JC Master Legal News Issue 829

Key Takeaways for This Issue
The People’s Bank of China has further clarified relevant matters pertaining to the “Guiding Opinions on Asset Management Business of Financial Institutions.”
Since its promulgation and implementation on April 27, 2018, the “Guiding Opinions on Regulating Asset Management Business of Financial Institutions” has played a positive role in standardizing the asset management market order and preventing financial risks. To better guide financial institutions in implementing the “Guiding Opinions,” the People’s Bank of China has further clarified relevant matters pertaining to the document.

The China Securities Regulatory Commission has publicly solicited comments on the “Administrative Measures for Private Asset Management Business of Securities and Futures Operating Institutions (Draft for Comments)” and its accompanying detailed rules.
Recently, the China Securities Regulatory Commission (CSRC) has launched a public consultation on the “Administrative Measures for Private Asset Management Business of Securities and Futures Operating Institutions (Draft for Comments)” and the “Regulations on the Operation and Management of Private Asset Management Plans of Securities and Futures Operating Institutions (Draft for Comments).”

The Shanghai Stock Exchange has promulgated and implemented the “Articles of Association of the Shanghai Stock Exchange (Revised in 2018).”
To implement the Measures for the Administration of Stock Exchanges, as amended and promulgated by the China Securities Regulatory Commission in November 2017, the Shanghai Stock Exchange has revised its Articles of Association (hereinafter referred to as the “Articles”). Following deliberation and approval by the Fourth Session of the Exchange’s Board of Directors and the Eighth General Meeting of Members, and after obtaining approval from the CSRC, the revised Articles were issued and came into effect on July 20.

The CPC Central Committee and the State Council have issued the “Plan for Reform of the National and Local Tax Collection and Administration System.”
Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Plan for Reforming the Tax Collection and Administration System of the State and Local Tax Authorities.” The reform of the tax collection and administration system is a major decision made by the Party Central Committee with Comrade Xi Jinping at its core, taking into account the overall situation. The “Reform Plan” serves as a guiding document to ensure the smooth and orderly advancement of this reform.

Changsheng Bio’s fake vaccine scandal has unfolded one after another, triggering five consecutive trading halts and wiping out nearly RMB 10 billion in market value.
On the evening of July 19, Changsheng Bio (002680.SZ) announced that its subsidiary had received an administrative penalty decision, ordering the confiscation of 186 units of the “Adsorbed Acellular Diphtheria–Tetanus–Pertussis Combined Vaccine” (batch number: 201605014-01) in stock and imposing a total fine and confiscation of RMB 3.4429 million for producing and selling substandard drugs. Previously, the subsidiary had already been placed under investigation in October 2017 on the same grounds; this latest action represents the outcome of that investigation.

Table of Contents
Table of Contents

Finance & Capital Markets
The People’s Bank of China has further clarified relevant matters pertaining to the “Guiding Opinions on Asset Management Business of Financial Institutions.”
The China Securities Regulatory Commission has publicly solicited comments on the “Administrative Measures for Private Asset Management Business of Securities and Futures Operating Institutions (Draft for Comments)” and its accompanying detailed rules. The CSRC has also imposed administrative penalties in three cases of violations of information disclosure requirements.
The Shanghai Stock Exchange has promulgated and implemented the “Articles of Association of the Shanghai Stock Exchange (Revised in 2018).”
The Shenzhen Stock Exchange has issued a newly revised Articles of Association.

Corporate & Commercial
CSRC: Insider trading cases in the first half of the year show a downward trend.
China Banking and Insurance Regulatory Commission: Minimum investment threshold for public offering wealth management products lowered to RMB 10,000.
New Oriental Online has launched its plan to list in Hong Kong, ushering in an “education boom” on the Hong Kong stock market.
IPO approval rate has dropped to as low as 55%; on Tuesday, five companies seeking their initial public offerings will face a critical test.
Changsheng Bio’s fake vaccine scandal has unfolded one after another, triggering five consecutive trading halts and wiping out nearly RMB 10 billion in market value.

Taxation
The CPC Central Committee and the State Council have issued the “Plan for Reform of the National and Local Tax Collection and Administration System.”
New tax authorities at the national, provincial, municipal, county, and township levels have all been officially established.

Litigation & Arbitration
The Second Circuit of the Supreme People’s Court deepens exchanges and cooperation with universities in its circuit.
The Anhui procuratorial organs have instituted public prosecution against Xu Jiagui in accordance with the law.

Other
More than 150 listed companies in Jiangsu are controlled by family ownership, and 60% are urgently seeking second-generation successors.
Changsheng Bio replied to the Shenzhen Stock Exchange: “We feel deeply remorseful and guilty about the incident.”
Finance & Capital Markets
The People’s Bank of China has further clarified relevant matters pertaining to the “Guiding Opinions on Asset Management Business of Financial Institutions.”
The Shanghai Head Office of the People’s Bank of China, its branches, business management departments, central sub-branches in provincial (capital) cities, and central sub-branches in sub-provincial cities; the China Development Bank, all policy banks, state-owned commercial banks, joint-stock commercial banks, and the Postal Savings Bank of China; all securities offices, fund management companies, futures companies, and private equity fund management institutions; and all insurance asset management institutions:
Since its promulgation and implementation on April 27, 2018, the “Guiding Opinions on Regulating Asset Management Business of Financial Institutions” (Document No. Yinfa [2018] 106, hereinafter referred to as the “Guiding Opinions”) has played a positive role in standardizing the order of the asset management market and preventing financial risks. To guide financial institutions in better implementing the “Guiding Opinions,” ensure a smooth transition in the regulation of asset management business, and create a favorable monetary and financial environment for the real economy, following joint deliberations by the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission, the relevant matters are hereby further clarified as follows:
I. In accordance with Article 10 of the Guiding Opinions, public‑offering asset management products, in addition to primarily investing in standardized debt‑type assets and listed equities, may also make appropriate investments in non‑standardized debt‑type assets; however, such investments must comply with the regulatory requirements set forth in the Guiding Opinions regarding maturity matching, quota management, information disclosure, and other aspects pertaining to investments in non‑standardized debt‑type assets.
II. During the transition period, financial institutions may issue legacy products to invest in new assets, giving priority to meeting the financing needs of key national sectors, ongoing major infrastructure projects, and small, medium, and micro enterprises. However, the aggregate size of these legacy products shall be capped at the total outstanding balance of such products as of the date prior to the issuance of the Guiding Opinions, and the maturity dates of the newly invested assets must not extend beyond the end of 2020.
III. During the transition period, for fixed‑term open‑ended asset management products with a lock‑up period of six months or longer, bonds held to collect contractual cash flows and intended to be held to maturity may be measured at amortized cost; however, the duration of the asset portfolio held by such products shall not exceed 1.5 times the length of the lock‑up period. Subject to strict regulatory oversight, banks’ cash‑management products shall, on an interim basis, be valued using the “amortized cost plus shadow pricing” approach applied to money‑market funds.
IV. For existing non-standard debt‑type assets that, despite various measures, remain difficult to unwind and must be brought back onto the balance sheet, relevant parameters shall be appropriately adjusted in the macroprudential assessment (MPA) framework to leverage their counter-cyclical regulatory function and support the reclassification of eligible off‑balance‑sheet assets. Banks with a need to bring such non‑standard debt‑type assets back onto the balance sheet are also encouraged to issue Tier 2 capital bonds to replenish their capital.
V. Following the end of the transition period, with the approval of the financial regulatory authorities, appropriate arrangements shall be made to properly handle existing non-standard debt‑type assets that, due to special circumstances, are difficult to bring back onto the balance sheet, as well as existing equity‑type assets that have not yet matured.
VI. During the transitional period, financial institutions shall formulate rectification plans in a self‑initiated and orderly manner, which shall be implemented upon conofficeation by the financial regulatory authorities.
Please forward this notice to all branches and financial institutions within your jurisdiction for implementation, and simultaneously send a copy to the local branches of the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission.
General Office of the People’s Bank of China
July 20, 2018

