JC Master Legal News Issue 807

Key Takeaways for This Issue

The Shanghai Stock Exchange has issued the “Guidelines for Handling Share Agreement Transfers of Listed Companies on the Shanghai Stock Exchange.”
On January 26, building on its earlier business guidelines, the Shanghai Stock Exchange issued and implemented the “Guidelines for Handling Share Agreement Transfers of Listed Companies.” This revision clearly sets forth requirements for accepting agreement‑transfer applications, circumstances under which applications will not be accepted, required application documents, and specific procedural steps.
Two ministries have issued the “Administrative Measures for the Financial Management of Land Reserve Funds.”
The Ministry of Finance and the Ministry of Land and Resources have jointly formulated and issued the “Administrative Measures for the Financial Management of Land Reserve Funds” to standardize land‑reserve activities and strengthen the management of financial revenues and expenditures related to such funds. The Measures stipulate that land‑reserve funds shall be used exclusively for their designated purposes, accounted for separately, and subject to budgetary management.
The State Taxation Administration has issued the “Announcement of the State Taxation Administration on Matters Relating to Taxpayer Credit Evaluation.”
On February 1, 2018, the State Taxation Administration issued the “Announcement of the State Taxation Administration on Matters Relating to Taxpayer Credit Evaluation” (hereinafter referred to as the “Announcement”). The main contents of this announcement are as follows: first, refining the institutional framework governing the scope of taxpayer credit evaluation; second, specifying the time limits for evaluating the taxpayer credit of the aforementioned enterprises; third, introducing an M‑level taxpayer credit rating and defining its applicable scope; fourth, clarifying the incentive measures applicable to enterprises rated at the M level; and fifth, improving the mechanism for dynamically adjusting taxpayer credit ratings.
The Supreme People’s Court has released typical cases on protecting property rights and the legitimate rights and interests of entrepreneurs.
On January 30, the Supreme People’s Court released the first batch of seven typical cases demonstrating how people’s courts have fully leveraged their adjudicative functions to protect property rights and the legitimate rights and interests of entrepreneurs. These seven cases cover six categories: contract performance, intellectual property, administrative management, criminal offenses, litigation preservation, and state compensation.
The China Internet Finance Association has issued the “Notice on Preventing Risks Associated with Overseas ICOs and ‘Virtual Currency’ Trading.”
On January 26, the China Internet Finance Association (hereinafter referred to as the “Association”) issued the “Notice on Preventing Risks Associated with Overseas ICOs and ‘Virtual Currency’ Transactions.” The notice highlights that overseas platform-based ICOs pose potential risks, including system security vulnerabilities, market manipulation, and money laundering.

Table of Contents
Table of Contents

Finance & Capital Markets

The Shanghai Stock Exchange has issued the “Guidelines for Handling Share Agreement Transfers of Listed Companies on the Shanghai Stock Exchange.”
The Shenzhen Stock Exchange has revised the “Guidelines for Shareholder Services of Listed Companies.”
The 2018 Work Conference of the China Securities Regulatory Commission was held.
The Ministry of Finance and the National Development and Reform Commission have, in accordance with the law, addressed issues involving local governments’ illegal or non-compliant borrowing and guarantee practices by certain accounting offices and bond‑issuing enterprises.
The China Banking Regulatory Commission has, in accordance with the law, investigated and prosecuted cases involving pledge‑based loans at banking financial institutions in Shaanxi and Henan provinces.

Corporate & Commercial

Two ministries have issued the “Administrative Measures for the Financial Management of Land Reserve Funds.”
Local Two Sessions Outline a New Vision for State-Owned Enterprise Reform
The Ministry of Science and Technology, together with five other departments, has issued the “National Agricultural Science and Technology Park Development Plan (2018–2025).”
The new edition of the “Technology Innovation Roadmap for Key Areas of ‘Made in China 2025’” has been released.
The first central state-owned enterprise restructuring of 2018 has been finalized: China Nuclear Construction Group will be wholly transferred to China National Nuclear Corporation.

Taxation

The State Taxation Administration has issued the “Announcement of the State Taxation Administration on Matters Relating to Taxpayer Credit Evaluation.”
Three ministries have adjusted the preferential tax policy for natural gas imports.

