Criminal Risks for Companys during the Coronavirus Outbreak
In December 2019, a new type of coronavirus (i.e., 2019-nCov) causing novel coronavirus pneumonia (“NCP”) broke out in Wuhan city, Hubei Province, and NCP then became an epidemic disease in many provinces in China and was detected in some countries and regions all over the world. While the Chinese government, healthcare institutions and personnel have been trying their best to control the epidemic situation, from a legal perspective, the 2019-nCov not only causes labor law issues for companies operating in China, it also brings criminal risks1 to the daily business operation of companies. For companies to understand these criminal risks better so as to minimize such risks, we have summarized several hypothetical scenarios, which may occur in different industries with preliminary legal introductions and analysis, as follows:
Abbreviations:
CL: the Criminal Law of the People's Republic of China
03Int: the Interpretation on Several Issues regarding Law Application in Handling Criminal Cases in relation to Obstructing Prevention of and Controlling the Disasters including Breakout of Infectious Diseases (issued by the Supreme Court and the Supreme Procuratorate of the People's Republic of China in 2003)
08Pro: the First Provision on Thresholds for Filing and Pursuing Criminal Cases by Public Security Bureau (issued by the Supreme Procuratorate and Ministry of Public Security of the People's Republic of China in 2008)
13Int:the Interpretation on Several Issues concerning the Application of Law in Handling Criminal Cases involving Defamation and Other Offences Committed through Information Networks (issued by the Supreme Court and the Supreme Procuratorate of the People's Republic of China in 2013)
A: Article
1. Medicare Industry
Scenario | Crime | Law |
Product liability-related crime | ||
| Crime of manufacturing or selling fake/ungraded products (“catch-all article”) | CL-A140 03Int-A2 |
| Crime of manufacturing or selling fake drugs | CL-A141 03Int-A2 |
| Crime of manufacturing or selling ungraded drugs | CL-A142 03Int-A2 |
| Crime of manufacturing or selling substandard medical devices | CL-A145 03Int-A3 |
IP violation-related crime | ||
| Crime of faking a registered trademark | CL-A213 |
| Crime of selling products with a fake registered trademark | CL-A214 |
Business operation-related crime | ||
| Crime of operating business unlawfully | CL-A225 03Int-A6 |
2. Manufacturers
Scenario | Crime | Law |
Epidemic disease-related crime | ||
| Crime of obstructing the prevention and treatment of an epidemic disease | CL-A330 08Pro-A49 |
Environmental protection-related crime | ||
| Crime of environmental pollution | CL-A338 03Int-A13 |
3. Retailers
Scenario | Crime | Law |
Business operation-related crime | ||
| Crime of operating business unlawfully | CL-A225 03Int-A6 |
4. Advertising Industry
Scenario | Crime | Law |
False advertising related crime | ||
| Crime of releasing false advertisements | CL-A222 03Int-A5 |
5. Operators and Managers of Hotels, Malls, and Office Buildings
Scenario | Crime | Law |
Epidemic disease-related crime | ||
| Crime of obstructing the prevention and treatment of epidemic disease | CL-A330 08Pro-A49 |
6. Network operators
Scenario | Crime | Law |
Infringement on citizen rights-related crime | ||
| Crime of defamation | CL-A246 13Int-A8 |
Obstruction of social management-related crimes | ||
| Crime of refusing to perform obligations in respect of information network security management | CL-A286.1 |
| Crime of fabricating or deliberately spreading false information | CL-A291.1 13Int-A1 |
| Crime of conducting provocation acts | CL-A293 13Int-A5 |
7. Entities receiving donations
Scenario | Crime | Law |
Corruption-related crime | ||
| Crime of misappropriation of special funds and property | CL-A273 |
| Crime of embezzlement by state staff | CL-A382 03Int-A14 |
| Crime of embezzlement by non-state staff | CL-A271 03Int-A14 |
In addition to the aforementioned crimes closely relating to the epidemic disease breakout, please note that the following criminal risks may also be triggered by market players due to the lack of awareness of criminal compliance, as follows:
8. Crime of infringing citizens' personal information
During the special period of the NCP prevention and control, concerning public health and safety, governments, the medical industry, transport industry and other relevant industries may need to collect and use the personal information (e.g., health information, diagnosis and treatment information, whereabouts, personal address, etc.) of the patients and people who have been to the NCP breakout areas. However, such collection and use of personal information should be compliant with the laws and regulations.
Scenario | Crime | Law |
Personal information-related crime | ||
| Crime of infringing citizens' personal information | CL-A253.1 |
9. Crimes related to securities market
The NCP may also cause a huge impact to the securities market, and we suggest that listed companies and security practitioners focus on the following potential criminal risks, including but not limited to:
Scenario | Crime | Law |
Securities market-related crime | ||
| Crime of illegally disclosing or failing to disclose important information | CL-A161 |
|
| CL-A180 |
| Crime of manipulating securities or futures market | CL-A182 |
10. Crimes related to raising funds
The NCP will have a grave negative impact on the economy, and some small or medium-sized enterprises will inevitably be faced with a series of problems including but not limited to financial difficulties, capital chain break, etc. In such cases, some enterprises may be faced with criminal risks because of their prior non-compliant funds-raising process, etc.
Scenario | Crime | Law |
Funds raising-related crime | ||
| Crime of issuing stocks or corporate bonds without due approval | CL-A179 |
| Crime of funds-raising fraud | CL-A192 |
| Crime of loan fraud | CL-A193 |
| Crime of defrauding loans | CL-A175.1 |
| Crime of contract fraud | CL-A224 |
1.Pursuant to the criminal laws and administrative laws and regulations of the People's Republic of China, for many types of crimes, if the violation of law does not meet the criminal threshold, such violation may still be regarded as illegal conduct under the administrative laws and regulations (e.g., the Public Security Administration and Punishment Act of the People's Republic of China, the Advertisement Act of the People's Republic of China, etc.). Please be informed that in this article, we only focus on and discuss criminal law-related issues, and leave administrative law issues untouched and to be fully discussed in subsequent article(s).
WU, Lei Partner
wul@junhe.com
Practice Areas:
Dispute Resolution
Regulatory Compliance
Restructuring and Insolvency
YIN, Xiao (Benjamin)
Partner
yinx@junhe.com
Practice Areas:
Commercial Criminal Practice
Anti-Commercial-Bribery
Compliance Investigation
YANG, Tong
yangt@junhe.com
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