The China Securities Regulatory Commission has publicly solicited comments on the “Administrative Measures for Private Asset Management Business of Securities and Futures Operating Institutions (Draft for Comments)” and its accompanying detailed rules.
Recently, the China Securities Regulatory Commission (CSRC) has launched a public consultation on the “Administrative Measures for Private Asset Management Business of Securities and Futures Operating Institutions (Draft for Comments)” and the “Regulations on the Operation and Management of Private Asset Management Plans of Securities and Futures Operating Institutions (Draft for Comments)” (hereinafter collectively referred to as the “New Regulations on Asset Management Business”).
A spokesperson for the China Securities Regulatory Commission stated that, in recent years, the private asset management business of securities and futures operating institutions has grown rapidly. As of June 2018, the total scale of such business stood at RMB 25.91 trillion, with securities offices and their subsidiaries accounting for approximately RMB 14.92 trillion, fund management companies and their subsidiaries for about RMB 10.83 trillion, and futures companies and their subsidiaries for roughly RMB 160 billion. Overall, the vast majority of these institutions are operating their private asset management businesses in good order, with product investment and operations conducted in a relatively standardized manner, thereby playing an important and positive role in meeting the financing needs of households and enterprises and in improving the structure of social financing. However, amid rapid market development and evolving internal and external conditions, certain issues have emerged in this sector, including some institutions straying from the core principles of asset management, inadequate active management, and weak risk controls. Since 2016, the CSRC has continuously refined regulatory frameworks for private asset management, urging securities and futures operating institutions to assume full responsibility for compliance and risk control. As a result, industry-wide awareness of compliance and risk management has strengthened, and practices of indiscriminate business expansion at the expense of compliance and risk oversight have been brought under preliminary control.
On April 27, 2018, the “Guiding Opinions on Regulating Asset Management Business of Financial Institutions” (hereinafter referred to as the “Guiding Opinions”) were officially promulgated and put into effect. In response, securities and futures operating institutions have actively advanced the standardization of their existing business lines and products in accordance with the relevant requirements. The newly drafted “New Regulations on Asset Management Business,” currently under public consultation, builds upon a systematic consolidation of the existing regulatory framework governing the private‑placement asset management activities of securities and futures operating institutions. It fully implements the provisions set forth in the “Guiding Opinions,” while also drawing on the China Securities Regulatory Commission’s effective risk‑management practices in this area over recent years. The new regulations aim to provide a comprehensive regulatory framework for the private‑placement asset management business of securities and futures operating institutions and are intended to be issued and implemented as supplementary rules to the “Guiding Opinions.”
A spokesperson for the China Securities Regulatory Commission stated that most of the provisions in the “New Regulations on Asset Management Business” are policies issued since 2016 to implement the CSRC’s commitment to law-based, comprehensive, and stringent regulation of the private asset management business of securities and futures operating institutions. These provisions exhibit a high degree of policy continuity, and certain indicators have been slightly relaxed compared with existing regulatory requirements after aligning with the “Guiding Opinions.” Overall, these measures will facilitate a smooth transition of existing asset management business among securities and futures operating institutions, further enhance their compliance management and risk control capabilities in the private asset management sector, effectively safeguard investors’ legitimate rights and interests, and help prevent systemic risks. Throughout the drafting process, four fundamental principles were consistently upheld:
First, we will standardize regulatory rules to promote fair competition. On the one hand, we will harmonize the regulatory framework for private asset management activities across all types of securities and futures operating institutions, including securities offices, fund management companies, and futures companies, as well as their subsidiaries, thereby eliminating regulatory arbitrage. On the other hand, we will align with the Guiding Opinions and ensure consistency and coherence with the asset management regulatory frameworks of other financial regulators.
Second, we will ground our efforts in effective integration and maintain a problem‑oriented approach. In principle, we will refrain from making major changes to the existing regulatory framework and rules. Drawing on the salient issues and regulatory experience accumulated in recent years in the private asset management sector, we will focus on strengthening risk prevention and control, regulating related-party transactions, preventing the transfer of benefits, and reinforcing the principal responsibility of operating institutions, thereby refining and improving the institutional framework.
Third, the regulatory framework has been refined to enhance its operational clarity. In line with the requirements of the Guiding Opinions, the New Regulations on Asset Management have further specified concrete metrics and supervisory requirements—such as investor suitability management, quota-based oversight of non-standard credit‑asset investments, liquidity‑ratio management, and information disclosure—making the regime both streamlined and practicable.
Fourth, we have increased the flexibility of the rules to ensure a smooth transition. Taking into account the current characteristics of market operations and the existing stock of asset management business, we have established a transition period identical to that set out in the Guiding Opinions, while also adopting a flexible “new‑old divide” approach. During this transition period, institutions are permitted, on the basis of orderly reducing the overall scale of existing products that still do not comply with the New Regulations on Asset Management, to renew such products on a rolling basis, without imposing uniform deadlines for rectification. This allows institutions to proceed in an orderly manner, gradually bringing their operations into compliance and ensuring a smooth, systematic alignment between the old and new regulatory frameworks. Upon expiration of the transition period, for existing non‑standard debt‑type assets that, due to special circumstances, remain difficult to bring into compliance, as well as for outstanding non‑standard equity‑type assets, appropriate arrangements may be adopted, subject to the approval of the China Securities Regulatory Commission, to address these matters in a prudent and orderly fashion.
The China Securities Regulatory Commission will, based on the public consultation process, carefully review all feedback received and, after further refinement, issue the relevant measures as soon as possible.

