La Cina ha implementato le misure del sistema di “credito sociale” che colpira’ sia i rappresentanti legali delle aziende cinesi nonche’ quelli stranieri se coinvolti in violazioni di leggi. Colore che avranno una condotta scorretta verranno inserite nella lista dei “disonesti”, la quale sara’ pubblica. Riportiamo qui sotto un interessante articolo offertoci gentilmente da Johannes Lazzaro, Senior Consultant in Foreign Investments and Corporate Affairs department alla Orcom C&A di Shanghai.
Social credit score: dishonest persons and extravagant spending In the context of the widely discussed new social credit score system China has implemented the first measures concerning sanctions imposed on “dishonest” people, as defined here below, without gaining by far the deserved level of attention, despite the extensive media coverage on the matter, especially in respect to foreign media.
In particular, the Supreme People’s Court of the PRC has issued a List of Dishonest Persons Subject to Enforcement, revised in 2017, affecting the legal representatives and leaders of organizations who are found to:
- be able to fulfill the obligations imposed by effective legal instruments but refuse to do so;
- obstruct or reject execution by fabricating evidence, perpetrating violence or making intimidation, etc.;
- dodge execution by false litigation, bogus arbitration or hiding and transferring property, etc.;
- violate the property reporting system;
- violate the consumption restriction order; or
- refuse to fulfill or implement the settlement agreement without justified reasons.
The above-mentioned provision, in essence, exposes the legal representative of any PRC company, including foreign-invested ones, to the risk of being included in the said list and thus marked as dishonest in a government kept list available to the public. Moreover, it needs to be stressed how anyone who deems a subject to have violated the above article may file an application for dishonesty to the competent People’s Court. The duration of the inclusion is of at least two years, except for the case where the subject on the list fulfils the enforceable obligation beforehand.
Moreover, in addition to reputational damage deriving from the inclusion on the list, the same organ has promulgated Several Provisions of the Supreme People’s Court on Restricting Extravagant Spending of Persons Subject to Enforcement, which contains a number of measures limiting personal liberty and other individual freedoms in case of subjects declared dishonest, particularly: 1. choosing to take a plane, a soft sleeper in a train, or a berth of the second class or above on a ship, for traveling;2. having extravagant spending at multi-star-rated hotels, restaurants, night clubs, golf courses, or other places;3. purchasing real property, newly constructing or expanding houses, or decorating houses in a luxurious manner;4. renting high-class office buildings, hotels, apartments, or other office premises;5. purchasing cars that are not necessary for business;6. going on tours or vacation;7. sending children to private schools with expensive tuition;8. spending a large sum in purchasing insurance wealth management products; and9. other spending acts not necessary in daily life or work, such as taking any seat in a G-series China Railway High-speed train or a seat of the first class or above in any other China Railway High-speed train.We would hereby like to stress how these are related to civil proceedings, meaning that no criminal offence needs to be committed in order to be included on the list and thus be subject to the restrictive measures. This is particularly important, as we deem it to be fairly easy for a legal representative to be placed on the list while exercising his/her daily job duties, as for example any delay in the performance of the company’s obligation on the employee’s side has direct consequences for the person discussed. As a result, the legal representative could face significant restrictions on, among others, his/her freedom of movement and hence the ability of duly being able to carry out his/her job duties.
In conclusion, in light of the above considerations, we believe it to be of outmost importance for any legal representative to personally ensure full compliance of the company’s operations, especially when it comes to delicate situations such as litigation with employees, in order to avoid the strict consequences under the seen regulatory framework. Orcom C&A will be glad to provide you with more information if interested and to assist you with any compliance related topic, useful to reduce risks.