Investment program highlights

Minimum investment amount

Investor may invest 250,000 EURO in real estate either as an individual or company purchase. The number of houses is not limited, if the total value of the properties amounts to 250,000 EURO or more. The property once purchased can be rented out.

Family Reunification

Both spouse and children under the age of 21 years old can be included in the investment program. Furthermore, residency can be extended to parents of both spouses. Both the applicant and family members can access the education, healthcare, insurance policies related to pensions and so forth.

Minimum stay per year

None

Investment Eligibility

Applicants need to meet the following requirements:

• Non-EU/EEA country citizen
• Min 18 years old
• No criminal record
• Obtain medical insurance
• Good character

Author: Maria Georgiou

This content appears as a courtesy of Georgios K Georgiou LLC, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information related to its content, please visit www.georgioullc.com

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Im Gesuch ist die finanzielle Situation der Gesellschaft darzulegen, wobei das Gesuch gemäss Art. 293 ff. SchKG zwingend folgende Beilagen zu enthalten hat:

• eine aktuelle Bilanz der Gesellschaft
• eine Erfolgsrechnung
• eine Liquiditätsplanung oder entsprechende Unterlagen, aus denen die derzeitige und künftige Vermögens-, Ertrags- oder Einkommenslage des Schuldners ersichtlich ist, sowie
• ein provisorischer Sanierungsplan

Die Gesuchstellerin kann das Gericht um provisorische Nachlassstundung für maximal vier Monate ersuchen. Auf Antrag kann die provisorische Nachlassstundung in begründeten Fällen um weitere vier Monate verlängert werden. Ein Gesuch wird bewilligt, sofern nicht offensichtlich keine Aussicht auf Sanierung oder Bestätigung eines Nachlassvertrages besteht. Das Nachlassgericht hat die provisorische Stundung unverzüglich nach Eingang des Gesuches zu behandeln und trifft von Amtes wegen weitere zur Erhaltung des schuldnerischen Vermögens notwendige Massnahmen (Art. 293a Abs. 1 SchKG).

Nach Art. 293b SchKG setzt das Nachlassgericht einen oder mehrere Sachwalter zur näheren Prüfung der Aussicht auf Sanierung oder Bestätigung des Nachlassvertrages ein. In begründeten Fällen kann jedoch von der Einsetzung eines Sachwalters abgesehen werden.

Haben Sie weitere Fragen? Das HütteLAW-Team berät Sie gerne.

Author: Larissa Kälin

This content appears as a courtesy of HütteLAW, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.huettelaw.ch.

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Like in any judgment, there are numerous lessons to be drawn from the decision of the Supreme Court, but in this article, we highlight five points that strike on corporate insolvency law in Zambia. A caveat must be placed here, being that the decision deals with corporate insolvency law as it existed before the enactment of the Corporate Insolvency Act, No. 9 of 2017. The lessons however, and the Supreme Court was alive to this fact, remain valid post the said new Act..

No. 1; Directors of the company retain residual power to litigate against wrongs done to the company

It is standard legal principle that once a company is placed under liquidation and a provisional liquidator appointed over its affairs, the power and control of the company is divested from the board and transferred to the liquidator. This means the company under liquidation can and does act at the behest of the liquidator. But the Supreme Court has endorsed the position that notwithstanding this clear position, directors and shareholders of the company have residual power to resist the liquidation and to litigate against wrongs done to the company by the liquidator and for the liquidator to account for his actions.

No. 2; Provisional Liquidator is not necessary in every case, although a liquidator is

When a petition is presented for liquidation, it is usual to make an application for the appointment of a provisional liquidator, pending the determination of the matter. The Supreme Court has clarified the need to carefully consider the need of such a ‘serious task’ which may in fact spells irreversible doom for the company. The provisional liquidator’s role is to preserve the assets of the company, pending the making of the winding up order. Care must be exercised to ensure that the decision to appoint a provisional liquidator is based on this fundamental rule.

Otherwise, only the liquidator would be necessary at the point of making an order for winding up of the company.

No. 3; Yes, Liquidator is boss, but he is also subject to supervision by committee of Inspection

Notwithstanding that the liquidator has overall powers over the affairs of the company subject of liquidation and supplants the board, the liquidator cannot be a law unto themselves. This is because the liquidator is subject to the committee of inspection, which must be put in place to supervise the conduct of the liquidation by the liquidator.