The China Securities Regulatory Commission has imposed administrative penalties on three cases of violations of information disclosure requirements.
Recently, the China Securities Regulatory Commission (CSRC) imposed administrative penalties, in accordance with the law, on Pangda Auto Trade Group Co., Ltd. (hereinafter referred to as Pangda Group) and its chairman, Pang Qinghua, for violations of information disclosure regulations. Pangda Group was issued a warning and fined RMB 600,000; Pang Qinghua, as the principal violator of information disclosure requirements, received a warning and was also fined RMB 600,000; as the directly responsible senior manager for Pangda Group’s information disclosure violations, he was similarly warned and fined RMB 300,000; other directly responsible personnel, Wu Cheng and Liu Zhongying, were each issued a warning and fined RMB 300,000 and RMB 150,000, respectively. In addition, the CSRC imposed administrative penalties on Gansu Shengda Group Co., Ltd. (hereinafter referred to as Shengda Group) for violations of information disclosure regulations: Shengda Group was issued a warning, ordered to make corrections, and fined RMB 450,000; its directly responsible senior manager, Zhao Mantang, was warned and fined RMB 400,000; and another directly responsible employee, Wang Junbao, was warned and fined RMB 200,000. Meanwhile, the Zhejiang Securities Regulatory Bureau, acting in accordance with the law, imposed administrative penalties on Meidu Energy Co., Ltd. (hereinafter referred to as Meidu Energy) for violations of information disclosure regulations: Meidu Energy was ordered to make corrections, issued a warning, and fined RMB 300,000; its directly responsible senior managers, Wen Zhanghua, Weng Yongtang, and Xu Guoqiang, were each warned and fined RMB 50,000; and another directly responsible employee, Shen Xutao, was warned and fined RMB 30,000. (For details of the administrative penalty decisions, please refer to the websites of the CSRC and the relevant securities regulatory bureaus.)
In the aforementioned cases, Pangda Group and its chairman, Pang Qinghua, failed to disclose equity‑change information truthfully and omitted disclosure of financing arrangements entered into by Pang Qinghua through total return swaps. Additionally, Pangda Group did not, as required, disclose non‑operating fund transactions between itself, its subsidiaries, and related parties, nor did it disclose, in accordance with regulations, the fact that it was under investigation by public security authorities for suspected criminal activity. Shengda Group failed to accurately disclose its control over other persons’ accounts holding shares of Shengda Mining Co., Ltd. (hereinafter “Shengda Mining”) and the related circumstances under which such accounts were used to pledge 21.6 million shares of “Shengda Mining” for financing. Furthermore, Meidu Energy failed to disclose its 2017 annual report and its first‑quarter 2018 report within the statutory time limits.
In cases involving violations of information disclosure requirements, financial fraud by listed companies has long been a focal point of market attention. In recent years, as the Commission has steadily strengthened its regulatory oversight and enforcement, the quality of financial information disclosed by listed companies has improved significantly. However, the quality of disclosures regarding other types of material matters remains in need of enhancement. Common issues include failure to disclose, as required, changes in the equity interests of major shareholders, share‑pledge arrangements, significant litigation, investigations or penalties, external guarantees, and related‑party transactions. The legal framework, including the Securities Law and the Measures for the Administration of Information Disclosure by Listed Companies, sets out a diverse array of disclosure obligations with rich and detailed content. Any material event that could have a substantial impact on the trading price of a listed company’s shares must be disclosed promptly and in accordance with the law, with full and transparent explanations of the event’s causes, its current status, and its potential implications. The Commission will, in accordance with the law, take resolute and stringent measures against all forms of violations of information‑disclosure obligations, thereby effectively upholding the principles of fairness, justice, and transparency in the capital market and safeguarding the right of the broad base of small and medium shareholders to be informed.

The Shanghai Stock Exchange has promulgated and implemented the “Articles of Association of the Shanghai Stock Exchange (Revised in 2018).”
To implement the Measures for the Administration of Stock Exchanges, as amended and promulgated by the China Securities Regulatory Commission in November 2017, the Shanghai Stock Exchange has revised its Articles of Association (hereinafter referred to as the “Articles”). Following deliberation and approval by the Fourth Session of the Exchange’s Board of Directors and the Eighth General Meeting of Members, and after obtaining approval from the CSRC, the revised Articles were issued and came into effect on July 20.
The Articles of Association of a stock exchange serve as its “mini‑constitution” and constitute an essential foundation for its self‑regulatory governance. In recent years, under the leadership of the China Securities Regulatory Commission, the Shanghai Stock Exchange has faithfully discharged its statutory duties, further strengthened its frontline regulatory functions, and worked diligently to safeguard market order and stability. This revision of the Articles of Association was guided by the Securities Law, the Measures for the Administration of Stock Exchanges, and the CPC Committee of the CSRC’s Guiding Opinions on Further Enhancing the Frontline Regulatory Functions of Stock Exchanges. It also drew on an in‑depth review of practical experience in frontline supervision and, through the convening of regional briefings at the Members’ General Meeting, extensively solicited feedback from exchange members.
This revision primarily addresses three key areas: first, strengthening Party leadership and enhancing the role of Party committees; second, optimizing the governance structure and elevating the level of standardized operations; and third, reinforcing the self-regulatory nature of oversight by bolstering frontline regulatory functions and tools.
In addition to amending its Articles of Association, and in order to implement the relevant requirements of the Measures for the Administration of Stock Exchanges, since the beginning of this year, the Shanghai Stock Exchange has also conducted a comprehensive review of its system of business rules, steadily advancing the revision and improvement of the foundational self-regulatory framework. Going forward, the Shanghai Stock Exchange will, in strict accordance with the provisions of its Articles of Association, continue to refine its internal governance, strengthen frontline regulatory oversight, and proactively assume responsibility and take decisive action, thereby making unremitting efforts to better serve the real economy, safeguard against financial risks, and deepen market reforms.

The Shenzhen Stock Exchange has issued a newly revised Articles of Association.
Recently, the Shenzhen Stock Exchange (hereinafter referred to as the SZSE) issued the revised Articles of Association of the Shenzhen Stock Exchange (hereinafter referred to as the “Articles”).
To fully implement the spirit of the 19th National Congress of the Communist Party of China, uphold and improve systems for strengthening the Party’s leadership, earnestly enforce the newly revised Measures for the Administration of Stock Exchanges, further optimize corporate governance, and effectively fulfill frontline regulatory duties, the Shenzhen Stock Exchange has, in light of its actual management and operational practices, undertaken further amendments to its Articles of Association. The revised Articles of Association have been approved at the Shenzhen Stock Exchange’s 2018 Members’ Meeting and recently received approval from the China Securities Regulatory Commission.
The Articles of Association constitute the foundational, guiding document for the organization and operation of a stock exchange and serve as an essential vehicle for exercising its frontline regulatory functions. The principal revisions to the Articles of Association encompass four key areas: First, refining the institutional framework for comprehensively strengthening Party leadership. This includes further clarifying the Party Committee’s role as the core of political leadership, ensuring the full implementation of the Party and state’s policies and guidelines; and stipulating that the Party maintains centralized, unified leadership over major undertakings, with all significant matters required to be reviewed and approved by the Party Committee prior to submission to the Board of Directors. Second, reinforcing the exchange’s frontline regulatory functions. This involves expanding the scope of the exchange’s duties, diversifying its frontline supervisory tools, enhancing members’ responsibilities for managing client trading behavior, and strengthening the exchange’s risk‑prevention and control obligations. Third, optimizing the exchange’s governance structure. This entails further defining the powers and responsibilities of the Board of Directors, the General Manager, and the Supervisory Board, and establishing a clear mechanism for reporting Board and Supervisory Board resolutions to the China Securities Regulatory Commission. Fourth, improving provisions related to internal redress mechanisms. This adds provisions allowing relevant market participants to request hearings and reviews, thereby better safeguarding their legitimate rights and interests.
Going forward, the Shenzhen Stock Exchange will earnestly implement the decisions and arrangements of the CPC Central Committee and the State Council, focusing on three key tasks: serving the real economy, preventing and controlling financial risks, and deepening financial reform. It will uphold law-based market governance and law-based institutional management, guide market participants to operate in a standardized manner, jointly safeguard the stable functioning of the capital market, and promote its sound and sustainable development.

