JC Master Legal News Issue 804

Key Takeaways for This Issue

The China Securities Regulatory Commission has clarified the IPO review standards for companies with “three types of shareholders.”
Recently, the China Securities Regulatory Commission has clarified its review policy for companies seeking an IPO that have “three categories of shareholders,” setting forth four key regulatory requirements.
The Ministry of Finance has issued the Interim Measures for the Administration of Government Procurement Agencies.
On January 11, 2018, the Ministry of Finance issued the Interim Measures for the Administration of Government Procurement Agencies (Cai Ku [2018] No. 2) (hereinafter referred to as the “Measures”). The Measures place particular emphasis on the professional competence of procurement agencies, requiring them to employ no fewer than five professionals who are well-versed in government procurement laws and regulations and possess the requisite capabilities to prepare procurement documents and organize procurement activities. In addition, the Measures set forth clear requirements regarding the venues and equipment used for opening and evaluating bids.
Six departments have jointly issued the “Notice on Adjusting the Relevant Catalogues of the Import Tax Policy for Major Technological Equipment.”
Recently, the Ministry of Finance, in coordination with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the General Administration of Customs, the State Taxation Administration, and the National Energy Administration, jointly issued the “Notice on Adjusting the Relevant Catalogues of the Import Tax Policy for Major Technological Equipment,” making adjustments to three catalogues under the import tax policy for major technological equipment.
The Investor Service Center has established a new model for resolving securities disputes—“arbitration plus mediation.”
Recently, the Investor Service Center successfully mediated a dispute between an investor and a securities office by adopting an in-court adjudication procedure for the first time. This marks the first official application of the “adjudication-plus-mediation” dispute-resolution model in China’s capital market.
The Overall Plan for the Third National Land Survey Has Been Released.
The “Overall Plan for the Third National Land Survey” (hereinafter referred to as the “Overall Plan”) was recently approved and promulgated by the State Council. The Overall Plan sets forth clear provisions regarding the objectives and significance of the Third National Land Survey, its principal tasks, its technical approach and methodologies, its key deliverables, and its organizational implementation.

Table of Contents
Table of Contents

Finance & Capital Markets

The China Securities Regulatory Commission has clarified the IPO review standards for companies with “three types of shareholders.”
The Shanghai and Shenzhen Stock Exchanges and China Securities Depository & Clearing Corporation have revised the business rules governing stock‑pledge repurchase transactions.
The Shanghai and Shenzhen Stock Exchanges Have Issued Answers to Questions on the Detailed Rules for Share Reductions by Listed Company Shareholders and Directors, Supervisors, and Senior Management.
The China Banking Regulatory Commission has issued the “Notice on Further Deepening the Rectification of Market Disorder in the Banking Sector.”
The Asset Management Association of China has issued the “Work Rules for the Preparation of Credit Information Reports for Members Who Are Private Securities Investment Fund Managers (Trial).”

Corporate & Commercial

The Ministry of Finance has issued the Interim Measures for the Administration of Government Procurement Agencies.
The Regulations on Domestic Investment in the Civil Aviation Industry will officially come into effect on January 19.
Seven departments have jointly launched the initiative to establish the first batch of national demonstration parks for integrated rural industrial development.
China Banking Regulatory Commission: Launches a Pilot Program for Investment-Management-Type Rural and Town Banks
The China Insurance Regulatory Commission has issued the Measures for the Administration of Insurance Standardization.

Taxation

The Ministry of Finance and the State Taxation Administration have jointly issued the “Notice on Improving the Policy for Tax Credit of Foreign-Sourced Income of Enterprises.”
The Ministry of Finance has issued the “Letter Soliciting Comments on Enterprise Accounting Standard No. 21—Leases (Revised) (Exposure Draft).”

Litigation & Arbitration

The Investor Service Center has established a new model for resolving securities disputes—“arbitration plus mediation.”
The Supreme People’s Court has issued the “Notice on Fully Leveraging the Role of Judicial Functions to Foster a Sound Rule-of-Law Environment for Entrepreneurs’ Innovation and Entrepreneurship.”

Other

The Ministry of Land and Resources has promulgated the Regulations on Law Enforcement Supervision in the Field of Land and Resources.
The Ministry of Civil Affairs convened a special meeting to deploy and advance poverty alleviation efforts in deeply impoverished areas.