No. 4; Liquidator without personal liability, though fancy, actually doesn’t exist

While it is usual for the liquidators to style themselves as ‘liquidator without personal liability’, this fancy description should not mislead one to believe the liquidator can never be made to account for their actions, and in an appropriate case, be held personally liable for their actions or omissions during the liquidation process. In this case, the Supreme Court specifically directed the addition of the liquidator to the proceedings for the purposes of inquiring into his possible personal liability.

No. 5; The Courts of law are the overall supervisors over a liquidation

The Supreme Court has underscored the heavy and important supervisory role placed on the courts of law in liquidations. It is for the courts to confirm that the grounds presented for a petition for liquidations are indeed genuine and that the players in the liquidation process are correctly playing their roles. The courts cannot underplay the heavy, serious and solemn role of consciously supervising liquidations placed on it by the law, not even when the parties are purportedly agreed, through a consent order.

It’s safe to conclude that the latest Supreme Court decision has numerous useful lessons for corporate insolvency law in Zambia. This should shape how future liquidations, even the current ongoing ones, on how they ought to be conducted.

Client Legal Alert – Equitas Legal Practitioners@2022

*This scholarly article is a general guide and does not contain definitive legal advice. Readers considering taking action on any of the issues discussed should speak to their legal advisors before taking any such action. Equitas disclaims any liability whatsoever arising from acting on this article.

Parties are purportedly agreed, through a consent order.

It’s safe to conclude that the latest Supreme Court decision has numerous useful lessons for corporate insolvency law in Zambia. This should shape how future liquidations, even the current ongoing ones, on how they ought to be conducted.

This content appears as a courtesy of Equitas Legal Practitioners, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit https://equitas-legal.com/.

The post Corporate Insolvency Law in Zambia; 5 Lessons from the latest Supreme Court decision in Fred Mmembe and Post Newspapers Case appeared first on China Collaborative Group.

We highlight the practical elements for enterprises to note when implementing the resumption of work.

1. Closed-loop management

Enterprise should implement a closed-loop pandemic control mechanism that is acknowledged by the authorities. Namely, a closed-loop refers to area zoning and category-based management for different areas to prevent physical contact between different groups of employees such as in production, common areas, or meeting rooms, as well as establishing no-contact with external individuals such as logistic suppliers (external individuals must hold a negative nucleic acid test certificate within 48 hours and on-site negative antigen test results). As result, employers should ensure the employees are segregated into groups, establish the work environment to permit one metre social distancing within the workplace, and restrict or limit physical contact between such groups to isolate positive cases to one group and prevent cluster outbreaks.

2. Emergency response plan

Enterprises shall formulate emergency response plans for COVID-19 outbreaks in the workplace. Any employees with abnormal antigen detection and nucleic acid detection should be reported to the official in charge and the Centre for Disease Control and Prevention. Transportation and treatment of those diagnosed with COVID-19 should be priorly established with the local government and temporary isolation measures should be implemented for close-contact staff. Large enterprise shall set up a shelter in the factory area.

3. Stock of Anti-Pandemic Materials

Enterprises should maintain a stock of anti-pandemic materials and purchase antigen self-test kits, face masks, alcohol-based disinfectants, hand sanitizers, infrared thermo-detectors, thermal imaging detectors, protective suits, goggles, disposable gloves, etc. whenever necessary. A minimum supply of anti-pandemic materials for 14 days is recommended. All used protective items shall be disposed properly and safely.

The Guideline also adds that enterprises should resume work and production under the guidance of district governments on a “one-on-one” basis. We suggest that enterprises consult with professionals to ensure the resumption of work is compliant with the local guidelines and district government.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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Getting right personal information protection and maternity leave

Currently, companies worldwide are called by both domestic and international regulations to become corporate citizens rather than merely profitable entities. In China, 2021, domestic legislation focused on data and cyber protection and introduced measures to support the third-child policy. Namely, Personal Information Protection Law (“PIPL”), effective from November 1 2022, obligates companies to strengthen personal data handling, process, and storage, and from late November, provinces and municipalities across China extended maternity leave to support the 3-child policy (announced on May 31, 2021, following the Chinese Communist Party Politburo meeting chaired by President Xi Jinping). As a result, in 2022, human resources (“HR”) across China should diligently implement plans to comply with such changes and obligations.