Commercial & Corporate
CSRC: Insider trading cases in the first half of the year show a downward trend.
On July 20, the China Securities Regulatory Commission (CSRC) released an update on its inspection and enforcement activities for the first half of the year, including recent administrative penalties imposed in three cases of information disclosure violations, and addressed key issues of market concern. According to the report, violations involving false or misleading disclosures, insider trading, and market manipulation remained the most prevalent types of misconduct, accounting for 74% of all cases initiated during the period.
Statistical data show that, in the first half of the year, the inspection system initiated a total of 307 investigations and opened 108 new cases. Among the newly filed cases, 39 involved violations of disclosure requirements, up 50% year over year; insider trading, market manipulation, and trading based on non‑public information accounted for 30, 11, and 3 cases, respectively, down 21%, 31%, and 50% year over year; 15 cases concerned violations by intermediary institutions and practitioners, while another 10 involved other illegal or non‑compliant activities such as holding shares above the permitted threshold. In the first half of the year, the investigation authorities concluded 93 cases, with an average investigation period of 133 days—22% shorter than the same period last year.
From the perspective of case trends, on the one hand, violations involving false disclosure, insider trading, and market manipulation remain the predominant types of misconduct, accounting for 74% of all cases filed. There has been a rise in instances of financial fraud by listed companies, failure to disclose material matters as required, and misleading statements, while violations by intermediary institutions and their practitioners continue to be particularly pronounced. On the other hand, thanks to sustained and rigorous enforcement, cases of insider trading, market manipulation, and trading based on non‑public information have shown a downward trend, and the spread of such misconduct has been brought under some degree of control.
The CSRC also launched focused investigations into eight landmark cases involving “black‑mouth” actors in the market and online, initiated formal inquiries into 18 typical cases involving repeat offenders, and ordered investigations into nine listed companies for failing to disclose their 2017 annual reports on time. In the first half of the year, the CSRC further pursued, in accordance with the law, violations of environmental information disclosure by Shanxi Sanwei, Shangfeng Cement (8.800, 0.05, 0.57%), Huifeng Shares (2.800, 0.00, 0.00%), Luoping Zinc & Electricity (8.450, -0.42, -4.74%), and other entities.
Notably, in the first half of the year, the China Securities Regulatory Commission referred 24 cases to public security authorities, involving 40 individuals. It resolutely handed over criminal cases—such as those involving Jinya Technology and Yabait—where listed companies seriously harmed investor interests and undermined the integrity of the market, ensuring that those responsible were held criminally accountable. This move sent a strong deterrent message to market participants and effectively helped purify the market environment.
In the first half of the year, the China Securities Regulatory Commission initiated investigations into 39 cases of violations of information disclosure laws and regulations, a 50% increase year on year; 17 cases were concluded, with 16 substantiated, yielding a case‑closure rate of 94%. According to CSRC spokesperson Gao Li, the ongoing information‑disclosure violations during this period primarily manifested in the following ways: first, fabricating purchase and sales transactions and abusing accounting standards to engage in financial fraud; second, undermining the interests of listed companies through illegal guarantees, misappropriation of funds, and other means; third, failing to fulfill statutory obligations to disclose material matters; and fourth, as efforts to win the battle against pollution have advanced, cases involving false or misleading environmental‑related disclosures by listed companies have been on the rise, with four new instances of inaccurate environmental‑information disclosure reported in the first half. Some companies failed to promptly disclose that key executives of their subsidiaries were suspected of environmental‑pollution crimes, while others, despite enduring repeated administrative penalties from environmental authorities over many years, neglected to disclose such information in their periodic reports.
In line with the principle of ensuring that intermediary institutions exercise due diligence in tandem with listed companies’ information disclosure, the China Securities Regulatory Commission initiated investigations into 11 securities‑related intermediary entities in the first half of this year, a 22% year‑on‑year increase. These cases involved three securities offices, five accounting offices, two valuation agencies, and one law office. The investigations primarily focused on instances where these institutions failed to exercise due diligence in providing securities services, manifesting as non‑compliance with applicable business rules, failure to maintain the requisite professional care, perfunctory or materially deficient due‑diligence procedures, and, in some cases, even the involvement of practitioners in collusive fraud.
Going forward, the CSRC will maintain a stringent enforcement stance against violations by intermediary institutions, effectively bolstering the deterrent effect of law enforcement, raising the costs of non‑compliance, and vigorously ensuring that all entities with information‑disclosure obligations fulfill their duties, thereby continuously strengthening the foundation for the stable functioning of the market.

China Banking and Insurance Regulatory Commission: Minimum investment threshold for public offering wealth management products lowered to RMB 10,000.
The China Banking and Insurance Regulatory Commission has issued the “Administrative Measures for the Supervision and Administration of Commercial Bank Wealth Management Business (Draft for Comments)” (hereinafter referred to as the “Measures”), which requires commercial banks to lower the minimum investment threshold for individual public‑offering wealth management products from the current RMB 50,000 to RMB 10,000, and introduces provisions to distinguish between public‑offering and private‑offering wealth management products, while also strengthening information disclosure requirements.
To strengthen information disclosure, the Measures set forth specific requirements for disclosing wealth management product information. These include: publicly offered open-ended wealth management products must disclose their net asset value on each business day; publicly offered closed-ended wealth management products must disclose their net asset value weekly; and publicly offered wealth management products must provide investors with monthly statements. Privately offered wealth management products are required to disclose their net asset value and other material information quarterly. In addition, banks must disclose to the public, every six months, an overview of their wealth management business operations.
The measures also stipulate that commercial banks must differentiate between public‑offering and private‑placement wealth management products. According to the China Banking and Insurance Regulatory Commission, this distinction is based on the fact that public‑offering wealth management products are marketed to an indefinite pool of the general public, with a high potential for risk spillovers, and thus subject to relatively stringent regulatory requirements regarding investment scope, leverage ratios, liquidity management, and information disclosure. In contrast, private‑placement wealth management products are offered privately to no more than 200 qualified investors; these investors generally possess stronger risk‑bearing capacity, and the corresponding regulatory requirements—such as those governing investment scope—are comparatively more relaxed.
In response to issues such as certain banks’ use of asset‑management products to create layered nesting structures, making it difficult to promptly and accurately ascertain the underlying asset positions, the Measures set forth the following requirements: First, clearly define legal relationships, explicitly stipulate the responsibilities and obligations of all participating parties, and establish a risk‑sharing mechanism to prevent legal disputes. Second, shorten the financing chain; to curb circular flows of funds, the provision prohibiting wealth‑management products from investing in wealth‑management products issued by the same or other banks remains in effect.

New Oriental Online has launched its plan to list in Hong Kong, ushering in an “education boom” on the Hong Kong stock market.
On July 17, New Oriental Online submitted its application for a Hong Kong IPO. The offering is jointly underwritten by Morgan Stanley, Citibank, and China International Capital Corporation (CICC), with Tencent becoming the largest shareholder alongside New Oriental Group. In March 2017, New Oriental’s subsidiary, New Oriental Online, had been listed on the NEEQ in China’s A-share market but delisted less than ten months later.
As of February 28, 2018, New Oriental Online reported nine-month revenue of RMB 485 million, up 48.29% year over year, with a gross margin approaching 70%. The company holds an 8.2% market share in China’s university exam preparation sector and maintains positive cash flow exceeding RMB 100 million.
After a sluggish first half of 2018, the education sector unexpectedly emerged as a bright spot in the Hong Kong stock market. Two weeks ago, Hujiang and Excellence Education each filed IPO applications to list in Hong Kong. Earlier this year, several other education companies—including Xinhua Education, 21st Century Education (1.46, -0.07, -4.58%), Tianli Education, and Hong Kong‑listed education offices—also entered the Hong Kong capital market. Meanwhile, according to incomplete statistics, another ten companies—such as Bojun Education, Chunlai Education, Hope Education, and Huatu Education—are currently awaiting approval to list in Hong Kong.
According to data from Founder Securities, the Hong Kong‑listed education sector tripled in market capitalization in 2017, with valuations generally ranging from 20 to 30 times earnings. As early as 2006, Yu Minhong led New Oriental Education & Technology Group to list in the United States; however, the company was subsequently targeted by short‑selling offices on the U.S. stock market, highlighting divergent perceptions between China and the U.S. regarding Chinese education providers. Although China’s mainland “Private Education Promotion Law” is highly favorable to the sector’s development, its specific implementing rules remain unclear. Moreover, A‑shares impose stringent revenue requirements, and the length of the listing queue is difficult to predict. Under these circumstances, the Hong Kong Stock Exchange’s introduction of a dual‑class share structure has made it an even more attractive option for companies seeking to list in Hong Kong.
Consistent with the broader trends in China’s education market, after-school tutoring institutions have continued to expand. In particular, the growing prevalence of digital tools and the inherent advantages of online education—most notably its convenience—have fueled the rapid growth of this sector. Key drivers of China’s online after-school tutoring market include the rising willingness and demand among Chinese families for personalized educational services. Since 2012, the online education industry has maintained a robust annual growth rate of over 30%, with the market size reaching hundreds of billions of yuan by 2017 and projected to surpass 200 billion yuan in 2018, attracting strong interest from investors and the secondary market.

