China Removed Restriction on Foreign Investment in Payment Services

Authored by Ren Gulong (rengulong@anjielaw.com) ,Zhang Yuan(zhangyuan@anjielaw.com),Yang Anshu(yanganshu@anjielaw.com),  Wen Xianglai(wenxianglai@anjielaw.com) & Hu Jianan(hujianan@anjielaw.com) at AnJie Law Firm

On 19th March 2018, the People’s Bank of China (PBOC) published the Notice of People’s Bank of China No.7 [2018] (the “Notice”), which removes restriction on payment services provided by foreign-invested payment institutions and sets up the rules and regulatory requirements. This Notice has followed the instructions of the 19th CPC National Congress on speeding up the reform process and promoting the full opening of the payment service market. It will lead to a new era of payment industry in China.

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China's Recent Financial Regulatory Reform

Authored by Ren Gulong (rengulong@anjielaw.com) & Zhang Yuan(zhangyuan@anjielaw.com) at AnJie Law Firm

On 18 March 2018, China's lawmaker, the National People's Congress approved a reform plan for the institutional organizations of the State Council, China's top administrative authority (the "Reform"). Among various substantial restructuring of governmental departments, one of the key part is the restructuring of the financial regulators. This is a substantial reform since 2002 and ends up the framework of separate institutional regulation by one central bank plus three commissions.

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Draft an Arbitration Clause both Tailored and Clear

 Authored by Arthur Dong (dongxiao@anjielaw.com) & Darren Mayberry (darren.mayberry@anjielaw.com) at AnJie Law Firm

Arbitration clauses benefit from simplicity. The best arbitration clauses also inform. Rarely are they inventive or creative. This is true for Chinese arbitration, or any other. Arbitration clauses should be tailored to your contract's purpose and your firm's needs. Above all, construct your arbitration clause with an eye towards clarity, and not towards partisan advantage.

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Merger Control Review 2017

 Authored by Michael Gu (michaelgu@anjielaw.com) adn Sun Sihui(sunsihui@anjielaw.com) at AnJie Law Firm

Introduction

The year 2017 marked the 10th anniversary of the promulgation of China's Anti-monopoly Law.

The country's three antitrust enforcement agencies – the Ministry of Commerce (MOFCOM), theNational Development and Reform Commission (NDRC) and the State Administration for Industryand Commerce (SAIC) – used their extensive experience to continuously reinforce their professionalcompetence and enforcement efficiency.

Generally, antitrust enforcement has become the norm. As regards antitrust investigations in 2017,both the number and influence of the concluded cases published by the NDRC and SAIC appeared todecrease compared with 2016. However, the two agencies maintained a steady rate of antitrustenforcement.

Meanwhile, MOFCOM registered an upsurge in the number of conditionally cleared cases duringconcentration reviews. In addition, it strengthened its antitrust enforcement efforts in relation tonon-filers that should have notified MOFCOM of their concentrations.

By reviewing MOFCOM's major antitrust enforcement events in 2017, this update summarizes the characteristics and developments of merger control review and provides an outlook of the trends in2018.

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Chinese Regulator Strengthened Regulations on Shareholders of Commercial Banks

 Authored by Ren Gulong (rengulong@anjielaw.com) at AnJie Law Firm

In January, 2018, China Banking Regulatory Commission (CBRC) released the Interim Measures for the Administration of Equity in Commercial Banks (“the Measures”) to prevent and punish illegal acts of shareholders that harm the interests of banks and to ensure the sound operation and healthy development of commercial banks.

Private capital has been enthusiastic in setting up or acquiring banking institutions in the past several years. In the meantime, a series of problems arose, acquisitions of bank shares with non-proprietary funds or using entrustment structure, the illegal transfer of interests between a bank and its shareholder.

In January, 2018, China Banking Regulatory Commission (CBRC) released the Interim Measures for the Administration of Equity in Commercial Banks (“the Measures”) to prevent and punish illegal acts of shareholders that harm the interests of banks and to ensure the sound operation and healthy development of commercial banks. The Measures regulates major shareholders of commercial banks, strengthens the examination of shareholders' qualifications and intensify the investigation and punishment of illegal acts.

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China Issued New Rules to Regulate Shadow Banking

 Authored by Ren Gulong (rengulong@anjielaw.com) and Yang Aushu(yanganshu@anjielaw.com) and Xiao Yao (xiaoyao@anjielaw.com) at AnJie Law Firm

Entrusted loan is a special term in Chinese financial market, which refers to aloan provided by a corporate lender to a corporate borrower through a commercial bank who acts as a trustee of the lender. Entrusted loans, together with trust products, P2P lending and other off-balance sheet business are considered as shadow banking in China. Since the global financial crisis, China’s shadow banking grew dramatically to provide loans to borrowers who cannot get credit from banks. According to People’s Bank of China (PBOC), the entrusted loans reached 13.97 trillion yuan by end of 2017, accounting for 8% of the aggregate financing in China. Though shadow banking has played a positive role for economic growth, there is growing concern on its risks, which is multi-faceted, hidden, complex, and contagious.