At Horizons, we have been working with clients to adjust employee policies and summarise the main aspects for human resources to practically implement changes.

Personal Information Protection Law

PIPL is the first legislation to address misuse of personal data and sets forth mandatory requirements for companies processing such data. Though data handling related to human resources do not require the employee’s consent, PIPL does introduce stricter obligations for those handling sensitive personal information, such as biometrics, religious beliefs, medical and health and so forth. Namely, companies shall obtain specific consent and inform such individuals of the necessity and impact on their rights and interests. Therefore, companies should audit the existing personal information processing systems to gain a comprehensive employee data overview and, if necessary, draft specific consent forms aligned with PIPL.

Equally, companies may only transfer personal information outside mainland China by fulfilling provisioned conditions. Under PIPL, such conditions are generally outlined and require further guidelines for companies to proceed ahead. We suggest HR keep abreast of forthcoming related guidelines, especially those handling large volumes of personal information that meet a threshold set by the National Cyberspace Authority.

Maternity Leave

In late November 2021, parental leave extensions were adopted in Chinese cities and provinces to stimulate the 3-child policy. Extended leave policies aim to reduce the burden of childbirth and childcare. The extended number of days varies from province to province or city to city, for example in Shanghai, maternity leave is extended to 158 days. For companies, the amended policies shall directly impact employee leave policies and workforce planning and costs to cover extended leave.

We suggest that companies should conduct an employee consultation process before any amendments are made to employee leave policies and ensure employees are entitled to the legally allocated number of leave days. Namely, clear specification of the type of leave and number of days such as maternity leave, paternal leave for working parents and carer’s leave. In this manner, companies can reduce the risk of labour disputes since the amendments are consented by employees and legal blinding.

Both PIPL and extended maternity leave reflect Environment Social and Governance (“ESG”) principles emerging in China. As an important international topic, we anticipate ESG to be present in forthcoming legislation in China, however, governed by President Xi Jinping Thought on Socialism with Chinese Characteristics.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

The post 2022 China Employment appeared first on China Collaborative Group.

DPB-the highlights

As stated, the DPB comprehensively incorporates most of the governing norms on data protection.

Comprehensive Incorporation of Core Principles on Data Protection

There are several internationally recognised core norms for data protection. These include Fair and lawful processing of personal information, Purpose specification, Minimality, quality, Openness and transparency, Data subject participation, Sensitivity, Security and confidentiality and Accountability.[1]

The DPB mandates data controllers to process information fairly, in a transparent manner and subject to the data subject giving consent.[2] This suffices as lawful processing of personal data under the DPB. Section 19 of the DPB also requires specific treatment for sensitive personal data. The DPB requires purpose specification for the processing of personal data, minimality, quality.[3] Data subject participation is guaranteed under part IV of the DPB which outlines the rights of a data subject. Data security is comprehensively regulated under Part V of the DPB. In all this, it is easy to appreciate how comprehensive the DPB is in embracing the international norms and standard on data protection.

Cross-Border Transfers of Personal Data

The DPB adopts a comprehensive framework for cross-border transfer of personal data.[4] This is a great step towards ensuring data protection in cross-border online transactions. This is because the DPB effectively provides a platform against which cross-border flows of personal data can be regulated. This can be sharply contrasted from the old Electronic Transactions and Cyber Security Act, which did not contain any provisions regulating cross-border flows of personal data in electronic transactions.

The DPB can be commended on many fronts including the condition of making data flows primarily subject to a decision on the adequacy of data protection in the foreign country to which the data will be transferred. [5]  The DPB is progressive in that data transfers can be authorised where the foreign country has a law, binding corporate rules, contractual clauses, code of conduct, or certification mechanism that afford an adequate level of protection.[6] This list is exhaustive enough to ensure sufficient facilitation of cross-border flows. In the absence of an adequate level of protection of any of the foregoing, a data transfer can be authorised under these conditions: if the data subject gives consent; if the processing is necessary for performance or conclusion of contract involving the data subject; and where consent cannot be practicably given, the transfer is nevertheless in the best interest of the data subject and the data subject would not have objected to it had he been asked.[7] These exceptions are broad enough to ensure the pace of international transactions is not unnecessarily hindered.