IPO approval rate has dropped to as low as 55%; on Tuesday, five companies seeking their initial public offerings will face a critical test.
As of July 19, 2018, the China Securities Regulatory Commission had accepted applications from 313 companies seeking an initial public offering or the issuance of depositary receipts, of which 28 had already passed review and 285 had not. Among the pending applications, 279 were undergoing normal review, while 6 had been suspended.
Among the 312 IPO applications accepted by the China Securities Regulatory Commission, 306 are undergoing normal review—142 on the Main Board, 54 on the SME Board, and 110 on the ChiNext Board. In addition, reviews have been suspended for six companies.
On July 10, the China Securities Regulatory Commission approved JieJia Weichuang’s initial public offering application. Meanwhile, next Tuesday (July 24), five more companies will face a critical review of their IPOs: Shenzhen Mindray Bio-Medical Electronics Co., Ltd. (IPO); Wuxi Lihu Turbocharger Technology Co., Ltd. (IPO); Anhui Jinchun Nonwoven Fabric Co., Ltd. (IPO); Hangzhou Dipu Technology Co., Ltd. (IPO); and Ningbo Xingrui Electronic Technology Co., Ltd. (IPO).
This week, five companies are scheduled to attend their IPO review meetings. According to the outcomes, Beijing Uxin Technology Group, Zhejiang Anglikang, and Shanghai Huapei Power Technology all received approval, while Kaijin Energy and Shenhao Technology were unfortunately rejected—both of the latter being companies previously listed on the New Third Board.
According to statistics, since the beginning of this year, the China Securities Regulatory Commission has reviewed 119 companies seeking an initial public offering, of which 65 have been approved and 28 have been rejected, resulting in an overall approval rate of 54.62%.

Changsheng Bio’s fake vaccine scandal has unfolded one after another, triggering five consecutive trading halts and wiping out nearly RMB 10 billion in market value.
On the evening of July 19, Changsheng Bio (002680.SZ) announced that its subsidiary had received an administrative penalty decision, ordering the confiscation of 186 units of the “Adsorbed Acellular Diphtheria–Tetanus–Pertussis Combined Vaccine” (batch number: 201605014-01) in stock and imposing a total fine and confiscation of RMB 3.4429 million for producing and selling substandard drugs. Previously, the subsidiary had already been placed under investigation in October 2017 on the same grounds; this latest action represents the outcome of that investigation.