Finance & Capital Markets

The China Securities Regulatory Commission has clarified the IPO review standards for companies with “three types of shareholders.”
Recently, the China Securities Regulatory Commission (CSRC) has clarified its review policy for companies seeking an IPO that have “three types of shareholders.” CSRC spokesperson Chang Depeng stated that, given the issue of “three types of shareholders” touches not only IPO regulatory policy but also the development of the New Third Board, the CSRC has adopted a highly cautious approach. After extensive deliberation and analysis, it has recently finalized the regulatory framework governing cases where companies listed on the New Third Board have “three types of shareholders” when applying for an IPO. At present, for companies planning an IPO that hold “three types of shareholders,” the following four key regulatory requirements have been put forward.
First, in accordance with the fundamental requirements of the Securities Law, the Company Law, and the IPO Regulations, corporate stability and clarity regarding the controlling shareholder and the actual controller are essential prerequisites. To safeguard the stability of companies seeking an IPO and to ensure that the controlling shareholder fulfills its duty of good faith, regulatory authorities stipulate that the company’s controlling shareholder, actual controller, and largest shareholder may not be “three types of shareholders.”
Second, given that the regulatory authorities are currently in the process of standardizing asset management business, in order to ensure that the “three categories of shareholders” are established in accordance with the law and operate in a compliant manner, it is required that these “three categories of shareholders” have already been brought under the effective supervision of the financial regulatory authorities.
Third, regulatory authorities will prevent the transfer of benefits at the source and mitigate potential risks by strictly overseeing highly leveraged structured products and investment entities engaged in multi-layered nesting. Issuers found to be involved in such arrangements are required to submit remediation plans that comply with regulatory requirements, while “three‑category shareholders” must be subject to look‑through disclosure. At the same time, intermediary institutions are mandated to verify whether the issuer and its related parties hold direct or indirect interests in these “three‑category shareholders.”
Fourth, to ensure compliance with the current lock-up and share‑sale restriction rules, “Category III shareholders” are required to make appropriate arrangements for the duration of their holdings.

The Shanghai and Shenzhen Stock Exchanges and China Securities Depository & Clearing Corporation have revised the business rules governing stock‑pledge repurchase transactions.
With the approval of the China Securities Regulatory Commission, the Shanghai and Shenzhen Stock Exchanges and China Securities Depository & Clearing Corporation have revised the Measures for Stock Pledge Repurchase Transactions and Registration and Settlement Business (Trial), issuing the Measures for Stock Pledge Repurchase Transactions and Registration and Settlement Business (2018 Revision) on January 12, 2018, which entered into force on March 12, 2018.
Following careful deliberation, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, and China Securities Depository & Clearing Corporation have adopted certain recommendations: First, it has been clarified that funds borrowed by the borrowing party must be held in a dedicated account opened at a bank designated by the securities office, thereby enhancing the operational feasibility of managing such accounts. Second, venture capital funds that meet specific policy‑supported criteria are now permitted to act as borrowers, thus supporting entrepreneurship and innovation. Third, the wording of certain provisions has been refined.
Compared with the “Business Measures (Trial)”, the revised “Business Measures” primarily encompass three key areas: First, further aligning the framework with the goal of serving the real economy. It clarifies that the borrowing party may not be a financial institution or any product issued by such an institution; borrowed funds must be used for production and operations in the real economy and managed in a dedicated account; the initial transaction amount for the borrowing party shall not be less than RMB 5 million (while the Shenzhen Stock Exchange stipulates that the minimum initial transaction amount for the borrowing party is RMB 5 million), and subsequent transactions must each be no less than RMB 500,000; furthermore, funds and bonds are no longer recognized as eligible collateral for the initial pledge. Second, strengthening risk management. It sets a cap on the stock‑pledge ratio at no more than 60%; limits the proportion of A‑share stocks pledged to a single securities office or a single asset‑management product to no more than 30% and 15%, respectively; and caps the overall market‑wide pledge ratio for any individual A‑share stock at 50%. Third, further standardizing business operations. It specifies the qualification requirements for securities offices engaging in this business and mandates that they establish mechanisms for ongoing credit‑risk management of borrowing parties and for tracking the use of borrowed funds.