Litigation & Arbitration

The Supreme People’s Court has released typical cases on protecting property rights and the legitimate rights and interests of entrepreneurs.
The Ministry of Justice has released guiding cases on notarization related to property rights protection.

Other

The China Internet Finance Association has issued the “Notice on Preventing Risks Associated with Overseas ICOs and ‘Virtual Currency’ Trading.”
The Comprehensive Department of the National Energy Administration has issued the “Notice on Launching Special Supervisory Work for Photovoltaic Power Generation.”

Finance & Capital Markets

The Shanghai Stock Exchange has issued the “Guidelines for Handling Share Agreement Transfers of Listed Companies on the Shanghai Stock Exchange.”
On January 26, building on its earlier business guidelines, the Shanghai Stock Exchange issued and implemented the “Guidelines for Handling Share Agreement Transfers by Listed Companies of the Shanghai Stock Exchange” (hereinafter referred to as the “Guidelines”). This revision clearly sets forth requirements for accepting agreement‑transfer applications, circumstances under which applications will not be accepted, required application documents, and specific procedural steps. In addition, the Guidelines introduce regulatory measures and disciplinary sanctions: any violations of laws or regulations, or breaches of commitments, occurring in the course of handling agreement‑transfer transactions or subsequent share reductions will be subject to appropriate regulatory actions or disciplinary penalties.
The Guidelines stipulate that applications for negotiated transfers may be submitted to the stock exchange in the following circumstances: 1) Negotiated transfers related to a listed company’s acquisition or changes in shareholders’ equity; 2) Where the transferring parties are under common de facto control, or are both controlled by the same controlling shareholder; 3) Negotiated transfers involving strategic investments by foreign investors in listed companies; 4) Other circumstances as determined by the China Securities Regulatory Commission.
The Guidelines stipulate the following requirements for such transfers: 1) The transfer agreement must have legally taken effect; 2) All parties to the agreement must be natural persons or legally established and validly existing legal entities or other organizations; 3) The shares to be transferred must be tradable shares without any sale restrictions, unless otherwise provided by laws, administrative regulations, departmental rules, normative documents, or the SSE’s business rules; 4) The shareholding proportion acquired by a single transferee shall not be less than 5% of the company’s total shares, except where the transferring parties are under actual control of the same party, are both controlled by the same controller, or where otherwise provided by laws, administrative regulations, departmental rules, normative documents, or the SSE’s business rules; 5) The transfer price of the shares shall not be lower than the lower limit of the block‑trade price range applicable on the date the transfer agreement is signed (with the date being deferred to the next trading day if that day is non‑trading); except as otherwise provided by laws, administrative regulations, departmental rules, normative documents, or the SSE’s business rules; 6) For agreement‑based transfers that, in accordance with relevant provisions, require prior administrative approval, such approval must have been obtained from the competent authorities; 7) Where the transferring parties are required to disclose relevant information, they must have duly and compliantly fulfilled their disclosure obligations in accordance with the law; 8) Where the transferring parties seek an exemption from the mandatory tender offer obligation, they must have obtained such exemption; 9) Any other requirements as determined by the China Securities Regulatory Commission and the Shanghai Stock Exchange.
At the same time, the Guidelines also specify circumstances under which applications will not be accepted, as follows: 1) Failure to meet the requirements set forth in the aforementioned nine provisions; 2) The shares to be transferred have been pledged, and the pledgee has not provided written consent to the transfer; 3) The shares to be transferred are subject to pending litigation, arbitration, or other disputes, or are otherwise encumbered by judicial freezes or other restrictions on rights; 4) The shares to be transferred fall within the categories prohibited from being reduced under the China Securities Regulatory Commission’s “Several Provisions on Share Reductions by Shareholders, Directors, Supervisors, and Senior Management of Listed Companies” or the “Detailed Rules on Share Reductions”; 5) The proposed transfer may result in circumvention of regulations governing share lock-up periods; 6) Violation of any commitments made by either party to the transfer; 7) A period of more than six months between the date of agreement signing and the date of application submission without justifiable reason; 8) The proposed transfer may constitute short-term trading or otherwise contravene laws, administrative regulations, departmental rules, normative documents, or the SSE’s business rules; 9) Other circumstances as determined by the Exchange.