This is hardly good news for Changsheng Bio, which has already endured four consecutive one‑limit-down trading days in the wake of the “falsification of rabies vaccine records” scandal.
On July 20, Changsheng Bio opened with another limit-down move, and the sell order book remained locked at that level through the close, with 553,300 lots still pending. This marked the fifth consecutive trading day of limit-downs, a decline that has already exceeded the expectations of four major fund management offices. The stock price has fallen by more than 40% from its closing level on July 13—the last trading day before the vaccine‑fraud scandal was disclosed—while the company’s market capitalization has shrunk from RMB 23.9 billion to RMB 14.1 billion, wiping out nearly RMB 10 billion in value. Moreover, post‑market Dragon and Tiger List data reveal that, over the previous four limit-down sessions, institutional investors were actively exiting each day.
According to the Administrative Penalty Decision of the Jilin Provincial Food and Drug Administration, during a national special sampling inspection, the “Adsorbed Acellular Diphtheria–Tetanus–Pertussis Combined Vaccine” (batch number: 201605014-01), manufactured by Changchun Changsheng (a subsidiary of Changsheng Bio), was found—upon testing by the National Institute for Food and Drug Control—to be non‑compliant in the “Potency Assay” parameter and thus should be classified as substandard medicine. The Jilin Provincial Food and Drug Administration determined that a total of 253,338 vials of this batch were produced; 552 vials were sampled by the Jilin Provincial Drug Testing Institute, 252,600 vials were sold to the Shandong Provincial Center for Disease Control and Prevention, and 186 vials remain in stock. The selling price was RMB 3.40 per vial, resulting in illegal proceeds of RMB 858,800 and a total declared value of RMB 861,300.
When the company was placed under investigation last July over this matter, Changsheng Bio issued an announcement stating that the potency of the implicated DPT vaccine batch failed to meet standards, which could compromise its immunoprotective efficacy, though it posed no threat to human safety. At present, Changchun Changsheng has conducted a comprehensive self‑inspection of its production system, rigorously identifying the root causes of the potency issue and strengthening quality‑control measures. With the exception of the DPT vaccine, the production and sales of all other vaccines remain normal. Given that the DPT combination vaccine accounts for only a small share of the company’s total revenue, the aforementioned incident has had no significant impact on its current operations. However, one year later, Changchun Changsheng once again engaged in an even more serious misconduct—falsifying records related to its rabies vaccine—resulting in substantial losses for the company.
On July 15 this year, the National Medical Products Administration (NMPA) issued an announcement stating that Changchun Changsheng’s production of lyophilized human rabies vaccine involved serious violations of the Good Manufacturing Practice for Pharmaceuticals, including falsification of records. The NMPA has ordered the Jilin Provincial Food and Drug Administration to revoke the company’s Pharmaceutical GMP Certificate (Certificate No.: JL20180024) and to suspend production of the rabies vaccine. At present, none of the implicated batches have left the factory or been released for sale, and all affected products have been brought under effective control.
“If the substandard quality of the BCG vaccine was a natural disaster—essentially a manufacturing accident—then this recent fiasco involving falsified rabies vaccines is clearly man-made, and Changchun Changsheng’s actions are of an extremely egregious nature,” says vaccine expert Tao Lina. He believes that Changchun Changsheng likely tampered with the active ingredient in its rabies vaccine, resulting in an antigen content below the pharmacopoeial standard of 2.5 IU. This could compromise the vaccine’s protective efficacy, though the exact level of the active ingredient remains to be determined.
Around 7:00 a.m. on July 16, Changsheng Bio issued an announcement stating that it had, as required, halted production of its rabies vaccine and was initiating a full recall of all batches of lyophilized human rabies vaccine (Vero cell) within their expiration dates. According to adverse‑reaction monitoring of this product over the past few years, no adverse events attributable to product quality have been identified. A company spokesperson clarified that the recall of all products still within their shelf life is an independent decision by Changsheng Bio, rather than a mandate from the National Medical Products Administration.
On July 18, Changsheng Bio announced that, due to the company’s decision to recall all batches of its lyophilized human rabies vaccine (Vero cell) that were still within their expiration dates, it expects to see a reduction of approximately RMB 200 million in the company’s first-half 2018 operating revenue and about RMB 140 million in net profit. Furthermore, the suspension of production of this lyophilized human rabies vaccine (Vero cell) will have a significant impact on the company’s manufacturing and operations, with an anticipated decline of roughly RMB 540 million in second-half 2018 operating revenue.
In addition, Changsheng Bio has revised downward its performance forecast for the first half of 2018: originally, in its Q1 report, it had projected that net profit attributable to shareholders for January–June 2018 would range from RMB 344 million to RMB 423 million, representing a year-on-year change of 30% to 60%. However, due to the impact of the recent rabies vaccine incident, the company has now adjusted its forecast for the same period to a range of RMB 211 million to RMB 317 million, with the expected year-on-year change revised to –20% to +20%.
According to the post‑market Dragon and Tiger List data for July 16, the second‑largest seller among the top five was an institutional‑only seat, with sales totaling RMB 3.14 million. On July 17, the top five selling seats collectively accounted for RMB 22.0427 million in sales—far exceeding the combined purchases of the top five buying seats—and the top three were all institutional‑only seats, totaling RMB 9.943 million. On July 18, institutional‑only seats occupied three of the top five selling positions, recording sales of RMB 1.98 million, RMB 1.79 million, and RMB 109,200, respectively. On July 19, the leading seller remained an institutional‑only seat, with sales amounting to RMB 2.288 million.
The reporter noted that as of March 31, 2018, a total of 11 funds held substantial stakes in Changsheng Bio. Among them, Fuguang Tianrui Strong Region Select Hybrid Fund held the largest position, with 8.6201 million shares, while the remaining 10 funds each held fewer than 700,000 shares. In addition, one trust product also owned shares of Changsheng Bio—the Shaanxi International Trust–Shanguo Tou Rongxing No. 8 Securities Investment Collective Fund Trust Plan—holding 5.21 million shares. Among the funds that have already disclosed their interim reports, E Fund Biotechnology Index Class‑A Fund and Orient Ligun Mixed‑Type Initiated Fund hold 330,500 and 100,000 shares of Changsheng Bio, respectively.
In addition, on July 17, three fund management companies revised down their valuations of Changsheng Bio. Among them, Bosera Fund implemented the largest downward adjustment. According to Bosera Fund’s announcement, effective July 16, 2018, it adjusted the valuation of its funds’ holdings in Changsheng Bio to RMB 14.50 per share. Meanwhile, Anxin Fund and Taida‑Holly Fund, also starting from July 16, valued their respective funds’ holdings in Changsheng Bio at RMB 16.11 per share.
According to an incomplete tally by a reporter from the China Times, on July 18, four additional fund management companies lowered their valuations of Changsheng Bio: E Fund Management Co., Ltd. and Jiutai Fund Management Co., Ltd. announced that, effective July 17, they would value the shares of Changsheng Bio held in certain funds at RMB 14.5 per share, while China Merchants Fund Management Co., Ltd. and GF Fund Management Co., Ltd. reported adjusted valuation prices of RMB 16.11 per share for Changsheng Bio.
As of the time this article was written, Changsheng Bio’s share price stood at RMB 14.5 per share, which is now below the valuations assigned to it by Anxin Fund, Taida‑Holly Fund, China Merchants Fund, and GF Fund, and has aligned with the valuation expectations of Bosera Fund, E Fund, and Jiutai Fund.
Taxation TAXATATION
The CPC Central Committee and the State Council have issued the “Plan for Reform of the National and Local Tax Collection and Administration System.”
Recently, the General Office of the CPC Central Committee and the General Office of the State Council issued the “Plan for the Reform of the National and Local Tax Collection and Administration System” (hereinafter referred to as the “Reform Plan”). The reform of the national and local tax collection and administration system is a major decision made by the Party Central Committee with Comrade Xi Jinping at its core, with a strategic vision for the overall situation. The Reform Plan conscientiously implements the decisions and arrangements of the CPC Central Committee and the State Council, serving as a guiding document to ensure the steady and orderly advancement of the reform.
The Reform Plan sets forth the guiding principles, fundamental tenets, and principal objectives of the reform of the national and local tax administration systems; outlines the key tasks, implementation steps, and supporting measures; and specifies the requirements for ensuring effective organization and execution.
The Reform Plan underscores the need to fully implement the spirit of the 19th National Congress of the Communist Party of China and the Second and Third Plenary Sessions of the 19th CPC Central Committee, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. With the overarching goal of strengthening the Party’s overall leadership, it seeks to reform the national and local tax collection and administration systems, merge provincial‑level and sub‑provincial tax authorities, transfer responsibilities for the collection and administration of social insurance contributions and non‑tax revenues, and establish an optimized, efficient, and unified tax collection and administration framework. This will provide robust institutional safeguards for advancing high‑quality tax modernization in the new era, better leverage the foundational, pillar‑building, and safeguarding roles of taxation in national governance, and more effectively support the decisive victory in building a moderately prosperous society in all respects, the launch of a new journey toward fully building a modern socialist country, and the realization of the Chinese Dream of national rejuvenation.
The Reform Plan sets forth four guiding principles for the reform of the national and local tax administration system: First, uphold the Party’s overall leadership. Officely safeguard General Secretary Xi Jinping’s core position on the Party Central Committee and on the Party as a whole, and resolutely ensure the authority and centralized, unified leadership of the CPC Central Committee with Comrade Xi Jinping at its core. Integrate strengthened Party leadership into every aspect and stage of the reform, ensuring that the reform progresses in the right direction. Second, put the people first and deliver tangible benefits. Center on taxpayers and payers, advance reforms to simplify tax filing and payment procedures, fundamentally address issues such as having to “run between two offices” and undergo “double checks,” effectively protect the legitimate rights and interests of taxpayers and payers, reduce their tax and fee‑paying costs, foster an improved business environment, build service‑oriented tax authorities that win public satisfaction, and enhance people’s sense of gain. Third, pursue optimization, efficiency, and unity. Adjust and streamline the functions of tax institutions and reallocate resources, enhance policy transparency and enforcement consistency, standardize service norms for the administration of taxes, social insurance contributions, and non‑tax revenues, and thereby support the development of a modernized economic system and high‑quality economic growth. Fourth, adhere to law‑based, coordinated, and prudent implementation. Thoroughly implement the requirements of governing the country comprehensively according to law, ensure that reform and the rule of law are mutually reinforcing, and better harness the initiative of both central and local authorities. Strive to achieve institutional, personnel, resource, and ideological alignment between national and local tax agencies, ensuring stable staffing, smooth transfer of responsibilities, steady progress in work, and positive social outcomes.
The Reform Plan emphasizes that, through reform, a streamlined, efficient, and unified tax collection and administration system will be gradually established, providing taxpayers and payers with higher‑quality, more efficient, and more convenient services; enhancing tax compliance and public satisfaction; improving administrative efficiency; reducing compliance and collection costs; strengthening tax and fee governance capabilities; ensuring the full realization of the tax system’s functions; and consolidating an important foundation for national governance.
The Reform Plan stipulates that, in accordance with the principle of “establish first, then dismantle; do not dismantle without establishing,” we will uphold unified leadership, tiered management, holistic design, and phased implementation. Specifically, we will first establish the new institutional framework before implementing the “three designations” regulations; merge the national and local tax authorities prior to assuming responsibility for the collection and administration of social insurance contributions and non‑tax revenues; and, after ensuring the steady reform of provincial (including autonomous regions, municipalities directly under the central government, and cities separately listed in the state plan—hereinafter referred to as “provinces”) tax bureaus, proceed to advance the reform of municipal (including prefectures, prefecture‑level cities, leagues—hereinafter referred to as “municipalities”), county (including counties, county‑level cities, districts, and banners—hereinafter referred to as “counties”) tax bureaus in a solid and systematic manner. Key tasks will be implemented item by item, with clear timelines, to ensure the completion of all reform objectives by the end of 2018.
The Reform Plan calls for strengthening the Party’s leadership over the tax system, improving institutional arrangements to ensure the Party’s comprehensive leadership over tax work, and making the Party’s leadership in the tax sector more robust and effective. It also seeks to optimize the organizational structure of Party leadership within the tax system, refine the disciplinary inspection and supervision mechanisms, and further enhance disciplinary inspection and supervision efforts. In addition, it aims to improve the mechanisms for Party building: the State Taxation Administration will assume primary responsibility for Party building and for upholding strict Party self‑discipline across the tax system, while local Party committees will be tasked with guiding and strengthening the development of grassroots Party organizations and the education, management, and oversight of Party members within local tax authorities, as well as with fostering mass organizations and promoting spiritual civilization. Together, these measures will create a synergistic effort in which Party committees at all levels of the tax administration collaborate with local Party committees and their relevant departments to advance Party building.
The Reform Plan sets out the leadership and management system for tax authorities, stipulating that, following the merger of the State Taxation Administration and local tax authorities, a dual‑leadership structure will be adopted—primarily under the State Taxation Administration, with concurrent oversight by the Party committees and governments of provinces, autonomous regions, and municipalities directly under the central government. With a view to establishing sound institutional mechanisms characterized by clear responsibilities, smooth operations, and robust safeguards, the Plan lays out specific requirements in areas such as cadre management, organizational staffing, business and revenue administration, fostering a collaborative governance framework for taxation, and supporting economic and social development. It also clarifies the division of responsibilities between the State Taxation Administration and tax authorities at all levels, on the one hand, and local Party committees and governments, on the other, thereby strengthening unified management of tax affairs, streamlining the relationship between a unified tax system and a tiered fiscal structure, and fully mobilizing the initiative of both the central and local levels.
The Reform Plan also lays out specific arrangements for key reform tasks, including completing the official launch of the new tax authorities, formulating the “three‑designations” regulations for these authorities, transferring responsibilities for the collection and administration of social insurance premiums and non‑tax revenues, advancing the integration and optimization of tax and fee‑related business processes and information systems, strengthening financial support and asset management, and reviewing and amending relevant laws and regulations. It further specifies corresponding safeguard measures. The plan requires tax bureaus at the provincial, municipal, and county levels to complete, in a timely, step‑by‑step manner, the centralized office arrangement, the official inauguration of the new agencies, and the commencement of operations under the new institutional name. It calls for strict control over the number of tax institutions, further streamlining the hierarchical tax organizational structure and administrative responsibilities, and refining the structural layout and resource allocation to ensure that institutional design is scientifically sound, functional mandates are clearly defined, and resource distribution is rational. At the same time, the plan stipulates that, effective January 1, 2019, all social insurance contributions—including basic old‑age pensions, basic medical insurance, unemployment insurance, work‑injury insurance, and maternity insurance—will be collected centrally by the tax authorities. In line with the principles of convenience and efficiency, the scope of non‑tax revenue collection and administration responsibilities to be transferred to the tax authorities will be determined appropriately; non‑tax revenue items that are legally retained and suitable for transfer will be phased in as they mature. Finally, the plan mandates the integration of taxpayer services and tax collection and administration functions, the optimization and enhancement of tax and contribution management information systems, and the provision of greater convenience for taxpayers and payers.
The Reform Plan emphasizes that the State Taxation Administration must ensure overall coordination; the Party committees and governments of all provinces, autonomous regions, and municipalities directly under the central government must provide full support; relevant departments must cooperate actively; and the tax authorities of each province must meticulously plan and implement the measures. Furthermore, it sets out work requirements in four key areas—raising political awareness, enforcing strict disciplinary standards, conducting oversight and inspections, and strengthening publicity and guidance—to ensure the smooth and steady implementation of all tasks.

