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 | ||
Manufacturing fake/ungraded products Selling fake/ungraded products | Crime of manufacturing or selling fake/ungraded products (“catch-all article”) | CL-A140 03Int-A2 |
Manufacturing fake drugs Selling fake drugs | Crime of manufacturing or selling fake drugs | CL-A141 03Int-A2 |
Manufacturing ungraded drugs Selling ungraded drugs | Crime of manufacturing or selling ungraded drugs | CL-A142 03Int-A2 |
Manufacturing substandard medical devices Selling substandard medical devices Knowingly purchasing substandard medical devices for compensable use | Crime of manufacturing or selling substandard medical devices | CL-A145 03Int-A3 |
IP violation-related crime | ||
Faking a registered trademark | Crime of faking a registered trademark | CL-A213 |
Selling products with a fake registered trademark | Crime of selling products with a fake registered trademark | CL-A214 |
Business operation-related crime | ||
Raising prices to an unreasonably high level during the infectious disease breakout | Crime of operating business unlawfully | CL-A225 03Int-A6 |
2. Manufacturers
Scenario | Crime | Law |
Epidemic disease-related crime | ||
Restarting business operations ahead of the time scheduled by the government | Crime of obstructing the prevention and treatment of an epidemic disease | CL-A330 08Pro-A49 |
Environmental protection-related crime | ||
Discharging, dumping or disposal of wastes containing pathogens of epidemic diseases or toxic substances, or other hazardous wastes to land, water or air | Crime of environmental pollution | CL-A338 03Int-A13 |
3. Retailers
Scenario | Crime | Law |
Business operation-related crime | ||
Raising prices to an unreasonably high level during an epidemic disease breakout | Crime of operating business unlawfully | CL-A225 03Int-A6 |
4. Advertising Industry
Scenario | Crime | Law |
False advertising related crime | ||
Advertiser, advertisement operator or publisher releases false advertisements to promote its products or services in the name of preventing epidemic diseases | 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 | ||
Providing drinking water that does not conform to the hygienic standards prescribed by the state Refusing to sterilize the sewage, filth and faeces contaminated by the pathogens of epidemic diseases in accordance with the hygiene requirements prescribed by the health and anti-epidemic disease authorities Permitting or conniving epidemic disease patients, pathogen carriers and suspected epidemic disease patients to engage in work which they are prohibited from engaging in by the health administration department of the State Council because of the likelihood of causing the spread of epidemic diseases Refusing to implement preventive and control measures proposed by the health and anti-epidemic disease authorities in accordance with the Law on Prevention and Treatment of Epidemic Diseases of the People's Republic of China | 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 | ||
Conniving users to conduct defamation through an internet platform run by the operator | Crime of defamation | CL-A246 13Int-A8 |
Obstruction of social management-related crimes | ||
Refusing to perform information security management obligations provided by laws and administrative regulations | Crime of refusing to perform obligations in respect of information network security management | CL-A286.1 |
Conniving users to fabricate or deliberately spread false information through internet platforms run by the operator | Crime of fabricating or deliberately spreading false information | CL-A291.1 13Int-A1 |
Conniving users to conduct provoking behavior through the internet which causes public disorder | Crime of conducting provocation acts | CL-A293 13Int-A5 |
7. Entities receiving donations
Scenario | Crime | Law |
Corruption-related crime | ||
Misappropriating funds and/or materials donated for the prevention and treatment of epidemic diseases | Crime of misappropriation of special funds and property | CL-A273 |
State staff embezzling funds and/or materials donated for the prevention and treatment of epidemic diseases | Crime of embezzlement by state staff | CL-A382 03Int-A14 |
Staff of non-state entities embezzling funds and/or materials donated for the prevention and treatment of epidemic diseases | 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 | ||
Illegally obtaining citizens' personal information Selling/providing citizens' personal information to others in violation of laws and regulations | 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 | ||
Providing shareholders and the public with false financial statements or statements concealing important facts Failing to disclose other important information which is required to be disclosed by law | Crime of illegally disclosing or failing to disclose important information | CL-A161 |
Trading securities or futures upon insider information Disclosing insider information to others Advising others explicitly or implicitly to engage in securities or futures transactions by taking advantage of insider information | Crime of conducting insider trading or leaking insider information Crime of trading securities or futures by taking advantage of undisclosed information | CL-A180 |
Carrying out combined or successive purchases or sales by taking advantage of funds, shareholding or information, thereby manipulating the trading prices of securities or futures Collaborating with another person to mutually trade securities or futures at a pre-arranged time and price and by pre-arranged means, thereby affecting the price or volume of the securities or futures traded Carrying out securities trading between accounts under the actual control of the same person, or taking the person himself/herself as the trading counterparty, buying and selling futures contracts from and to himself/herself, thus effecting the trading price or volume of securities and futures | 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 | ||
Issuing stocks or corporate bonds without the approval of the relevant state departments | Crime of issuing stocks or corporate bonds without due approval | CL-A179 |
Raising funds through fraudulent methods with the purpose of unlawful possession | Crime of funds-raising fraud | CL-A192 |
Obtaining loans from banks or other financial institutions by fraudulent means with the purpose of unlawful possession | Crime of loan fraud | CL-A193 |
Obtaining loans from banks or other financial institutions by fraudulent means, causing huge losses to the banks or other financial institutions | Crime of defrauding loans | CL-A175.1 |
Obtaining another party's property through defrauding means in the process of signing or performing the contract with the purpose of unlawful possession | 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).