The Shenzhen Stock Exchange has revised the “Guidelines for Shareholder Services of Listed Companies.”
To further enhance the shareholder disclosure platform for listed companies, improve the efficiency of shareholder information disclosure, and effectively safeguard investors’ legitimate rights and interests, the Shenzhen Stock Exchange has revised the “Guidelines for Shareholder Services of Listed Companies” (hereinafter referred to as the “Original Guidelines”), which will be promulgated and implemented effective February 2.
The Guidelines have been revised with a focus on three key areas. First, the scope of shareholder information disclosure has been expanded: in addition to the existing equity‑change‑related services, new functionalities have been added for general shareholders’ meetings and other activities approved by the Shenzhen Stock Exchange, enabling shareholders to independently file relevant announcements through the dedicated business portal and thereby promoting higher corporate governance standards among listed companies. Second, the categories of registrable users have been broadened and clarified; once shareholders and their concerted actors complete user registration, they can both use the portal to disclose pertinent announcements, further enhancing the accuracy, completeness, and effectiveness of such disclosures. Third, the content of registration documents and the application process have been refined, with a clear list of required documents established and the procedures for requesting and reviewing additional permissions for shareholder users streamlined.

The 2018 Work Conference of the China Securities Regulatory Commission was held.
Recently, the 2018 Work Conference of the China Securities Regulatory Commission was held in Beijing. The conference reviewed the key achievements of 2017 and outlined the priority tasks for 2018.
In response to this year’s reforms and developments in the capital market, the meeting outlined key priorities: resolutely winning the tough battle to prevent and defuse major risks in the capital market; reforming the issuance and listing system; intensifying support for new technologies, new industries, new business forms, and new models; accelerating the development of a multi-tiered capital market system; continuing to deepen reforms of the New Third Board; leveraging deeper reforms and broader two-way opening-up to comprehensively enhance the core competitiveness of all types of market entities; vigorously advancing the intelligent and technology-driven modernization of regulatory oversight; and continuously strengthening inspection and law enforcement.
In response to the reforms and developments in the capital markets in 2018, the meeting outlined the following key priorities: resolutely fight the tough battle of preventing and defusing major risks in the capital markets; strengthen risk monitoring and enhance capacity to respond to risks in the stock, bond, and futures markets; and officely safeguard the bottom line of preventing systemic risks. Guided by the goal of serving national strategies and building a modernized economic system, we will draw on mature, effective, and beneficial systems and practices from international capital markets, reform the issuance and listing regime, strive to make the regulatory framework more inclusive and adaptable, and intensify support for new technologies, new industries, new business forms, and new models. We will accelerate the development of a multi-tiered capital market system, continue to deepen reforms of the New Third Board, promote the sound development of regional equity markets, and vigorously foster venture capital and angel investment. We will guide the healthy development of the futures and derivatives markets. By deepening reform and expanding two-way opening-up, we will comprehensively enhance the core competitiveness of all types of market entities. We will vigorously advance the intelligent and technology-driven transformation of regulation, continuously strengthen inspection and law enforcement, severely crack down on all illegal and non-compliant activities, and elevate efforts to protect the legitimate rights and interests of investors to a new level.