New tax authorities at the national, provincial, municipal, county, and township levels have all been officially established.
On the 20th, national tax and local tax agencies at the county and township levels were officially merged, with all newly established tax authorities at the county and township levels uniformly displaying their official signs. After 36 days of concerted effort, the phased merger and corresponding sign‑hanging of tax agencies across the four administrative levels—province, city, county, and township—have been fully completed, marking the successful conclusion of the first major battle in the reform of the tax collection and administration system. Moving forward, the reform will deepen further by progressively formulating and implementing the “three designations” regulations at each level and by gradually assuming responsibility for the collection and administration of social insurance contributions and non‑tax revenues.

It is reported that, in the lead-up to this, newly established tax authorities across the provinces have adopted a coordinated approach—planning as a unified whole, implementing in phases, advancing through institutional mechanisms, and operating under a visual management framework. Through multi‑party collaboration and seamless vertical coordination, they have ensured that reform efforts progress smoothly in accordance with unified requirements, standards, and timelines. Prior to the official unveiling of the provincial-level new tax agencies on June 15, guided by the principle of “institutional reform first, services second,” by May 1 the national and local tax services had essentially achieved integrated one‑stop handling at physical tax service halls, online processing via a single portal, and one‑click consultation through the 12366 taxpayer service hotline, enabling taxpayers to benefit early from the conveniences brought by the reforms.
As the reform of the national and local tax administration system advances in depth, ties with taxpayers and payers are becoming ever closer. The national tax system will adhere to the principles of optimization, efficiency, and unity, fully harness the benefits of institutional reform, continue to deepen the “delegation, regulation, and service” reform, constantly refine and upgrade service measures, effectively enhance the convenience of tax filing and payment, safeguard the legitimate rights and interests of taxpayers and payers, further improve the tax-related business environment, crack down rigorously on the issuance of false invoices and tax fraud, uphold a sound tax order, and ensure the security of national tax revenues.

LITIGATION & ARBITRATION
The Second Circuit of the Supreme People’s Court deepens exchanges and cooperation with universities in its circuit.
On July 18, the Second Circuit Court of the Supreme People’s Court convened a symposium to deepen exchanges and cooperation with seven universities in its circuit jurisdiction and renewed the bilateral exchange cooperation agreement. Hu Yunteng, a full-time member of the Judicial Committee of the Supreme People’s Court, Secretary of the Party Leadership Group of the Second Circuit Court, and Chief Justice, attended the event.
Since its establishment, the Second Circuit Court has engaged in comprehensive, multi‑level cooperation and exchanges with universities across its circuit, working together to cultivate legal professionals with notable results. In July 2015, the Court signed its first cooperation agreements with the law schools of seven institutions: Heilongjiang University, Jilin University, Liaoning University, Northeastern University, Dalian Maritime University, Liaoning Normal University, and Shenyang Normal University. Over the past three years, the two sides have actively explored and established collaborative mechanisms—including “internship assistants,” “legal volunteers,” joint research on specialized topics, mutual appointment of presiding judges and legal scholars, and interactive teaching and training programs. They have also launched the “Courtroom Visits Law Schools” initiative, extending the functions of court proceedings by conducting model trials at universities within the circuit and inviting law students to observe. Additionally, they have organized “Judges Explain the Law” events, with numerous distinguished judges serving as visiting professors at institutions such as Jilin University and Liaoning University, offering elective courses, and delivering a series of public lectures at Dalian Maritime University, Liaoning Normal University, Shenyang Normal University, and Heilongjiang University. Furthermore, they have held “Public Open Days,” taking advantage of opportunities such as Constitution Promotion Day and hearings on complex cases to invite university faculty and students to tour the courtroom, attend trials, and participate in case discussions. The Court has also deepened its efforts to support law interns, establishing mentorship and assistant‑internship programs that enhance practical skills through participation in court guidance, reception of visitors, and judicial proceedings, while engaging interns in themed Party‑day activities and speech contests to strengthen their sense of responsibility and commitment. To date, the Second Circuit Court has hosted six cohorts totaling more than 130 law interns and conducted 13 “Courtroom Visits Law Schools” events, attracting over 10,000 faculty members and students to observe court proceedings.