Data Protection by Design and Default

The DPB is also very progressive in that it accords the Authority with the power to publish directions on good practices and codes of conduct in data protection including the application of data protection principles by design and default in the processing of personal data.[8] Data protection by design is a concept that dictates that in light of progressive data protection regimes, companies must ensure that in their activities they incorporate data protection. Essentially since the companies must comply with data protection they must not wait for breaches before they address data protection but rather from the commencement of any action or process data protection must be incorporate and addressed.

On the other hand, data protection by default entails that for those computer products already released, there must be adherence to the highest standard of privacy to ensure data is kept safe and secure. Further, any data necessary for the operation of the product should only be kept for the minimum possible amount of time. The incorporation of these concepts in the DPB is a remarkable step in ensuring that privacy will be respected as technology gets more sophisticated.

The DPB clearly updates the data protection landscape in Malawi to comparable international standards.  This is indeed a shift in the right direction and will ensure that Malawi takes part in the information age. In my next article I shall explore some of the weaknesses in the DPB that may yet be improved to ensure comprehensive legislation is enacted.

Author: Gonjetso Dikiya LLB(Hons) University of Malawi; LLM candidate in Information and Communications Law, University of the Witwatersrand.

Head of Legal Services- Dispute Settlement Services

This content appears as a courtesy of Ritz Attorneys at Law, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit https://ritzattorneys.com/.

[1] Roos Anneliese ‘Core Principles of Data Protection’ 2006 CILSA 102-130.

[2] S. 18 of the DPB

[3] S. 23 of the DPB.

[4] Part VI of the DPB.

[5] S. 34(1)(a) of the DPB.

[6] S. 34(1)(a) of the DPB.

[7] S 36 of the DPB.

[8] S. 13 of the DPB

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If the property is rented out, a nil ATED return must still be completed, a normal tax return must be filed in addition.

If this is not done in time, there is not only the threat of back tax and penalty tax. Failure to register for ATED can also delay a potential transfer of the property to a new owner for up to one year.

ATED has been mandatory since April 2013. If your company is not yet registered, this should be done as soon as possible.

HütteLAW will be happy to assist you in cooperation with Mark Levy from TC-group London (marklevy@tc-group.com ).

Author: Martin Hütte

This content appears as a courtesy of HütteLAW, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.huettelaw.ch.

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The protection of consumer welfare is one of the objectives of the Competition and Fair-Trading Act (CFTA). Although the protection of consumers is largely governed by the Consumer Protection Act, the competition regime also has a role to play because competition and consumer protection are essentially two sides of the same coin. This paper discusses the link between competition and consumer protection, and the role of the Competition and Fair-Trading Commission (CTFC) in the protection of consumers.

The Link between Competition Law and Consumer Protection

There exists an undeniable link between competition and the protection of consumers from unfair trade practices. Anti-competitive behaviour e.g., price fixing and exclusionary practices, distort the market force of supply by restricting the entrants into the market. Where supply is low and demand is high, producers will most likely hike their prices. The obvious disadvantage of this on the consumer is clearly a concern of both competition and consumer protection regimes.

Concurrently, consumer protection offences, such as deceptive advertising, distort the market force of demand. They create a false image as to the true nature of a product or service, making it seem to be worth more than it actually is. Unfair trading practices not only affect the welfare of consumers, but also lessen the business of existent or potential trade rivals. Thus, in order to ensure that there is a free market, sufficient protection must be given to both the supply side and the demand side – to both competition and consumer protection regimes. While ensuring that the market force of supply is protected by safeguarding against anti-competitive behaviour, demand must also be protected by safeguarding consumers against unfair and deceptive trade practices, that make goods and services appear to be worth more than they actually are.

