Section 3

Crimes of Disrupting Order of Company and Enterprise Management

Article 158 Whoever deceives the competent company registration department and falsely declares the registered capital by using false documents of proof or other deceptive means, thus obtaining the company registration certificate, if the amount of the registered capital falsely declared is large, the consequences are serious, or there are other serious circumstances, shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody, and concurrently, a fine of not less than 1 percent but not more than 5 percent of the registered capital falsely declared; or shall be sentenced to a fine on the said scale only.

An entity committing a crime as prescribed in the preceding paragraph shall be fined, and the directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody.

Article 159 A company promoter or shareholder who, in violation of the provisions in the Company Law, makes a false capital contribution by failing to deliver the promised cash or tangible assets or to transfer property rights, or withdraws the contributed capital after the incorporation of the company, if the amount involved is large, the consequences are serious or there are other serious circumstances, shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine of not less than 2 percent but not more than 10 percent of the amount of his fake capital contribution or the capital contribution withdrawn; or shall be sentenced to a fine on the said scale only.

An entity committing a crime as prescribed in the preceding paragraph shall be fined, and the directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody.

Article 160 Whoever, when issuing stocks, corporate or enterprise bonds, depositary receipts, or other securities recognized by the State Council in accordance with the law, conceals important facts or fabricates major information in the prospectus for stocks, share subscription form, prospectus for corporate or enterprise bonds, or other issuance documents, if the amount involved is large, the consequences are serious or there are other serious circumstances, shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine, or shall be sentenced to a fine only. Where the amount involved is especially large, the consequences are especially serious or there are other especially serious circumstances, the offender shall be sentenced to fixed-term imprisonment of not less than 5 years, and concurrently, a fine.

A controlling shareholder or an actual controller who organizes or gives instructions for the commission of an act as prescribed in the preceding paragraph shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine of not less than 20 percent but not more than the amount of the illegally raised fund; or shall be sentenced to a fine on the said scale only. Where the amount involved is especially large, the consequences are especially serious, or there are other especially serious circumstances, the offender shall be sentenced to fixed-term imprisonment of not less than 5 years, and concurrently, a fine of not less than 20 percent but not more than the amount of the illegally raised fund.

An entity committing a crime as prescribed in the preceding two paragraphs shall be fined not less than 20 percent but not more than the amount of the illegally raised fund, and the directly responsible persons in charge and other directly responsible persons shall be punished in accordance with the provisions in the first paragraph of this Article.

Article 161 Where a company or an enterprise obligated to disclose information in accordance with the law provides its shareholders and the general public with an accounting report which is false or conceals important facts, or fails to disclose according to the applicable regulations other important information that shall be disclosed in accordance with the law, thereby seriously harming the interests of the shareholders or other persons, or there being other serious circumstances, its directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine, or shall be sentenced to a fine only. Where the circumstances are especially serious, the directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not less than 5 years but not more than 10 years, and concurrently, a fine.

A controlling shareholder or an actual controller of a company or an enterprise as prescribed in the preceding paragraph who commits, organizes or instructs others to commit an act as prescribed in the preceding paragraph, or conceals the relevant information, which results in the occurrence of the circumstances as prescribed in the preceding paragraph, shall be punished in accordance with the provisions in the preceding paragraph.

Where the controlling shareholder or actual controller committing a crime as prescribed in the preceding paragraph is an entity, the entity shall be fined, and its directly responsible persons in charge and other directly responsible persons shall be punished in accordance with the provisions in the first paragraph of this Article.

Article 162 Where, in the process of liquidation, a company or an enterprise conceals its assets, records false information in its balance sheet or asset list, or distributes the assets of the company or enterprise prior to full payment of its debts, thereby seriously harming the interests of the creditors or others, the directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine of not less than RMB 20,000 yuan but not more than RMB 200,000 yuan; or shall be sentenced to a fine on the said scale only.

Article 162a Whoever conceals or deliberately destroys accounting vouchers, accounting books or accounting reports that shall be preserved in accordance with the law, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine of not less than RMB 20,000 yuan but not more than RMB 200,000 yuan; or shall be sentenced to a fine on the said scale only. 

An entity committing a crime as prescribed in the preceding paragraph shall be fined, and the directly responsible persons in charge and other directly responsible persons shall be punished in accordance with the provisions in the preceding paragraph.

Article 162b Where a company or an enterprise transfers or disposes of its assets by concealing assets, undertaking fabricated debts or any other means and goes through false bankruptcy, thereby seriously harming the interests of the creditors or others, the directly responsible persons in charge and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than 5 years or short-term custody, and concurrently, a fine of not less than RMB 20,000 yuan but not more than RMB 200,000 yuan; or shall be sentenced to a fine on the said scale only.

Article 163 Where an employee of a company, an enterprise, or any other entity, taking advantage of his position, solicits or illegally accepts money or other forms of property from others as a price of providing benefits, if the amount involved is relatively large, he shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody, and concurrently, a fine. If the amount involved is large or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 10 years, and concurrently, a fine. If the amount involved is especially large or there are other especially serious circumstances, the employee shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment, and concurrently, a fine.

Where an employee of a company, an enterprise or any other entity, in violation of the relevant state regulations, takes advantage of his position and accepts kickbacks or service charges of any form in economic activities and takes them into his own possession, he shall be punished in accordance with the provisions in the preceding paragraph.

