JC Master Legal News Issue 1166

Key Takeaways for This Issue

The China Securities Regulatory Commission has rigorously investigated and prosecuted cases of financial fraud, for the first time holding parties that assisted in the fraud jointly accountable.
Recently, the China Securities Regulatory Commission (CSRC) issued a preliminary notice of administrative penalties in accordance with the law, alleging that Nanjing Yuebo Power System Co., Ltd. engaged in violations of information disclosure regulations. In addition to proposing strict legal sanctions against the listed company, its actual controller, and relevant directors, supervisors, and senior management who bear responsibility for the fraud, the CSRC also plans to hold two entities that assisted in the fraudulent activities strictly accountable.
Shanghai and Shenzhen Stock Exchanges: Propose to adjust the daily price limit for main-board stocks under risk alerts to 10%
On June 27, according to the official websites of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, the two exchanges recently launched a public consultation on adjusting the price fluctuation limits for risk‑alert stocks on the main board and related matters. The proposed change would raise the daily price limit for such stocks from 5% to 10%, aligning it with that of other main‑board securities.
The Supreme People’s Court and other authorities have jointly issued the “Model Texts for Complaints and Answers in Certain Cases.”
On June 23, the Supreme People’s Court, the Ministry of Justice, and the All China Lawyers Association jointly issued the “Model Texts for Complaints and Answers in Certain Types of Cases.” These model texts will be rolled out for use in courts nationwide starting July 14, 2025.

Finance & Capital Markets
The China Securities Regulatory Commission has rigorously investigated and prosecuted cases of financial fraud, for the first time holding parties that assisted in the fraud jointly accountable.
Recently, the China Securities Regulatory Commission (CSRC) issued a preliminary notice of administrative penalties in accordance with the law regarding alleged violations of information disclosure regulations by Nanjing Yuebo Power System Co., Ltd. (hereinafter referred to as “Yuebo Power,” which has since been delisted). In addition to proposing strict legal sanctions against the listed company, its actual controller, and relevant directors, supervisors, and senior executives who bear responsibility for the fraudulent practices, the CSRC also plans to hold two entities that assisted in the fraud accountable.
The China Securities Regulatory Commission stated that financial fraud is a malignant tumor that undermines the very foundations of the market and has long been a key target of its enforcement efforts. Going forward, it will continue to rigorously implement the decisions and arrangements of the CPC Central Committee, pursuing both the principal offenders and their accomplices, and further strengthen accountability for those who fabricate financial statements as well as those who assist in such misconduct. By bolstering a comprehensive, multi‑pronged accountability framework encompassing administrative, civil, and criminal measures, the Commission will impose full‑scale penalties on the planners, organizers, perpetrators, and collaborators of financial fraud, resolutely dismantling the profit chains and “ecosystems” that sustain such wrongdoing.
At the same time, with respect to entities that have actively rectified their conduct and cooperated fully with investigations—demonstrating meritorious behavior—the CSRC has consistently adhered to a law enforcement policy that balances leniency and severity, applying mitigated, reduced, or even exempted penalties in accordance with the law.
Shanghai and Shenzhen Stock Exchanges: Propose to adjust the daily price limit for main-board stocks under risk alerts to 10%
On June 27, according to the official websites of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, the two exchanges recently launched a public consultation on adjusting the price fluctuation limits for risk‑alert stocks on the main board and related matters. The proposed change would raise the daily price limit for such stocks from 5% to 10%, aligning it with that of other main‑board securities.
An official from the exchange stated that the relevant regulatory adjustments will help stocks better absorb positive or negative market factors within a broader price range, thereby enhancing pricing efficiency. By standardizing the daily price fluctuation limits across all stock types within each market segment, the reforms aim to reduce disparities in trading mechanisms and make them easier for investors to understand and apply. However, investors should bear in mind that, following these changes, stocks will exhibit greater intraday volatility. They are advised to carefully weigh the risks before purchasing stocks subject to risk warnings, so as to avoid potential losses.