The Ministry of Finance and the National Development and Reform Commission have, in accordance with the law, addressed issues involving local governments’ illegal or non-compliant borrowing and guarantee practices as they relate to certain accounting offices and bond‑issuing enterprises.
On February 1, 2018, the Financial Supervision Commissioner’s Office of the Ministry of Finance in Jiangsu Province conducted an investigation into illegal and non-compliant debt‑raising and guarantee practices in several cities and counties within the province. The verification and follow-up inspections conofficeed that two enterprises—Gaoyou City and Hongze County in Jiangsu Province—illegally used public‑interest assets as collateral to issue corporate bonds. Furthermore, Zhongxinghua Certified Public Accountants (a special general partnership) engaged in unlawful and non‑compliant conduct in issuing audit reports for the aforementioned bond issuances. In accordance with relevant regulations, the Ministry of Finance and the National Development and Reform Commission imposed the following measures on the concerned entities and responsible individuals: First, Zhongxinghua Certified Public Accountants (a special general partnership) was ordered to carry out thorough rectification, strengthen its risk awareness, enhance internal quality control, and continuously improve its professional standards; second, administrative penalties were imposed, including warnings, on the four certified public accountants who signed the audit reports for “15 Gaoyou Bonds” and “16 Hongze Bonds”; third, Gaoyou City Construction Investment and Development Co., Ltd. and Hongze County Urban Asset Management Co., Ltd. were required to conduct comprehensive self‑inspections and rectifications of their asset conditions, and during the rectification period, their applications to issue corporate bonds were restricted.
In 2015, Gaoyou City Construction Investment and Development Co., Ltd. and Hongze County Urban Asset Management Co., Ltd. each issued corporate bonds worth RMB 1 billion, using land-use rights designated for commercial purposes as collateral. However, the six parcels of land held by these two companies are all classified as public‑benefit assets, which neither meet the accounting standards’ definition of an asset nor comply with the requirements set forth in the “Notice on Further Strengthening Risk Prevention and Management of Corporate Bonds,” which stipulates that “only operating‑type assets may be injected; purely public‑benefit assets such as government office buildings, parks, and schools may not be transferred to urban investment companies.”

The China Banking Regulatory Commission has, in accordance with the law, investigated and prosecuted cases involving pledge‑based loans at banking financial institutions in Shaanxi and Henan provinces.
Recently, following a series of statutory procedures—including case filing, investigation, adjudication, deliberation, notification, and review of statements and defenses—the Shaanxi and Henan Banking Regulatory Bureaus have, in accordance with the law, investigated and imposed penalties on pledge‑loan cases involving banking financial institutions within their jurisdictions. A total of RMB 52.5 million in fines was levied against 19 banking financial institutions implicated in these cases across the two provinces, and 104 individuals held accountable were also sanctioned.
This case has exposed numerous deficiencies in the internal control and management systems of the aforementioned banking financial institutions. First, the “three‑checks” process for loan origination has been rendered a mere formality. Relevant banks have failed to conduct due diligence in pre‑loan investigations, imposed lax scrutiny during loan reviews, and neglected post‑loan monitoring. At some grassroots branches, procedures were disregarded and operations were conducted in violation of regulations, constituting serious breaches of prudent‑management principles. Second, collateral management has collapsed. These institutions have committed significant lapses in the inspection and valuation of pledged assets, creating opportunities for illicit actors. Third, business operations have been pursued in an excessively aggressive and reckless manner. Banks have placed undue emphasis on the scale and pace of growth, lacking a thorough understanding of their clients and failing to adequately assess underlying risks. Some entities have engaged in unauthorized approval processes, with critical positions left without effective checks and balances, and internal controls and audit functions rendered ineffective.

Commercial & Corporate

Two ministries have issued the “Administrative Measures for the Financial Management of Land Reserve Funds.”
Recently, the Ministry of Finance and the Ministry of Natural Resources jointly formulated and issued the Measures for the Financial Management of Land Reserve Funds (Cai Zong [2018] No. 8, hereinafter referred to as the “Measures”) to standardize land reserve activities and strengthen the management of financial revenues and expenditures related to land reserve funds.
Land reserve funds refer to the funds required by land reserve institutions—listed and managed by the Ministry of Natural Resources—to acquire, expropriate, exercise pre-emptive purchase rights over, or reclaim land, as well as to carry out preliminary development thereof, in accordance with relevant state regulations. The Measures stipulate that land reserve funds shall be earmarked for specific purposes, accounted for separately, and subject to budgetary management.
The Measures stipulate that land reserve funds shall be sourced from the following channels: expenditures allocated by the fiscal authorities to land reserve institutions—covering land acquisition and relocation compensation, land development costs, and other related expenses incurred during the land reserve process—derived from land transfer revenues generated from previously supplied reserved land; funds earmarked for land reserves from the State-owned Land Revenue Fund; proceeds raised through the issuance of local government bonds; and other fiscal funds approved by the fiscal authorities for use in land reserves.
The specific scope of use for land reserve funds includes: payments for land acquisition, purchase, preemptive purchase, or repossession; compensation costs for land expropriation and demolition; necessary preliminary land development expenses; principal and interest repayments on existing land reserve loans in accordance with the Ministry of Finance’s regulations on the standardization of land reserve and fund management; and other expenses related to land reserves approved by the fiscal authorities at the same level, including expenditures incurred in land‑registry surveys, land registration, land‑price appraisals, and the construction of fences, walls, and other protective structures during the course of land‑reserve operations.
The Measures stipulate that land reserve institutions shall, in the third quarter of each year, prepare a draft budget for the following year’s land reserve funds—by parcel or by project—based on the current year’s land reserve plan. After review by the competent authority, the draft shall be submitted to the fiscal department at the same level for approval. The day-to-day operating expenses of land reserve institutions shall be accounted for separately from the land reserve funds and may not be commingled.