Where a person engaged in public duties in a state-owned company, enterprise or any other state-owned entity, or a person delegated by a state-owned company or enterprise or any other state-owned entity to a non-state-owned company or enterprise or any other non-state-owned entity to engage in public duties commits an act as prescribed in the preceding two paragraphs, the person shall be convicted and punished in accordance with the provisions in Articles 385 and 386 of this Law.

Article 164 Whoever, for seeking illicit benefits, gives money or other forms of property to an employee of a company, an enterprise or any other entity, if the amount of the money or other forms of property thus given is relatively large, shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody, and concurrently, a fine. If the amount of money or other forms of property thus given is large, the offender shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 10 years, and concurrently, a fine.

Whoever, for seeking illicit commercial benefits, gives money or other forms of property to a public official of a foreign country or of a public international organization shall be punished according to the provisions in the preceding paragraph.

An entity committing a crime as prescribed in the preceding two paragraphs shall be fined, and its directly responsible persons in charge and other directly responsible persons shall be punished in accordance with the provisions in the first paragraph.

A briber who voluntarily confesses to his bribery before being prosecuted may be given a mitigated punishment or be exempted from punishment.

Article 165 A director of the board or manager of a state-owned company or enterprise who, taking advantage of his office, operates for himself or another person the same business as that of the company or enterprise in which he holds a position, and obtains illegal benefits, if the amount involved is large, shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody, and concurrently, a fine, or shall be sentenced to a fine only. If the amount involved is especially large, the offender shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 7 years, and concurrently, a fine.

Article 166 An employee of a state-owned company, enterprise, or public institution who, taking advantage of his position, commits any of the following acts, thereby causing heavy losses to the interests of the state, shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody, and concurrently, a fine, or shall be sentenced to a fine only. Where extremely heavy losses are caused to the interests of the state, the offender shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 7 years, and concurrently, a fine:

(1) turning operation of the profitable business of the state-owned company, enterprise, or the public institution over to his relatives or friends;

(2) purchasing commodities from an entity operated and managed by his relatives or friends at a price manifestly higher than the market price, or selling commodities to an entity operated and managed by his relatives or friends at a price manifestly lower than the market price; or

(3) purchasing substandard commodities from an entity operated and managed by his relatives or friends.

Article 167 Where in the process of signing or fulfilling a contract, a person of a state-owned company, enterprise or public institution, who is directly in charge is defrauded due to serious remissness in his duty, thereby causing heavy losses to the interests of the state, he shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody. Where extremely heavy losses are caused to the interests of the state, the offender shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 7 years.

Article 168 Where an employee of a state-owned company or enterprise causes the bankruptcy of or heavy losses to the company or enterprise due to serious remissness in his duty or abuse of his office, if heavy losses are caused to the interests of the state, he shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody. If extremely heavy losses are caused to the interests of the state, he shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 7 years.

An employee of a state-owned public institution committing a crime as prescribed in the preceding paragraph, thereby causing heavy losses to the interests of the state, shall be punished in accordance with the provisions in the preceding paragraph.

An employee of a state-owned company, enterprise or public institution practicing favoritism and irregularities and committing a crime as prescribed in the preceding two paragraphs shall be given a heavier punishment in accordance with the provisions in the first paragraph.

Article 169 Where a person who is directly in charge of a state-owned company or enterprise, or a department superior to and in charge of such companies or enterprises practices favoritism and irregularities and converts state-owned assets to shares at a low price or sells the assets at a low price, thereby causing heavy losses to the interests of the state, he shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody. Where extremely heavy losses are caused to the interests of the state, he shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 7 years.

Article 169a Where a director of the board, supervisor or senior manager of a listed company, in violation of his fiduciary duty to the company, takes advantage of his office and manipulates the company to engage in any of the following acts, thereby causing heavy losses to the interests of the company, the offender shall be sentenced to fixed-term imprisonment of not more than 3 years or short-term custody, and concurrently, a fine, or shall be sentenced to a fine only. Where extremely heavy losses are caused to the interests of the company, the offender shall be sentenced to fixed-term imprisonment of not less than 3 years but not more than 7 years, and concurrently, a fine:

(1) providing funds, commodities, services or other assets for another entity or individual for free;

(2) providing or accepting funds, commodities, services or other assets under obviously unfair conditions;

(3) providing funds, commodities, services or other assets for an entity or individual that obviously does not have the ability of repayment;

(4) providing a guaranty for an entity or individual that obviously does not have the ability of repayment, or providing a guaranty for an entity or individual without a justifiable reason;

(5) waiving the creditor’s right or undertaking a debt without a justifiable reason; or

(6) harming the interests of the listed company by any other means.

Where a controlling shareholder or an actual controller of a listed company instructs a director of the board, supervisor, or senior manager of the listed company to commit an act as prescribed in the preceding paragraph, the controlling shareholder or actual controller shall be punished in accordance with the provisions in the preceding paragraph.

Where the controlling shareholder or actual controller of the listed company which commits a crime as prescribed in the preceding paragraph is an entity, the entity shall be fined, and the directly responsible persons in charge and other directly responsible persons shall be punished in accordance with the provisions in the first paragraph.