The Shanghai and Shenzhen Stock Exchanges Have Issued Answers to Questions on the Detailed Rules for Share Reductions by Listed Company Shareholders and Directors, Supervisors, and Senior Management.
On January 12, 2018, in response to issues encountered during the implementation of the “Several Provisions on Share Reductions by Shareholders, Directors, Supervisors, and Senior Management of Listed Companies,” the Shanghai Stock Exchange issued the “Q&A on the Implementation Rules for Share Reductions by Shareholders, Directors, Supervisors, and Senior Management of Listed Companies of the Shanghai Stock Exchange (I)” (hereinafter referred to as the “Share Reduction Q&A (I)”), while the Shenzhen Stock Exchange released the “Answers to Investors’ Questions on Matters Relating to the ‘Implementation Rules for Share Reductions by Shareholders, Directors, Supervisors, and Senior Management of Listed Companies of the Shenzhen Stock Exchange (II)’” (hereinafter referred to as the “Answers to Investors’ Questions (II)”). These documents were intended to further address issues of widespread concern among market participants, facilitate a deeper understanding and effective compliance with the relevant share‑reduction regulations, and ensure that the reduction activities of shareholders and directors, supervisors, and senior management are conducted in accordance with the law.
The contents of “Q&A on Share Reductions (I)” and “Answers to Investors’ Questions (II)” primarily cover four key areas: First, the application of the Implementing Rules to specific types of transactions, including share issuances for asset acquisitions and accompanying financing, employee stock ownership plans, equity incentive schemes, judicial enforcement, execution of equity pledge agreements, and gifts. Second, interpretations of specific provisions in the Implementing Rules, such as how the limits on reduction ratios—whether through centralized bidding or block trades—apply when a major shareholder’s holdings fall below 5% over any consecutive 90 calendar days; how the Rules are applied following a major shareholder’s reduction or a targeted share transfer under an agreement; and the order of reductions in mixed‑ownership share transfers. Third, the retroactive effect of the Implementing Rules, covering scenarios where prohibited reduction conditions existed prior to their entry into force, as well as whether the Rules apply to directors, supervisors, and senior executives upon their departure. Fourth, related issues such as whether transfers among persons acting in concert constitute share reductions, and whether preferred shares are subject to the Rules.

The China Banking Regulatory Commission has issued the “Notice on Further Deepening the Rectification of Market Disorder in the Banking Sector.”
On January 13, 2018, the China Banking Regulatory Commission issued the “Notice on Further Deepening Efforts to Rectify Market Disorder in the Banking Sector” (hereinafter referred to as the “Notice”). The campaign to address market disorder in the banking sector is being carried out across ten key areas, with banking financial institutions assuming primary responsibility and regulatory authorities bearing supervisory duties. The Notice emphasizes that identifying and resolving problems must be both the starting point and the ultimate goal, focusing on institutions with numerous issues, regions rife with irregularities, and business segments where risks are concentrated, while rigorously investigating potential case‑related risks. It also clarifies that self‑examination and self‑correction will be treated leniently, whereas regulatory findings will be subject to strict enforcement, and that regulators will adopt a more tolerant stance toward banks that proactively identify, address, and take decisive action. Adhering to the principle of seeking progress while maintaining stability, the initiative adopts a phased approach—distinguishing between new and existing practices, proceeding step by step, and implementing tailored measures—to guard against the risk of creating new risks in the process of addressing existing ones. The emphasis is on upholding the principle that “regulation is regulation,” shifting the focus of oversight to the prevention and resolution of various financial risks rather than to expanding or strengthening the banking sector, while reinforcing accountability for regulatory performance and fostering a rigorous regulatory environment. Particular attention is paid to establishing long-term mechanisms, addressing regulatory shortcomings, and effectively tackling the institutional and systemic factors that give rise to market disorder.
In terms of specific measures, the 2018 campaign identified eight key areas for targeted rectification, encompassing 22 items: First, inadequate corporate governance, covering three aspects—shareholder and equity management, performance accountability and evaluation, and professional qualifications. Second, violations of macro‑regulatory policies, including breaches of credit‑lending guidelines and real‑estate sector regulations. Third, risks associated with shadow banking and cross‑financial products, focusing on four areas: unauthorized interbank operations, wealth‑management activities, off‑balance‑sheet business, and cooperative ventures. Fourth, infringements on financial consumers’ rights, primarily involving improper sales practices and excessive or abusive fees directly affecting consumer interests. Fifth, illicit transfer of benefits, including favoritism toward shareholders and related parties. Sixth, unlawful or non‑compliant business conduct, comprising four categories: establishing and operating institutions without approval; engaging in deposit‑and‑loan activities in violation of regulations; conducting bill‑related transactions contrary to rules; and improperly concealing or disposing of non‑performing assets. Seventh, case‑related and operational risks, highlighting recurring vulnerabilities and pressing issues—such as inadequate employee oversight, insufficient internal controls, and ineffective investigation and handling of incidents. Eighth, industry‑wide integrity risks, spanning both business operations and information management. In addition, a separate negative list was established to address shortcomings in regulatory enforcement.
At the same time, it is required to evaluate the series of special rectification campaigns launched in 2017 and establish a working mechanism of “rectification–evaluation–rectification.” Banking financial institutions must treat deepening the crackdown on market irregularities in the banking sector as a routine priority, conducting inspections and making corrections concurrently, and addressing violations immediately upon discovery. Regulatory authorities at all levels should carry out on-site inspections and supervisory oversight, and impose accountability and penalties in accordance with the law for any illegal or non-compliant conduct, ensuring that ironclad systems and strict discipline are rigorously enforced.