Prohibited Unfair Trading Acts Against Consumers

The Competition and Fair-Trading Act prohibits any unfair trading acts committed against consumers. The following practices by producers or traders constitute unfair practices towards consumers and are prohibited under the Competition and Fair-Trading Act:

• Withholding or destroying producer or consumer goods, rendering goods unserviceable or destroying the means of production and distribution of such goods, whether directly or indirectly, with the aim of bringing about a price increase;
• Excluding liability for defective goods;
• Making warranties that do any of the following;
• Limit liability to a particular geographic area or sales point;
• Falsely represent that products are of a particular style, model or origin;
• Falsely represent that the goods are new or of specified age;
• Represent that the products or services have any sponsorship, approval, performance and quality characteristics, components, materials, accessories, uses or benefits which they do not have;
• Engaging in conduct that is likely to mislead the public as to the nature, price, availability, characteristics, suitability for a given purpose, quantity or quality of any products or services;
• Supplying any product which is likely to cause injury to health or physical harm to consumers, when properly used, or which does not comply with a consumer safety standard which has been prescribed under any written law;
• Claiming payment for unsolicited goods or services;
• Engage in unconscionable conduct in carrying out trade in goods or services;
• Engage in pyramid selling of goods and services (a scheme which makes money by recruiting people rather than by selling products);
• Engaging in bait selling (A sales tactic where a store/trader attracts customers by an advertisement for a high quality or low-priced item, that turns out to be unavailable. The trader then uses the opportunity to lure the customer into purchasing a higher priced or lower quality product as a replacement, or to purchase other products offered by the same producer. The advertised unavailable product is only used as bait);
• Offering gifts or prizes with no intention of supplying them;
• Putting out an advertisement which is misleading or deceptive; and
• Engaging in any such acts constitutes an offence.

Role of the Competition and Fair-Trading Commission in Consumer Protection

The CFTC is empowered to enforce the CFTA and regulate, monitor, control and prevent acts or behaviour which are likely to adversely affect competition and fair trading in Malawi.  This includes conducting investigations, whether of its own motion or otherwise, into the conduct of any business to ensure that its acts are not anti-competitive or unfair towards consumers. The Commission sits as tribunal and may hold public hearings in the conduct of its investigations. It has authority to summon and examine witnesses, to call for and examine documents, to administer oaths, to require that any document submitted to the Commission be verified by affidavit; and to adjourn any investigation from time to time. Following such hearings, the Commission may make a finding based on which the Commission can make orders and directions.

Thus, where unfair acts have been committed against consumers, the consumer may report to the CFTC, which will then summon the concerned parties and conduct investigations in the manner discussed above. The Commission also has power to unilaterally commence investigations of suspected unfair practices against consumers, without being moved by anyone. Once the Commission makes a finding, it can issue order and directions regarding the conduct of the trader against consumers. It may require that traders cease certain unfair trade practices or even make payment to consumers for injustices committed against them. Further, the findings of the Commission may be used as a basis for prosecution of those who engage in unfair trading practices. Through this, the welfare of consumers is protected.

The safeguarding of fair competition and the protection of consumers from unfair trade practices are interlinked and indispensable to each other. They both protect the market forces of supply and demand, which are necessary to ensure free and fair trade, as well as efficiency of production and distribution of goods and services. The Competition and Fair-Trading Commission plays a key role in the protection of the welfare of consumers through its findings, orders and directives issued pursuant to its investigative powers.

This content appears as a courtesy of Ritz Attorneys at Law, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit https://ritzattorneys.com/.

The post Protection of Consumers under the Competition Law Regime in Malawi appeared first on China Collaborative Group.

A copyright is an exclusive property right that belongs to authors of any work by the mere fact of its creation.
Copyright law does not protect ideas, but the expression of ideas, the forms but a work shall be eligible for copyright irrespective of its form of expression, its quality or purpose for which it was created.

Legal framework for Copyright in Malawi

Copyrights are governed by the Copyright Act 2016.
Malawi is also a signatory to various international instruments including:

• Berne Convention for the Protection of Literary and Artistic Works
• Universal Copyright Convention (Geneva)
• Agreement on Trade-Related Aspects of Intellectual Property Rights

Procedure for Registration of a Copyright

There is no registration requirement for copyrights in Malawi. An author of any work shall, by the mere fact of its creation, enjoy an exclusive property right in the work.

Eligibility for Copyright Protection

Any Literary, dramatic, musical or artistic work shall not be eligible for copyright unless:

• it is original in character; or
• it is a derivative work including the following:

i. translations, adaptations, arrangements and any other transformations of original literary, dramatic, musical and artistic works

ii. collections of works, such as encyclopedias and anthologies, which, by reason only of the selection or arrangements of their contents, constitute intellectual creations.