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China Will Fully Open Up Its Financial Market

 Authored by Ren Gulong (rengulong@anjielaw.com) and Yang Aushu(yanganshu@anjielaw.com)at AnJie Law Firm

On 10 November 2017, Vice Minister of Finance Zhu Guangyao announced at a press briefing that China will ease and remove the limits on foreign investments in the financial service sector including securities, banking and insurance. The announcement shows a high-level policy (the “New Policy”) and detailed rules may soon be promulgated, which will certainly bring more opportunities for foreign investors in Chinese financial market.

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Domestic Arbitration Update for Foreign Invested Enterprises; Anti-Protectionist Measures may delay Enforcement of Awards

 Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm

A recent reform of the Prior Reporting System  will likely impact the procedural rights of Foreign Invested Enterprises (FIEs) following domestic arbitration. The 2017 Supreme People's Court Provisions on the Prior Reporting System dropped on 26 December, 2017. They became effective on 1 January, 2018. The Prior Reporting System originated in 1995. It has been expanded to apply to enforcement of a specific class of awards which have arisen from domestic arbitration proceedings.
 
The Prior Reporting System has served as an enforcement and annulment process for awards produced from either international arbitration or 'foreign-related' arbitration proceedings. Basically, enforcement courts must report 'up' to the High People's Court for that province before they may refuse enforcement. Likewise, High People's Courts which agreed to refuse enforcement had to report to the Supreme People's Court. Intermediate courts had served as the first instance forum for enforcement of both domestic and foreign arbitral awards. Deadlines for reporting or reply are sporadically observed. Resultant delays can drag enforcement out a year, or even longer.

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Pharmaceutical companies face severer antitrust compliance challenges - Commentary on the "Price Conduct Guidelines on Operators of Drugs prone to Shortages and APIs"

Authored by Michael Gu (michaelgu@anjielaw.com) and Sihui Sun(sunsihui@anjielaw.com) at AnJie Law Firm

Four months after seeking comments, the National Development and Reform Commission ("NDRC") released “Price Conduct Guidelines on Operators of Drugs prone to Shortages and APIs ” (“Guidelines”) on 16 November 2017. This is the first price-related anti-monopoly guidelines for a specific industry since the Anti-Monopoly Law was implemented. The Guidelines provide risk assessment warning and compliance guidance for pricing monopolistic behaviours involving both drugs prone to shortages and active pharmaceutical ingredients (“APIs”). For the first time, the Guidelines clarify that enforcement agencies use the "Prohibition plus Exemption" principle to identify pricing monopolistic agreements and refine the consideration of certain abusive activities (e.g. unfair pricing and refusal to deal). In addition, the Guidelines remove controversial provisions such as exclusive dealing that is included in the draft Guidelines. We recommend that the relevant pharmaceutical enterprises should conduct the anti-monopoly risk audit by reference to the Guidelines and adopt more strict compliance measures to identify and prevent the relevant legal risks.

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How to Compete Fairly in the Digital Era -Implications of the New Anti - Unfair Competition Law

 

Authored by Michael Gu (michaelgu@anjielaw.com) and Charles Xiang (xiangwenlei@anjielaw.com) at AnJie Law Firm

Introduction

On 4 November 2017, the Standing Committee of the National People’s Congress of China finally passed the long-awaited amendments to the Anti-Unfair Competition Law (AUCL), which takes effect on 1 January 2018.This is the first time the AUCL has been amended since it came into effect in 1993, and it will have significant impact on business practice in China.

The revision of the AUCL covers various legal issues, such as acts of confusion (Article 6), commercial bribery (Article 7), false or misleading business promotion (Article 8), infringement upon trade secrets (Article 9), illegal prize-giving sales (Article 10), spread of rumors or misleading information (Article 11), and Internet-related unfair competition by technical means (Article 12).

In particular, the revised AUCL included a new section addressing the Internet-related unfair competition. Some of the unfair competition behaviour(e.g. false or misleading online business promotion)are more like an online version of the traditional acts of unfair competition. Other Internet-related unfair competition behaviour is unique in the digital age driven by information technical means.

This article mainly focuses on the latter, i.e. unique unfair completion in the digital world,and endeavors to illustrate some precedents and interpretations of Article 12 of the AUCL and analyze how Article 12 will be applied and enforced inpractice.

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