The Asset Management Association of China has issued the “Work Rules for the Preparation of Credit Information Reports for Members Who Are Private Securities Investment Fund Managers (Trial).”
On January 12, 2018, the Asset Management Association of China issued the “Rules for the Preparation of Credit Information Reports for Members Who Are Private Securities Investment Fund Managers (Trial),” which conducts a “health check” on private securities investment funds and issues corresponding reports. The credit information report introduces and clarifies four key dimensions—compliance, stability, professionalism, and transparency—known as the “one‑nature, three‑degrees” framework. Under these four broad categories, a total of 15 sub‑indicators are further defined. Moving forward, the Association plans to extend this credit information reporting system, at an appropriate time, to the private equity and venture capital fund sectors.

Commercial & Corporate

The Ministry of Finance has issued the Interim Measures for the Administration of Government Procurement Agencies.
On January 11, 2018, the Ministry of Finance issued the Interim Measures for the Administration of Government Procurement Agencies (Cai Ku [2018] No. 2) (hereinafter referred to as the “Measures”). The Measures place particular emphasis on the professional competence of procurement agencies, requiring them to employ no fewer than five professionals who are well-versed in government procurement laws and regulations and possess the requisite capabilities to prepare procurement documents and organize procurement activities. In addition, the Measures set forth clear requirements regarding the venues and equipment used for opening and evaluating bids.
The Measures clearly set forth five requirements that agencies authorized to act as agents in government procurement must meet: they must be capable of independently assuming civil liability; establish a sound internal supervision and management system for government procurement; employ no fewer than five professionals who are well-versed in the laws and regulations governing government procurement and possess the requisite expertise to prepare procurement documents and organize procurement activities; maintain an independent office space and the necessary office facilities required for conducting government procurement business; and, if they conduct evaluation work at their own premises, they must provide appropriate evaluation venues and install audio‑video recording and other monitoring equipment that comply with the standards prescribed by the provincial people’s government.
The Measures stipulate that fiscal departments at all levels shall strengthen oversight of procurement agencies, including establishing and improving a random inspection mechanism that combines targeted and non‑targeted sampling; local fiscal departments shall enhance training on government procurement practices for these agencies, continuously raising their professional standards.
The Measures also require fiscal departments at all levels to strengthen, in accordance with the law, oversight and inspection of procurement agencies. Such oversight and inspection shall cover eight areas: the authenticity of the agency’s online registration information; the conclusion and implementation of entrusted agency agreements; the preparation and issuance of procurement documents, the organization of evaluation proceedings, the publication of relevant notices, the selection of evaluation experts, and the evaluation process itself; the collection and refund of bid bonds; and the notification of the winning or successful supplier.