Works not subject to Copyright Protection

Copyright protection does not extend to the following:

• written laws and decisions of courts and administrative bodies and to official translations news published, broadcast or communicated to the public by any other means; and
• a report made by a commission appointed by the Government or any agency and which the Government has made available to the public

Rights Conferred by Copyright Protection

Rights conferred by copyright protection are subdivided into two major groups, being, economic rights and moral rights.

Economic Rights

The author of any copyrighted material shall have exclusive right to the following:

• Reproduction of the copyrighted material;
• Distribution of the copyrighted material through sales, renting, licensing or lending;
• Public display of the copyrighted material;
• Public performance of the copyrighted material;
• Communication of the copyrighted material to the public; and
• Translation, adaptation, or any other transformation of the copyrighted material.

Moral Rights

The author of any copyrighted material shall have exclusive moral rights:

• The right to claim ownership of the work and to demand that his/her name be mentioned in a manner in line with proper usage; and
• Object to and seek relief from alternation or distortion of their work where such act would be prejudicial to his/her honour or reputation or where such alteration would lead to discrediting of the work.

Ownership of a Copyright

A person vested with copyright shall be the author of the work.
Where two of more persons are authors of the work, copyright shall vest jointly.
Where the work is created during the course of the author’s employment or is a product of commissioned work, the rights in the work shall vest in the employer or party that commissioned the work.

What is the Duration of Protection

Copyrights shall be protected during the lifetime of the author and fifty years after his/her death.
In cases of joint ownership, during the lifetime of the last surviving author and for fifty years after his death.
In cases where the author is anonymous, fifty years from the date such work was first published.

Infringement of a Copyright

A person infringes a copyright where they, without valid transfer or license, reproduces, duplicates, extracts or imitates such a work, or sell, lends or hands out the said work without consent of the copyright owner.

How are copyrights enforced

Copyright infringement is a criminal offence and on conviction, violators shall be liable to a fine of MK5,000,000.00 and to imprisonment for two years.
A civil action for copyright infringement can also be commenced by the owner of the copyright where they can obtain remedies as follows:

• Damages;
• Injunction;
• Account of profits or otherwise; and
• Forfeiture of all reproductions to the copyright owner or the government.

Conclusion

Works in Malawi are subject to copyright protection merely by virtue of their creation. Copyrights vest various rights in the creators of works and prohibits unauthorised distribution or reproduction of such works. Where such infringement occurs, the proprietor has various remedies in both criminal and civil courts.

This content appears as a courtesy of Ritz Attorneys at Law, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit https://ritzattorneys.com/.

The post COPYRIGHT IN MALAWI appeared first on China Collaborative Group.

Deng Xiaoping initiated the Reform and Opening Up policy and opened the door to the world in 1978. As a result, China’s GDP rose from 367.9 billion yuan in 1978 to 15.45 trillion yuan in 2020 and lifted China from a third-world country to becoming a global economic superpower.

In the last 40 years, China’s significant economic growth has increased its role in the world both as a trade and investment partner and as an international Institution member in the United Nations (1945), World Trade Organisation (2001), and World Bank (1980). As a result, China holds a more influential and significant role in the world today than 40 years ago and more recently demonstrating a more mature and assertive stance.

Internationally, China has increased activism and assertiveness within international institutions (“Institutions”) in recent years. Specifically, China increased engagement in formulating policies and positions within the Institutions and increasingly utilised such Institutions as platforms to articulate its’ position. Equally, today’s institutions represent a broader range of countries with different priorities, needs, and interests than the founding members. Therefore, Institutions are increasingly evolving from the post-second world war era, in which the USA played a primary role in the founding principles of the Institutions.

Domestically, China has adopted a collection of legislation to strengthen the national sovereignty and interests, including:

• The Cyber Security Law of the People’s Republic of China effective from 1 June 2017
• The Export Control Law of the People’s Republic of China effective from 1 December 2020
• Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and other Measures, effective from 9 January 2021
• The Anti-Foreign Sanctions Law of the People’s Republic of China effective from 10 June 2021
• Data Security Law of the People’s Republic of China effective from 1 September 2021

For companies and individuals doing business in or with China, such legislation defines business operations – especially cross-border activities in several areas.

With a rapidly growing middle-class in China, the Chinese market for many companies is an increasingly important and growing market segment. Therefore, companies either invested or planning to invest in the Chinese market cannot disregard national sovereignty and interests’ compliance within their business operations. Below, we highlight the three key areas of national sovereignty and interests’ compliance applicable to companies doing business in or with China.