Commercial & Corporate
The State Administration for Market Regulation plans to issue the “Guidance on the Review of Non-Horizontal Merger Transactions.”
On June 27, the State Administration for Market Regulation issued an announcement soliciting public comments on the “Guidance on the Review of Non-Horizontal Merger Transactions (Draft for Comments),” with a deadline for feedback set for July 16, 2025.
The Guidelines aim to standardize the review of non‑horizontal mergers and acquisitions, enhancing transparency and predictability. Their key provisions include: clarifying the types of non‑horizontal concentrations and the corresponding market definitions; introducing structured market‑share‑based indicators; and providing a detailed exposition of efficiency‑related defenses. Vertical mergers may exclude or restrict competition by controlling upstream inputs or downstream customers, or by obtaining competitively sensitive information; mixed‑type mergers may transmit market power through practices such as tying. The Guidelines pay particular attention to the risks posed by non‑horizontal concentrations in the digital economy and illustrate these issues with 31 case examples.
The Ministry of Finance is seeking public input on the Application Guidance for the Sustainability Disclosure Framework.
The General Office of the Ministry of Finance has issued the “Letter Soliciting Comments on the Draft Application Guide to the ‘Enterprise Sustainability Disclosure Standards—Basic Principles (Trial)’.”
The draft “Application Guidance” consists of nine questions, namely: value chain, reporting entity, relevance of information, primary users of sustainability information, materiality assessment, the principle of proportionality, the current and expected financial impacts of sustainability risks and opportunities, the resilience of an enterprise’s strategy and business model to sustainability risks, and the disclosure of sustainability‑related impacts. Among these, the value chain, reporting entity, relevance of information, and primary users of sustainability information serve to clarify key concepts from the “Basic Standards.”

Taxation
The National Audit Office disclosed that inadequate coordination in tax administration and other shortcomings resulted in a loss of 72.66 billion yuan in taxes and fees.
On June 24, Auditor General Hou Kai of the National Audit Office presented to the 16th Meeting of the Standing Committee of the 14th National People’s Congress the “Audit Work Report of the State Council on the Implementation of the Central Budget and Other Fiscal Revenues and Expenditures for 2024.”
The report indicates that the auditing authorities focused on six areas: the collection of fiscal revenue, zero-based budgeting, transfer payments, the state‑owned capital operation budget, special bonds, and the draft central government final accounts. Audits of tax and customs authorities revealed that 88.997 billion yuan in “excessive” taxes and fees had been collected, while inadequate coordination in tax administration resulted in a loss of 72.66 billion yuan in tax revenues. As of the end of March 2025, the tax, customs, finance, and natural resources departments had yet to establish effective mechanisms for data sharing and utilization, and internal tax authorities lacked sufficient coordinated analysis of tax‑related data.
Chongqing has introduced measures to stabilize foreign investment, including a number of favorable fiscal and tax policies.
Recently, the General Office of the Chongqing Municipal People’s Government issued the “Several Measures for Stabilizing Foreign Investment Development in Chongqing.”
In terms of fiscal and tax support, the policy of temporarily exempting withholding income tax on direct investments made by foreign investors using their distributed profits is strictly enforced, with service mechanisms streamlined to ensure precise implementation. At the same time, domestic reinvestment by foreign-invested enterprises is encouraged, land for major projects is secured as needed, and no additional land fees are levied for upgrading or retrofitting.
In addition, the measures also include steadily advancing pilot programs to open up sectors such as telecommunications and healthcare, implementing the removal of foreign‑investment access restrictions in the manufacturing sector, and continuously enhancing investment promotion efforts, thereby providing comprehensive support for stabilizing Chongqing’s foreign‑invested development.