The Regulations on Domestic Investment in the Civil Aviation Industry will officially come into effect on January 19.
The revised Regulations on Domestic Investment in the Civil Aviation Industry (hereinafter referred to as the “Regulations”) will come into effect on January 19, 2018. The Regulations further relax the market access requirements for both state-owned and non-state-owned entities investing in the civil aviation sector, encourage and support domestic investors in entering the industry, and guide and regulate investment activities among civil aviation enterprises, thereby promoting the rapid and sound development of the civil aviation industry.
The Regulations stipulate that public air transport enterprises subject to special management for domestic investment shall remain under state control or in a state‑controlled majority position; in the latter case, the state‑controlled majority must be held by a single state‑owned investor and its controlled subsidiaries. At the same time, domestic investors are encouraged to diversify their investments in civil transport airports, while hub airports included in the civil aviation development plan and civil transport airports of strategic significance shall remain wholly state‑owned, state‑controlled, or in a state‑controlled majority position. Where civil transport airports are invested in, constructed, or operated through government–social capital cooperation mechanisms such as franchising, such arrangements must also comply with relevant national regulations governing franchising and other forms of government–social capital partnerships.
The Regulations govern investment activities among civil aviation enterprises: Civil transport airports, aviation fuel sales, storage, transportation, and refueling enterprises, computer reservation system service providers, and their affiliated entities, when investing in public air transport enterprises other than all‑cargo airlines, shall not exceed a 5% equity stake. For a public air transport enterprise and its affiliates investing in civil transport airports or their shared terminals that are designated as national‑planned international or regional hubs, the aggregate investment share shall not exceed 25%, and such investments may not confer controlling interest. Furthermore, civil transport airports may invest in aviation fuel sales, storage, transportation, and refueling enterprises and related facilities within the airport’s premises, with an investment share not exceeding 25% and without acquiring controlling interest.

Seven departments have jointly launched the initiative to establish the first batch of national demonstration parks for integrated rural industrial development.
Recently, the National Development and Reform Commission, the Ministry of Agriculture, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Land and Resources, the Ministry of Commerce, and the China National Tourism Administration jointly issued the “Notice on the Release of the List of the First Batch of National Demonstration Parks for Integrated Rural Industrial Development” (NDRC Agricultural Economy [2017] No. 2301, hereinafter referred to as the “Notice”), announcing the first batch of 148 entities designated as demonstration park creators.
The Notice requires that the Development and Reform Commissions of all provinces, autonomous regions, and municipalities directly under the central government, in coordination with relevant departments, strengthen organizational leadership, enhance coordination and guidance, and intensify support and safeguards for the establishment of demonstration parks. Each entity responsible for establishing a demonstration park is expected to continuously tap into agriculture’s multifaceted functions—ecological, cultural, and tourism-related—actively explore new models for the integrated development of rural industries, innovate and refine mechanisms for linking interests across industrial chains, effectively boost farmers’ incomes, and transform the demonstration parks into exemplary models of integrated rural industrial development in their respective regions. Furthermore, they are to distill and codify a set of replicable and scalable best practices, striving to achieve more substantial progress in the integrated development of the primary, secondary, and tertiary sectors in rural areas.

China Banking Regulatory Commission: Launches a Pilot Program for Investment-Management-Type Rural and Town Banks
Recently, the China Banking Regulatory Commission issued the “Notice of the China Banking Regulatory Commission on Launching Pilot Programs for Investment-Management‑Type Rural and Small‑Town Banks and the ‘One Bank per Multiple Counties’ Model for Rural and Small‑Town Banks” (hereinafter referred to as the “Notice”). The Notice stipulates that commercial banks meeting certain conditions may establish a new rural and small‑town bank or designate an existing one as its investment‑management bank—referred to as an investment‑management‑type rural and small‑town bank—which shall acquire all equity interests in the targeted rural and small‑town banks held by the original principal initiator and assume the principal initiator’s responsibilities with respect to those invested banks.
An official from the China Banking Regulatory Commission stated that investment‑management‑type rural and township banks (hereinafter referred to as “investment‑management banks”) have only had their scope of business expanded; their institutional classification remains that of rural and township banks. The Notice clarifies that, in addition to their existing business scope, investment‑management banks may engage in investing in and acquiring other rural and township banks, and provide them with mid‑ and back‑office services such as payment and clearing agency, policy advisory, information technology, product development, operational support, and training, as well as undertake, on behalf of these banks, applications for a unified credit card brand, among other activities.
The official stated that, compared with the current management model, the investment‑management bank model offers distinct advantages: First, as an independent legal entity, it can better coordinate and concentrate resources, enhance the efficiency of management and services, and address shortcomings in back‑office and middle‑office functions. Second, it helps attract investment from social capital by encouraging equity participation. Third, the investment‑management bank can tailor its risk‑identification, monitoring, resolution, and liquidity‑support mechanisms to the specific characteristics of rural and township banks, establishing a “small institutions, large platform” framework that fosters economies of scale and strengthens both the management capabilities and overall risk resilience of these banks.