Local Two Sessions Outline a New Vision for State-Owned Enterprise Reform
Local Two Sessions have been held intensively in recent weeks, and the newly released 2018 government work reports from provinces, autonomous regions, and municipalities have outlined a new landscape for state‑owned enterprise reform at the local level. Fully advancing mixed‑ownership reform and restructuring, while actively promoting the listing of provincial‑level enterprises and asset securitization, have become key priorities across the country. With the third batch of mixed‑ownership reform pilot projects poised to be announced and the SASAC’s “Double Hundred Action” well under way, local SOE restructuring, mixed‑ownership reform, and IPOs are set to gain momentum nationwide in 2018.
Multiple provinces, autonomous regions, and municipalities have made the development of mixed‑ownership enterprises a top priority in this year’s state‑owned enterprise reform. In the Northeast and the central and western regions, the pace of mixed‑ownership reform has further accelerated. Beijing, Shanghai, Jiangxi, Ningxia, Xinjiang, Sichuan, and other localities are actively advancing the listing of provincial‑level SOEs and the securitization of their assets. Meanwhile, Shanxi, Hebei, Qinghai, Ningxia, Guangxi, and other regions are vigorously piloting employee stock ownership schemes; in particular, Jiangxi has explicitly stated that five enterprises will undertake such pilot programs this year.
State-owned asset supervision and administration commissions in Yunnan, Shandong, and other regions have finalized lists of tasks for mixed‑ownership reform and corporate listings. The Yunnan Provincial SASAC stated that it is advancing mixed‑ownership reforms at the group level for five enterprises, including the Urban Investment Group, the Energy Investment Group, the Industrial Investment Group, Chengtai Insurance, and the Precious Metals Group. Meanwhile, the Shandong Provincial SASAC indicated that it will push forward mixed‑ownership reforms at two to three provincial‑level enterprises, such as Taishan Property & Casualty Insurance, and will facilitate the full‑scale listing of two to three provincial‑owned companies while supporting six enterprises—including Qilu Expressway—in pursuing listings on the A‑share and H‑share markets.

