. Additionally, the draft includes provisions on pro bono legal services and stipulates that legal practitioners from Hong Kong and lawyers from Macao, upon passing the Guangdong–Hong Kong–Macao Greater Bay Area lawyer qualification examination and obtaining mainland qualifications, may engage in specified categories of legal practice in nine cities within Guangdong Province.

The Supreme People’s Court has released the 38th batch of selected Q&A from the Legal Answers Website, focusing on criminal trials.

Recently, the Supreme People’s Court released “Selected Q&A from the Legal Answers Website (Batch No. 38) — Criminal Trial Special Topic.”

This batch of responses clarifies four issues in criminal adjudication: where, during the probationary period of a suspended sentence for detention, an omitted offense is discovered and multiple offenses are sentenced cumulatively to a term of fixed-term imprisonment, the period of pretrial detention served on the detention charge shall be credited against the total sentence; in distinguishing between the crime of operating a casino and the crime of gambling in a group, emphasis should be placed on examining openness, commercial nature, and continuity, with a comprehensive assessment taking into account the degree of organization, level of control, venue, and scale; if an offender was convicted of a specific drug-related offense as a minor and subsequently commits another drug-related offense upon reaching adulthood, such conduct may be deemed a repeat drug offense; when calculating a sentence in months, if the starting date is February 28 and the sentence is eight months, the expiration date shall be October 27.

In the first-instance ruling of the trademark infringement case between LV and Moli Nai Bai, Moli Nai Bai was ordered to pay damages totaling ten million yuan.

Recently, the Suzhou Intermediate People’s Court issued a first-instance judgment in the trademark infringement case brought by Louis Vuitton Malletier against Shenzhen Moli Nai Bai Catering Management Co., Ltd. and others.

The court found that the principal company of Moli Nai Bai and the stores involved infringed upon the exclusive rights to LV’s seven registered trademarks featuring the four‑leaf flower motif. The court ordered the principal company to pay RMB 10 million in damages and RMB 300,000 in reasonable expenses—totaling RMB 10.3 million—within ten days of the judgment taking effect, with the implicated stores jointly liable for up to RMB 100,000 in compensation. According to the judgment, Moli Nai Bai is also required to publish a public statement on its official website, official Weibo account, WeChat official account, WeChat mini‑program, Xiaohongshu, and Douyin homepage to mitigate the adverse effects. On July 2, the founder of Moli Nai Bai stated that they would file an appeal. Public records indicate that the related trademarks featuring the four‑leaf flower motif are currently under review following rejection or have been declared invalid.