The China Insurance Regulatory Commission has issued the Measures for the Administration of Insurance Standardization.
The China Insurance Regulatory Commission recently issued the Measures for the Administration of Insurance Standardization (hereinafter referred to as the “Measures”).
The Measures are grounded in the realities and development priorities of standardization in the insurance sector, adhering to the principles of “government guidance and market-driven momentum, serving the overall national agenda while taking a long-term perspective, advancing in a coordinated manner with a focus on key areas.” Taking as its starting point the establishment of a new insurance‑standardization management system characterized by synergistic development and coordinated support between government and market, and guided by the goal of building a unified, well‑coordinated, efficiently operating framework for insurance standardization that is jointly governed by both public and private sectors, the Measures set out norms and requirements for all stages and procedures involved in insurance standardization. They further streamline mechanisms, clearly delineate the boundaries between government‑issued and market‑driven standards, and define the respective responsibilities and scopes of all stakeholders, thereby providing robust institutional safeguards for advancing supply‑side structural reform in the insurance standards domain and strengthening the application and implementation of standards.
The Measures cover the insurance standardization framework, the responsibilities of insurance standardization bodies, the procedures for developing and revising insurance standards, as well as the implementation and management of such standards. They clarify the respective governance mechanisms, organizational structures, and development/revision processes for industry standards and association‑level standards; delineate the roles and responsibilities of standardization stakeholders—including regulatory authorities, the Insurance Standardization Committee, industry associations, and market entities—in standardization activities; and establish standardized procedures for the implementation of various types of insurance standards and methods for their effective management.
The Measures are of great significance in further enhancing the standardization of the insurance industry in terms of both compliance and scientific rigor, and will elevate the management of standardization efforts to a new level. Moving forward, the China Insurance Regulatory Commission will encourage all entities and institutions across the industry to study and thoroughly understand these Measures, ensure their effective implementation, and proactively assume responsibility at every stage—standard formulation and revision, as well as application and enforcement—thereby fully leveraging the foundational support and normative guidance provided by insurance standards to build a modern insurance services sector and promote the sustained, healthy development of the industry.

Taxation TAXATATION

Six departments have jointly issued the “Notice on Adjusting the Relevant Catalogues of the Import Tax Policy for Major Technological Equipment.”
Recently, the Ministry of Finance, in coordination with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the General Administration of Customs, the State Taxation Administration, and the National Energy Administration, jointly issued the “Notice on Adjusting the Relevant Catalogues of the Import Tax Policy for Major Technological Equipment,” making adjustments to three catalogues under the import tax policy for major technological equipment.
To implement the State Council’s requirements under the Plan for Adjusting and Revitalizing the Equipment Manufacturing Industry, with the approval of the State Council, in August 2009, the Ministry of Finance and five other ministries jointly introduced a tax policy on imports of major technological equipment. Under this policy, domestic enterprises that meet specified conditions are exempt from customs duties and value-added tax at the import stage on certain key components and raw materials that are genuinely necessary for the production of major technological equipment or products supported by the state.
The Ministry of Finance, in coordination with relevant departments, has revised the three lists associated with this policy. In light of developments in the domestic major‑technology‑equipment industry and changes in the production and manufacturing capacities of supporting components and raw materials, and in alignment with the “Made in China 2025” plan, the “Catalogue of Major Technological Equipment and Products Supported by the State” has been updated to include certain technologies that are currently at the early or growth stages, while removing those technologies for which domestic industries have already achieved robust development and well‑integrated upstream–downstream supply chains, thereby further clarifying the policy’s focus. For technologies that already enjoy strong competitive advantages, the “Catalogue of Major Technological Equipment and Products Not Eligible for Import Duty Exemption” explicitly stipulates that their imports will not qualify for duty exemption. Moreover, based on adjustments to the “Catalogue of Major Technological Equipment and Products Supported by the State,” the “Catalogue of Key Components and Raw Materials for Importing Major Technological Equipment” has been correspondingly revised to grant duty exemption to those components and raw materials whose import is deemed genuinely necessary.