The Ministry of Science and Technology, together with five other departments, has issued the “National Agricultural Science and Technology Park Development Plan (2018–2025).”
Recently, the Ministry of Science and Technology, together with five other departments, issued the “National Agricultural Science and Technology Park Development Plan (2018–2025)” (hereinafter referred to as the “Plan”).
The Plan is designed to aggregate innovation resources, foster new drivers of agricultural and rural development, and focus on expanding its functions in areas such as rural innovation and entrepreneurship, showcasing and demonstrating achievements, promoting the commercialization of research outcomes, and providing training for professional farmers.
The main contents are as follows: First, comprehensively deepen institutional reform and actively explore innovative mechanisms. Taking institutional reform and mechanism innovation as the fundamental approach, we will proactively pursue reforms in areas such as transforming agricultural development models, adjusting the industrial structure, and advancing reform, thereby promoting the transformation and upgrading of agriculture, facilitating the transfer and application of advanced agricultural technologies, and enhancing land productivity, resource utilization efficiency, and labor productivity.
Second, we will concentrate superior science and education resources to enhance our capacity for innovation services. We will guide the intensive clustering of innovation factors—such as technology, information, talent, and capital—within the park. By attracting and integrating agricultural research institutions, universities, and other science‑and‑education entities, we will foster market‑oriented organizations for agricultural R&D, technology transfer, and industrial incubation, and establish an agricultural technology transfer center, an entrepreneurship platform for scientific and technical personnel, and a high‑tech industry incubation base.
Third, we will foster key players in scientific and technological innovation and develop high‑tech industries. We will establish “double‑innovation” platforms such as science‑and‑technology incubators, enterprise accelerators, star‑creation spaces, and modern agricultural industry technology innovation centers, nurturing a cohort of technology‑driven enterprises with advanced capabilities and strong growth potential. By promoting standardized production, regionally coordinated development, brand‑oriented operations, and high‑value‑added growth, we will cultivate a number of agri‑high‑tech industrial clusters that are both highly catalytic and distinctly distinctive.
Fourth, optimize the innovation and entrepreneurship ecosystem and enhance the parks’ capacity for innovation and entrepreneurship.
Fifth, we will encourage differentiated development and refine the park‑building model. We will comprehensively advance the construction of national agricultural science and technology parks, guiding them to leverage their technological strengths to carry out demonstration projects, promote innovation, and foster distinctive industrial clusters with strong competitiveness. Following the principle of “one park, one leading industry,” we will develop high‑tech agricultural industry clusters with robust brand recognition, thereby enhancing the overall competitiveness of the agricultural sector.
Sixth, we will build beautiful, livable rural areas and promote the integrated development of industrial parks. We will follow a new path of urbanization with Chinese characteristics, exploring innovative models of urban–rural integration—such as “park–city integration,” “park–town integration,” and “park–village integration.” We will strengthen resource conservation and environmental sustainability, ensuring high productivity and product safety. We will advance the efficient use of agricultural resources, enhance total factor productivity in agriculture, and develop circular, eco‑friendly agriculture.

The new edition of the “Technology Innovation Roadmap for Key Areas of ‘Made in China 2025’” has been released.
Recently, the Ministry of Industry and Information Technology released the latest edition of the Technology Innovation Roadmap for Key Areas under “Made in China 2025” (hereinafter referred to as the “2017 Edition Roadmap”).
This revision retains the ten key areas and 23 priority development directions identified in the “Green Book on Technological Innovation in Key Areas of ‘Made in China 2025’—Technology Roadmap (2015 Edition)” (hereinafter referred to as the “2015 Edition Technology Roadmap”), while, building on the existing framework, it further supplements the roadmap with specific details on critical materials and key specialized manufacturing equipment, tailored to the particular circumstances of each development direction.

The first central state-owned enterprise restructuring of 2018 has been finalized: China Nuclear Construction Group will be wholly transferred to China National Nuclear Corporation.
Recently, with the approval of the State Council, China National Nuclear Corporation (hereinafter referred to as “CNNC”) and China Nuclear Engineering Group Corporation (hereinafter referred to as “CNEC”) have undergone a restructuring. CNEC has been wholly transferred to CNNC without compensation and is no longer directly supervised by the State-owned Assets Supervision and Administration Commission of the State Council. As a result, the number of central enterprises has been reduced to 97, with one less state‑owned defense‑related enterprise.