Litigation & Arbitration
Civil Aviation Administration: Passengers are prohibited from bringing onboard power banks that lack the 3C certification mark or have been recalled.
Recently, the Civil Aviation Administration of China issued an urgent notice requiring that, effective June 28, passengers are prohibited from carrying power banks without a 3C certification mark, with unclear markings, or those subject to recall on domestic flights.
The notice states that, owing to the frequent incidents of power banks catching fire and emitting smoke, and given that several leading manufacturers have recently recalled multiple batches of their products due to safety risks associated with battery cells, the State Administration for Market Regulation has revoked or suspended the 3C certification of numerous power bank and battery‑cell manufacturers. In response, the Civil Aviation Administration has decided to tighten controls, prohibiting passengers from bringing onboard any power banks lacking a 3C mark or those that have been subject to recall. The notice emphasizes that all airlines and airports must intensify public awareness campaigns to alert travelers to the relevant safety risks and strengthen inspection procedures at security checkpoints.
The Supreme People’s Court and other authorities have jointly issued the “Model Texts for Complaints and Answers in Certain Cases.”
On June 23, the Supreme People’s Court, the Ministry of Justice, and the All China Lawyers Association jointly issued the “Model Texts for Complaints and Answers in Certain Types of Cases.” These model texts will be rolled out for use in courts nationwide starting July 14, 2025.
The Model Texts cover nine areas, including criminal (private prosecution), civil, commercial, and intellectual property matters, encompassing a total of 67 types of dispute‑related documents, with 56 new categories added. The guidelines explicitly require courts at all levels to fully respect the wishes of the parties and their counsel, resolutely preventing any unlawful refusal to accept cases that should be filed in accordance with the law on the grounds of mandatory application of the model texts, thereby ensuring that parties can exercise their right to bring suit in full compliance with the law.
The 16th Meeting of the Standing Committee of the 14th National People’s Congress reviewed several draft laws.
On June 24, the 16th Meeting of the Standing Committee of the National People’s Congress was held in Beijing, where draft laws including the Law on Public Security Administrative Penalties, the Anti-Unfair Competition Law, the Law on Responding to Sudden Public Health Emergencies, the Maritime Law, the Fisheries Law, and the Civil Aviation Law were reviewed.
Among these, the third‑reading draft of the revised Law on Administrative Penalties for Public Security further standardizes enforcement procedures, clarifies the use of police identification, improves the approval process for seizures, and regulates hearings in cases involving minors. The second‑reading draft of the Anti-Unfair Competition Law introduces provisions on a fair‑competition review system, specifies the constituent elements of unfair competitive practices such as infringement of data rights and malicious trading, and focuses on addressing issues like large enterprises abusing their dominant position to delay payments to small and medium‑sized businesses. The second‑reading draft of the Maritime Law emphasizes refining safeguards for seafarers’ rights and revising provisions governing carriage contracts.
The Supreme People’s Court has released the 22nd batch of selected Q&A entries from the Legal Answers Website.
On June 26, the Supreme People’s Court published on the People’s Court Daily a selection of Q&A from the Legal Answers Website (the twenty-second batch), comprising three sets of questions and answers.
The key points of this batch of Q&A are as follows: 1. The probation period begins on the date the judgment becomes final; the time between the judgment’s entry into force and the commencement of reporting to the supervising authority is counted within the probation period. 2. After online acknowledgment of an electronic commercial bill, if offline settlement is chosen and the bill’s status indicates that it has been settled, the holder loses the right to seek recourse against prior parties. 3. Under Article V(1)(a) of the New York Convention, “lack of legal capacity” encompasses the absence of power of representation or agency; accordingly, if a party lacks the authority to represent or act on behalf of a company in entering into an arbitration agreement, the arbitral award shall not be recognized or enforced.
The Supreme People’s Court and the Supreme People’s Procuratorate have issued a reply to safeguard the right of detainees to choose their defense counsel.
On June 25, the Supreme People’s Court and the Supreme People’s Procuratorate issued the “Reply on Issues Concerning the Legal Guarantee of the Right of Detained Criminal Suspects and Defendants to Choose Their Defense Counsel,” which shall take effect as of June 27, 2025.
The Reply clarifies two key points: First, it safeguards the right of a court‑appointed defense counsel to meet with the client; once a legal aid agency has assigned an attorney, if the guardian or a close relative subsequently appoints another defense counsel, that counsel is entitled to meet with the detainee. Second, it protects the detainee’s right to choose their own defense counsel; if the detainee opts for a defense counsel appointed by a guardian or a close relative, the court and the procuratorate shall notify the legal aid agency to terminate the legal aid.

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