The Ministry of Finance has issued the “Letter Soliciting Comments on Enterprise Accounting Standard No. 21—Leases (Revised) (Exposure Draft).”
Recently, in order to adapt to the development of the socialist market economy, refine China’s corporate accounting standards framework, enhance the quality of financial reporting and the transparency of accounting information, and ensure the continued convergence of China’s corporate accounting standards with International Financial Reporting Standards, the Ministry of Finance has drafted “Accounting Standard for Business Enterprises No. 21—Leases (Revised) (Exposure Draft).”
The main contents of this revision include: refining the principles governing the identification, disaggregation, and consolidation of leases; replacing the lessee’s dual‑model accounting approach with a single model; enhancing the lessor’s lease classification criteria and related accounting treatments; revising the accounting treatment for sale-and-leaseback transactions to align with revenue recognition standards; and improving the presentation and disclosure requirements pertaining to leases.

LITIGATION & ARBITRATION

The Investor Service Center has established a new model for resolving securities disputes—“arbitration plus mediation.”
Recently, the Investor Service Center successfully mediated a dispute between an investor and a securities office by adopting an in-court adjudication procedure for the first time. This marks the first official application of the “adjudication-plus-mediation” dispute-resolution model in China’s capital market.
The Investor Service Center stated that dispute mediation adheres to the fundamental principle of voluntariness on the part of the parties involved. However, compared with market‑operating institutions, investors often find themselves at a disadvantage in terms of financial resources, professional expertise, access to information, and organizational capacity, making it difficult for them to engage in effective, equal‑footed communication and negotiation with these entities. Even when both investors and institutions enter the mediation process, institutions typically hesitate to make voluntary concessions, rendering successful mediation highly challenging. This successful case of “arbitration plus mediation” provides a replicable and scalable practical model for overcoming the longstanding difficulty of achieving successful mediation, thereby establishing a new mechanism for resolving disputes that is convenient, professional, and authoritative.
To ensure the proper and thorough resolution of this dispute, upon the investor’s application and with the securities office’s authorization, the Investor Protection Center initiated court‑mediated adjudication proceedings in December 2017. Following the hearing, recognizing that both parties had certain expectations regarding their respective faults and liabilities and expressed a willingness to settle, the adjudicating panel refrained from rendering an immediate decision and instead organized post‑hearing mediation. Taking into account the relative fault of each party and applying the law, the panel put forward a neutral mediation proposal, which led the parties to reach a settlement agreement on the spot. The securities office then provided compensation in accordance with its share of responsibility. After the people’s court ruled that the mediation agreement was legally effective, the agreement has now been fully implemented, and the dispute has been satisfactorily resolved.

The Supreme People’s Court has issued the “Notice on Fully Leveraging the Role of Judicial Functions to Foster a Sound Rule-of-Law Environment for Entrepreneurs’ Innovation and Entrepreneurship.”
Recently, the Supreme People’s Court issued the “Notice on Fully Leveraging the Role of Judicial Functions to Foster a Sound Rule-of-Law Environment for Entrepreneurs’ Innovation and Entrepreneurship.”
The notice emphasizes the need to strictly enforce criminal laws and judicial interpretations and to resolutely prevent the use of criminal measures to interfere with economic disputes. It is essential to uphold the principle of legality in criminal law: entrepreneurial activities involving innovation and business operations—provided they do not violate criminal statutes—shall not be prosecuted as crimes. The elements constituting the offenses of illegal business operations and contract fraud must be rigorously applied, and their scope should not be arbitrarily expanded. With respect to civil disputes arising during the conclusion or performance of contracts, unless there is conclusive and sufficient evidence demonstrating that the circumstances meet the statutory requirements for a criminal offense, such matters shall not be treated as criminal cases.
The notice stipulates that strict distinctions must be drawn between entrepreneurs’ illicit gains and their lawful property; where there is insufficient evidence to establish that certain assets constitute illicit proceeds, no judgment shall order their confiscation or restitution. Furthermore, a clear separation must be maintained between an entrepreneur’s personal assets and the legal person’s corporate assets, and in handling corporate crimes, the entrepreneur’s lawful personal property and that of family members may not be implicated. The notice also requires that the legitimate rights and interests of honest and trustworthy entrepreneurs be protected in accordance with the law. Moreover, the validity of contracts entered into between governments and enterprises should be properly assessed; where government entities breach their commitments—particularly when such breaches result solely from changes in administration or leadership—their reasonable claims shall be upheld in accordance with the law.