Taxation TAXATATION
The State Taxation Administration has issued the “Announcement of the State Taxation Administration on Matters Relating to Taxpayer Credit Evaluation.”
On February 1, 2018, the State Taxation Administration issued the “Announcement of the State Taxation Administration on Matters Relating to Taxpayer Credit Evaluation” (hereinafter referred to as the “Announcement”). The main contents of this Announcement are as follows:
I. Improving the System for Defining the Scope of Taxpayer Credit Evaluation
This announcement clarifies that three categories of enterprises not previously included in the scope of tax credit evaluation under the Measures for the Administration of Tax Credit will now participate in such evaluations:
First, newly established enterprises refer to those that have been in existence for less than one assessment year from the date they first engaged in tax-related matters with the tax authorities. In this announcement, the assessment year is defined as the calendar year, namely January 1 to December 31. Second, enterprises that had no revenue from production or business operations during the assessment year. Third, enterprises subject to the deemed‑taxation method for corporate income tax.
II. The time frame for evaluating the tax credit of the aforementioned enterprises has been clarified.
1. For newly established enterprises that had already completed tax-related procedures prior to April 1, 2018, the tax authorities shall conduct a tax credit assessment by April 30, 2018. Starting from April 1, 2018, for newly established enterprises filing tax-related matters with the tax authorities for the first time, the tax authorities shall promptly carry out a tax credit assessment. 2. For enterprises that have no revenue from production or business operations during the assessment year, as well as for those subject to the deemed‑taxation method for corporate income tax, the tax authorities shall, following the time limits stipulated in the Measures on Credit Management, conduct a tax credit assessment at the end of each assessment year. Currently, the Measures on Credit Management provide that the tax authorities shall assess these enterprises’ tax credit in April of the year following the assessment year and publish the assessment results.
III. Introduction of the M-Level Tax Credit Rating and Its Scope of Application
A new M‑level taxpayer credit rating has been introduced, expanding the taxpayer credit rating system from four levels—A, B, C, and D—to five levels: A, B, M, C, and D. The M‑level taxpayer credit rating applies to newly established enterprises that have not engaged in any of the untrustworthy behaviors listed in Article 20 of the Measures for Credit Management, as well as to enterprises that reported no revenue from production or business operations during the assessment year and achieved a score of 70 points or higher on the annual evaluation indicators.
IV. Clarifying the Incentive Measures Applicable to Tax Credit Grade M Enterprises
This announcement clearly stipulates two incentives for M‑level enterprises: first, they may electronically certify special VAT invoices online, eliminating the need to visit the tax service hall for invoice verification; second, tax authorities will enhance their support by providing timely guidance on tax policies and administrative regulations.
V. Improving the Dynamic Adjustment Mechanism for Taxpayer Credit
To promptly reflect the tax compliance status of enterprises, this announcement clarifies that, whether an enterprise is newly participating in the tax credit evaluation or has previously participated, if it engages in any of the untrustworthy behaviors listed in Article 20 of the Measures for the Administration of Tax Credit, the tax authorities shall promptly adjust its tax credit rating and notify it through appropriate means.

Three ministries have adjusted the preferential tax policy for natural gas imports.
Recently, the Ministry of Finance, the General Administration of Customs, and the State Taxation Administration issued a notice on adjustments to tax preferential policies for natural gas imports. The notice states that, effective October 1, 2017, the sales price of liquefied natural gas will be adjusted to RMB 26.64 per gigajoule, and the sales price of piped natural gas will be adjusted to RMB 0.94 per cubic meter.

Litigation & Arbitration

The Supreme People’s Court has released typical cases on protecting property rights and the legitimate rights and interests of entrepreneurs.
To fully leverage the guiding and exemplary role of typical cases and foster a sound rule-of-law environment that safeguards property rights and the legitimate rights and interests of entrepreneurs, the Supreme People’s Court on the morning of January 30 released the first batch of seven typical cases in which people’s courts have effectively exercised their adjudicative functions to protect property rights and the lawful rights and interests of entrepreneurs. These seven cases cover six categories: contract performance, intellectual property, administrative management, criminal offenses, litigation preservation, and state compensation.
1. Bei Peng Company’s application for compensation in a criminal case involving unlawful seizure; 2. Xu Moumou v. the People’s Government of Wucheng District, Jinhua City, concerning administrative enforcement and administrative compensation; 3. Chongqing Moumou Investment (Group) Co., Ltd. v. the People’s Government of Moumou District, Luzhou City, et al., regarding a contract dispute; 4. Property preservation proceedings involving Jinan Mou Real Estate Co., Ltd.; 5. Moumou Sanitary Ware (China) Co., Ltd. v. Suzhou Moumou Technology Development Co., Ltd., Tu Moumou, et al., concerning infringement of trademark rights and unfair competition; 6. Peng Mou’s criminal case of trade secret infringement; 7. A certain Group Co., Ltd. v. the Land and Resources and Housing Administration of a certain city, regarding a land registration dispute.