The Anhui procuratorial organs have instituted public prosecution against Xu Jiagui in accordance with the law.
On July 13, 2018, the case involving Xu Jiagui, former Party Secretary and Chairman of Anhui Huishang Group Co., Ltd. (at the level of a full‑level director), who is suspected of accepting bribes and abusing his authority as an employee of a state‑owned enterprise, was assigned jurisdiction by the Anhui Provincial People’s Procuratorate and subsequently prosecuted by the Wuhu Municipal People’s Procuratorate before the Wuhu Intermediate People’s Court.
During the review-and-prosecution stage, the procuratorial organ duly informed the defendant, Xu Jiagui, of his procedural rights in accordance with the law, interrogated him, heard the views of his defense counsel, and reviewed all case materials. The Wuhu Municipal People’s Procuratorate alleges that, from January 2007 to October 2014, the defendant, Xu Jiagui, took advantage of his positions as Party Secretary and Chairman of Huishang Group Co., Ltd. to seek benefits for relevant entities and individuals in areas such as financial guarantees, corporate management, project cooperation, and promotion, and directly or through his relatives illegally accepted cash, shopping cards, and other property totaling an especially large amount. Furthermore, he made unlawful decisions by providing loan guarantees to certain subsidiaries of Huishang Group Co., Ltd., and failed to implement supervisory and risk‑prevention measures in response to problems exposed within those subsidiaries, thereby causing particularly serious losses to national interests. Accordingly, he should be held criminally liable for the crimes of accepting bribes and abuse of power by personnel of a state‑owned company, in accordance with the law.
Other
More than 150 listed companies in Jiangsu are controlled by family ownership, and 60% are urgently seeking second-generation successors.
As one of the most dynamic provinces for the private sector, Jiangsu is home to nearly 40% (152) of its listed companies that are family‑controlled. After decades of development, the average age of these private offices’ ultimate controllers has approached 53, a stage that, on the surface, still falls within their prime years. Nevertheless, the succession planning for the “second generation” should be addressed sooner rather than later.
“More than 60 percent of private‑listed companies in Jiangsu have reached a ‘red alert’ on the issue of second‑generation succession, with the oldest members of the founding generation already aged 86,” says Sun Tao, a senior partner at Grandall Law Office (Nanjing). He adds that ensuring the smooth inheritance of family businesses painstakingly built by the previous generation has become an urgent priority for the next generation.
On July 18, dozens of law offices, tax advisory offices, trust institutions, and other organizations from across the country gathered in Nanjing to discuss “Family Succession in Listed Companies” and released the “Jiangsu Province Listed Company Marriage and Inheritance Big Data Report.” As one of the report’s authors, Sun Tao revealed that the study draws on publicly disclosed information from listed companies, assessing corporate succession issues based on the shareholdings of controlling shareholders’ immediate family members and descendants, as well as their positions in key management roles within the company.
The aforementioned report indicates that, as of the end of 2017, Jiangsu Province had at least 388 listed companies. Among these, 152 were owned or controlled by families—meaning that nearly 40 percent of Jiangsu’s listed offices are family‑owned enterprises. These family‑controlled listed companies are geographically concentrated in the southern Jiangsu region, with 105 such offices accounting for nearly 70 percent of the province’s total; Suzhou leads the pack, home to 56 family‑run listed companies.
Notably, statistics show that 80 companies have already initiated succession planning, with the key indicators being that more than half of the second-generation successors either hold a partial stake in the company or occupy managerial positions—such as chairman, general manager, or director—in the office or its affiliated entities.

Changsheng Bio Responds to the Shenzhen Stock Exchange: Expresses Deep Regret and Guilt Over the Incident
On the afternoon of July 22, Changsheng Bio (002680.SZ) issued an announcement responding to a notice of concern from the Shenzhen Stock Exchange. In the statement, the company said it feels deeply remorseful and guilty about the incident and once again extends its sincere apologies to all vaccine recipients and investors.
The announcement further stated that Changsheng Bio will take this as a cautionary lesson, draw broader lessons from this incident, formulate practical and feasible corrective measures, and carry out thorough rectification. In addition, Changsheng Bio indicated that it will closely monitor the progress of the matter, actively cooperate with the National Medical Products Administration, the Jilin Provincial Food and Drug Administration, and other relevant regulatory authorities in their follow-up work, and strictly fulfill its information disclosure obligations in accordance with the applicable regulations of the China Securities Regulatory Commission and the Shenzhen Stock Exchange.
As for the Shenzhen Stock Exchange’s inquiry—based on the Administrative Penalty Decision, the Jilin Provincial Drug Administration initiated an investigation into Changsheng Bio as early as October 27, 2017—please clarify whether there was any delay in disclosing relevant information. In response, Changsheng Bio stated that in 2016 and 2017, revenue from its DPT vaccine amounted to approximately RMB 37 million and RMB 30 million, respectively, accounting for 3.62% and 1.95% of the company’s annual operating income. Since these figures did not reach the 10% threshold stipulated in Article 9.2 of the Shenzhen Stock Exchange’s Rules for Listing Stocks, the company determined that this matter did not constitute material information requiring disclosure. The pilot free trade zones have led nationwide growth in foreign investment, while the western region has maintained strong momentum in attracting foreign capital. Among the 11 pilot free trade zones, 4,281 new foreign-invested enterprises were established, with actual utilized foreign investment totaling RMB 57.84 billion, up 32.6% year-on-year and accounting for 13% of the national total. Meanwhile, the western region recorded RMB 28.84 billion in actual utilized foreign investment, a year-on-year increase of 13.2%.
　In addition, on the 12th, the Ministry of Commerce released the 2017 China Shopping Center Development Index Report, which indicated that China’s shopping center development index stood at 68.5 in 2017, up 1.3 points year over year and 18.5 points above the threshold for expansion, signaling a sustained recovery and improvement in the overall shopping center market. Specifically, the current‑conditions index was 65.1, up 0.9 points year over year, while the expectations index reached 73.5, an increase of 1.8 points compared with the previous year, reflecting steadily strengthening market confidence among shopping center operators.

JC Master Law Office
Address: 9th Floor, National Water Resources Building, No. 70 Qingjiang South Road, Nanjing City
Postal Code: 210036
Phone: 025-84503333
Fax: 025-84505533
Website: www.jcmaster.com
This legal notice is provided solely for informational purposes and does not constitute legal advice or a legal analysis of any specific case. The transmission of this legal notice does not establish an attorney–client relationship between JC Master Law Office and the user or viewer. JC Master Law Office assumes no responsibility for any third-party content accessible via the internet. If you do not wish to receive this legal notice, please notify us by email at jcm@jcmaster.com.
The copyright of this legal information is owned by JC Master Law Office ©. Without written permission, no organization or individual may reproduce, publish, or cite it in any form.