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China anti commercial bribery system and lessons learned from GSK scandal

China anti commercial bribery system

China does not have specific anti-commercial bribery laws dealing with domestic business corruption and bribery. Instead, this is provided for under the PRC Anti-Unfair Competition Law (“AUCL”) and PRC Criminal Law, which applies to all Chinese citizens and any persons within China. Both laws also apply to all companies and institutions organized under China’s laws, which include Chinese domestic companies, Sino-foreign joint ventures, wholly foreign-owned enterprises, representative offices and even foreign companies doing unincorporated business in China.

The AUCL prohibits business operators from “giving bribes in the form of property or other means for the purpose of selling or purchasing products.” The PRC Criminal Law, however, criminalizes the act of “giving money or property to any employee of a company or enterprise or other entity for the purpose of seeking illegitimate benefits.” If an entity commits such a crime, it shall be fined, whilst a person who is directly in charge and other persons who are directly responsible for the crime could be sentenced to imprisonment or detention. The PRC Criminal Law also has specific provisions governing governs against bribery to government-related officials.


Basics of China Prenuptial Agreement

The Law Office of China Commercial Law Co., Guangdong works with couples that wish to establish the terms of a settlement agreement either before or after they are married-in the event that they later decide to divorce or legally separate.

The benefits of a prenuptial agreement are that although it costs you attorney's fees now; down the road if things don't go as planned you will save a lot of nerves and money on fees in case of separation or a divorce. It will reduce the number of times you will have to be in court (except issues related to children), because other issues have already been resolved in advance in writing. It will speed up settlement and reduce the risk exposure and publicity. If there is a great disparity in the couples existing net worth, pre-nup is the smart choice to prevent problems in the future.

Premarital Contracts Offer More Certainty

What if? It’s a question we ask when we buy insurance, knowing that we cannot control the future, but also knowing that we should be prepared. A prenuptial agreement offers more certainty in the eventuality that the marriage ends in divorce, separation or death.


China Lawyer Hourly Billing and Value Billing Practice

I have been having an ethics debate with another attorney. Our discussion revolves around this:

1.      I assert that it would be unethical for an attorney billing hourly
to bill (for example) three hours instead of one (when the time spent was one hour), on a project, when the time spent re-using (for example) a motion which was previously drafted for another client was one actual hour.
2.      Other attorney asserts that it is ethical to bill three hours for
that one hour of actual work because an earlier client paid for three hours to create the original motion, and it would be unethical to charge a later client less because an earlier client paid more.
a.       My response is that this is essentially double-billing, and that we
have an ethical obligation to use any usual means to reduce client billable hours, including using earlier motions, pleadings, and parts of briefs (appropriately reviewed and updated, of course) when possible.

I distinguish this from flat or "value" based fees and contingency fees, and look only at the case where the client is contracted on an hourly basis.

Another colleague responded:

Let me pass these examples by you:


Whether and how non-compete clause enforceable in China

As experienced China corporate lawyer, we frequently encounter the situation where clients inquire about non-compete clause and even independent non-compete contract.

Non-Competition provisions restrict individuals and organizations from providing services or engaging in businesses in certain markets and geographies for a period of time. The enforceability of these clauses varies from State to State. The examples are taken from agreements covering matters broader than just non-competition, such as employment agreements, acquisition agreements or license agreements.

On January 31, 2013, the Supreme People’s Court of the People’s Republic of China, China’s highest court, released Judicial Interpretation on Labor Disputes (IV) (“Interpretation IV”). The Court had published a draft of the Interpretation for public comments in June 2012. However, there are major differences between the final interpretation and the draft, which is intended to balance the interests of the employer and employee.Employers in China are under a statutory obligation to compensate employees for observing non-compete obligations after termination of the employment. Until recently, it was uncertain how much compensation the employer was required to pay. Some local regulations provided for indicative percentages, but most did not.


Different types of companies in China

As China corporate lawyer, we share following rules and regulation about China business organization laws with you. China’s Company Law recognizes two types of companies.

Limited Liability Company

This type of entity requires a minimum capital of RMB 30,000 with less than 50 shareholders.

The capital can be in the form of cash, industrial property or land use rights.

Company Limited by Shares

This type of entity is to be set up by promotion or share offer with a minimum share capital of RMB 5 million. For incorporation, no less than two promoters are required. Establishment by share offer is subject to the approval of China’s securities regulator.

Foreign Investment Entities

Foreign investors are allowed to set up the following types of business entities:

1. Cooperative Joint Venture (CJV)

A CJV has the option to register as a legal person with limited liability. The parties in a CJV have the flexibility of choosing whether to operate the enterprise as a limited liability company or to operate it as an unincorporated entity under which partners bear unlimited liability. The profits of a CJV are allowed to be shared by participants as specified in the joint venture contract, and not necessarily in proportion to their capital contribution. As a result, this type of venture is ideal when the foreign investor is only looking for a short-term project. After obtaining a fair or premium return on investment, the foreign investor returns the majority or full ownership of the enterprise to the Chinese partner.
•A cooperative venture does not require a new business licence if it is arranged in contractual form under the auspices of an existing joint venture enterprise.
•There are no expiry periods or limitations on the length of the venture. The contractual terms can be renewed at any time and for any extended period, subject to the approval of the government.
•Investment contributions from each party are not limited to financial capital but may also include non-financial assets such as intellectual property rights, buildings, materials or machinery.
•Transfer or withdrawal of investments is not subject to the approval of the government. Foreign investors can deploy their registered capital as they see fit.

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I am a licensed China lawyer. Most clients are foreign nationals and companies. China Lawyer Blog have associates in Beijing, Shanghai, Tianjin, Guangzhou, Suzhou, Nanjing, Qingdao, Fuzhou, Hainan, Hefei, Wuhan, Xian, Changsha, Xiamen and Hangzhou. Learn More

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This China Lawyer Blog is aiming at providing better knowledge and understanding of Chinese law for foreigners. Should you have any legal issue in China, do not hesitate to contact China Lawyer Blog for consultation. Preliminary consultation is free. Further legal service, however, will be charged in due rate and in due course.

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.