The Ministry of Justice has released guiding cases on notarization related to property rights protection.
On January 30, 2018, the Ministry of Justice released the second batch of notarization guidance cases (Nos. 4–6). Following the Ministry’s publication late last year of an initial set of three notarization guidance cases closely related to the daily lives of the public, these new cases further focus on strengthening notarization services in the area of property‑rights protection. A total of three cases were issued this time. Case No. 4 concerns the notarization of corporate equity‑incentive contracts, illustrating how notarization supports employee equity‑incentive programs in state‑controlled mixed‑ownership enterprises, ensuring that pilot projects involving employee stock ownership are conducted in accordance with laws and regulations, and providing equal protection for the property rights of the company, the incentivized employees, and other shareholders. Case No. 5 addresses the notarization of rural land‑contracting agreements, demonstrating how notarization offers legal services for rural land‑contracting activities, guides parties in drafting contracts and fulfilling their obligations, effectively prevents potential disputes, and safeguards the legitimate rights and interests of collective organizations, farmers, and holders of contracted management rights. Case No. 6 pertains to the notarization of evidence preservation during market investigations into intellectual‑property infringement, highlighting the unique role of notarization in establishing intellectual‑property rights and enforcing against infringement, thereby providing robust support for legally determining facts of infringement in IP dispute cases and effectively protecting the lawful rights and interests of intellectual‑property right holders.

Other

The China Internet Finance Association has issued the “Notice on Preventing Risks Associated with Overseas ICOs and ‘Virtual Currency’ Trading.”
On January 26, the Internet Finance Association of China (hereinafter referred to as the “Association”) issued the “Notice on Preventing Risks Associated with Overseas ICOs and ‘Virtual Currency’ Trading” (hereinafter referred to as the “Notice”). The Notice points out that, at present, the cleanup and rectification of domestic ICO activities and virtual‑currency trading platforms have been largely completed; however, during this period, some investors have shifted their activities overseas. Even so, overseas platforms still harbor risks such as system security vulnerabilities, market manipulation, and money laundering. The Notice further notes that, as governments worldwide strengthen regulation in the virtual‑currency sector, some overseas trading platforms may be forcibly shut down by their host governments, while others have already had access restricted due to significant compliance risks. Against this backdrop, domestic investors who turn to overseas platforms for trading will face certain risks.
Meanwhile, the association’s monitoring has revealed that certain domestic institutions and individuals continue to organize so‑called peer-to‑peer (P2P) trading and over-the-counter (OTC) transactions, accompanied by services such as market making and escrow. In essence, these activities still constitute “virtual currency” trading venues, which are in clear violation of existing policy regulations. In these related transactions, some domestic social media platforms provide various conveniences for centralized virtual‑currency trading, while certain non‑bank payment institutions offer payment services to support such trading.

The Comprehensive Department of the National Energy Administration has issued the “Notice on Launching Special Supervisory Work for Photovoltaic Power Generation.”
Recently, the Comprehensive Department of the National Energy Administration issued the “Notice on Conducting Special Supervision of Photovoltaic Power Generation” (hereinafter referred to as the “Notice”). The Notice states that the main contents of this special supervision are as follows: First, basic information: the nationally allocated capacity for photovoltaic power generation in the region, the actual installed capacity connected to the grid, and the number of projects (as of the end of 2017); as well as the electricity generated by photovoltaic projects, the amount of power fed into the grid, and the rate of curtailed solar energy. Second, grid connection and access: investment in and buyback arrangements for grid infrastructure supporting photovoltaic projects; the status of applications for grid connection and access; and measures taken to provide support through green channels for poverty‑alleviation photovoltaic projects. Third, implementation of relevant pricing and fee policies: compliance with price policies for photovoltaic projects; implementation of investment subsidies or other financial incentives introduced by local governments; the scope and standards for levying land‑use fees; and the collection of land‑preparation fees and the allocation of other charges. Fourth, electricity purchase, tariff settlement, and subsidy disbursement: the formulation of measures to ensure adequate consumption of generated power; the implementation of full‑capacity guaranteed purchase or minimum guaranteed hours; and the status of tariff settlement and subsidy payments.

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