Other

The Overall Plan for the Third National Land Survey Has Been Released.
The “Overall Plan for the Third National Land Survey” (hereinafter referred to as the “Overall Plan”) was recently approved and promulgated by the State Council. The Overall Plan sets forth clear provisions regarding the objectives and significance of the Third National Land Survey, its principal tasks, its technical approach and methodologies, its key deliverables, and its organizational implementation.
The Overall Plan sets out the objectives of the Third National Land Survey: building on the findings of the Second National Land Survey, it seeks to comprehensively refine and enhance the national baseline data on land use; ensure that the state maintains accurate and detailed information on the current status of land use and changes in land resources; further improve the systems for land surveying, monitoring, and statistical reporting; achieve information‑based management and sharing of survey results; and meet the needs of ecological civilization development, spatial planning, supply‑side structural reform, macroeconomic regulation, reform of the natural resources management system, unified property rights registration, and territorial space use control.
According to the Overall Plan, the primary tasks of the Third National Land Survey are, building on the results of the Second National Land Survey and in accordance with national unified standards, to leverage remote sensing, surveying and mapping, geographic information systems, the Internet, and other technologies nationwide; to make coordinated use of existing data; and, based on orthophoto maps, to conduct field surveys of land categories, areas, and ownership. This will enable a comprehensive understanding of the distribution and utilization of farmland, orchards, forests, grasslands, commercial and service用地, industrial, mining, and warehousing用地, residential用地, public administration and public service用地, transportation用地, water bodies, and water conservancy facilities across the country. The survey will also refine the assessment of farmland, providing a thorough grasp of its quantity, quality, distribution, and composition; conduct surveys of inefficient and idle land to comprehensively map land use within urban areas and development zones; establish an interconnected and shared land‑survey database covering four administrative levels—national, provincial, prefectural, and county—that integrates imagery, land categories, boundaries, areas, and ownership; improve networked management systems for inter‑level data sharing; and strengthen mechanisms for surveying and statistically analyzing changes in land resources, as well as for conducting all‑weather, full‑coverage remote‑sensing monitoring and rapid updating. Compared with the Second National Land Survey and annual change‑of‑land‑use surveys, the Third National Land Survey represents a refinement of existing data, an update of changing conditions, and a supplementation of newly added elements, while also applying multi‑layered annotations to land categories such as farmland, orchards, forests, grasslands, and aquaculture water surfaces, reflecting their current usage, quality status, and management attributes where overlapping jurisdictional requirements exist among relevant departments.

The Ministry of Civil Affairs convened a special meeting to deploy and advance poverty alleviation efforts in deeply impoverished areas.
Recently, the Ministry of Civil Affairs convened a special meeting to plan and advance poverty alleviation efforts in areas of extreme poverty. The meeting called for fully leveraging the functions and responsibilities of civil affairs departments and adopting more effective measures to ensure the success of poverty eradication in these regions. First, it is essential to fulfill social assistance duties and provide a safety net. Rural subsistence allowances must be set at no lower than the national poverty line. For those who lack the capacity to work, those who are capable but still in the process of escaping poverty, and those who have fallen back into poverty after lifting themselves out, comprehensive support should be provided through subsistence allowances and other social assistance programs. Second, social organizations should be encouraged and guided to participate in poverty alleviation, with a particular focus on deeply impoverished areas such as the “Three Regions and Three Prefectures,” where tailored, targeted assistance should be delivered. Third, greater policy and resource support must be directed toward these areas, in accordance with central directives, ensuring that resources, policies, and funding are tilted in favor of the most disadvantaged regions. Fourth, inter‑departmental coordination must be strengthened. Active efforts should be made to secure support from relevant agencies, including finance, development and reform, and poverty alleviation authorities, to jointly address challenges in civil affairs‑related poverty‑eradication work in deeply impoverished areas, garner additional backing, and build synergistic policy momentum.

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