Cyber and data security

Cybersecurity for many countries is a top national priority to maintain secure networks and protect data from cyber-attacks.

In China, cyber security is centred on the security of the collected data, and companies are obliged to ensure networks collecting and processing the data are secure, monitored and shall not endanger national security or sovereignty.

The Cyber Security Law of the People’s Republic of China (“CSL”) and Data Security Law of the People’s Republic of China (“DSL”) are two primary legislation governing cyberspace and affect all companies working with data collection, processing, and management in China.

Cyber Security Law

The CSL establishes the compliance framework for network operators and is the overarching law for cybersecurity.

Under CSL, the network operator is defined as owners and administrators of the network and network service providers and obliged to ensure servers and data stored, transmitted, or created on such servers are secure and protected from cyber-attacks. Furthermore, the CSL outlines a Critical Information Infrastructure (“CII”), which subjects information crucial to national security and economy to store the collected and produced personal information and important data within the territory of mainland China. Any data required to be transmitted aboard shall be conducted under measures of the Cyberspace Administration of China.

Data Security Law

DSL sets forth an overarching framework to regulate data handling and management accordingly with national sovereignty, security, and development interests.

Under the DSL, the scope and definition of data include any record of information in electronic or other forms and imposes an extraterritorial application to China-related data handling and management.

Organisations and individuals are obliged to ensure and formulate data management policies, cooperate with public security and national security organs that require their data for national security or criminal investigation. Mismanagement of data, specifically those handling important data could face significant liabilities for both the company and individual.

Export Controls

Prior to the adoption of the Export Control Law of the People’s Republic of China (“ECL”), export controls were scattered across several laws. The ECL is the first comprehensive framework establishing export controls, a list of controlled items, and provisioning extra-territorial application to individuals and organisations outside of China who endanger national security and interests.

Under the ECL any export of the controlled items from an individual or organisation within the territory of mainland China to an overseas individual or organisation is subject to certain obligations including obtaining the relevant license from the State Export Control Authorities. Controlled items are defined under the ECL as the following:

• Dual-use items which can be for civil and military purposes or helping to improve military potentials, especially goods, technologies, and services in design, development, production, or application utilised for weapons of mass destruction;
• Military products comprising of equipment, special production facilities, and other related goods, technologies, and services utilised for military purposes;
• Nuclear materials, including nuclear equipment, non-nuclear materials used for nuclear reactors, and related technologies and services;
• Technical materials and data related to the items listed above.

For companies with an international supply chain or engaged in cross-border research and development, the ESL has a significant impact on exporting operations. For example, foreign items containing components assembled or manufactured in China could be deemed as controlled items or cross-border research or technology transfer, activities such as research, inter-company research (where the research and development centre are in China), or technology sales to foreign enterprises could be classified as related technical material and data – thus subject to export control.

Addressing sanctions

In 2021, China addressed the application of foreign legislation and sanctions to Chinese individuals and legal entities both within and outside of the territory of China. Two main legislation were enacted and established a stricter stance against foreign economic sanctions against Chinese organisations and individuals.

Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and other Measures

Early this year, the Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and other Measures (“Rules”) were promogulated by the Ministry of Commerce. The Rules provision a working mechanism for Chinese companies and individuals affected by extraterritorial foreign legislation that prohibit or restrict engagement in normal economic, trade, and related activities with a third State (or region) or its citizens, legal person, or other organisations. Affected individuals or entities are required to such matters to the State Council within 30 days. The State Council shall issue a prohibition order to oppose an unjustified extra-territorial application of foreign legislation and other measures.

Foreign companies in China especially multinationals should note the Rules stipulate any Chinese entities who comply with the unjustified extra-territorial application of foreign legislation subject to a prohibition order can be pursued in court.

The Anti-Foreign Sanctions Law of the People’s Republic of China

The Anti-Foreign Sanctions Law of the People’s Republic of China (“AFSL”) establishes the regulatory framework for foreign persons, both legal entities and individuals, acting against China’s national interests. Under the AFSL, organisations, individuals, and affiliated individuals who directly or indirectly participate in formulating, deciding, and implementing discriminatory restrictive measures against China shall be included in a Sanctions List (“List”). Those included in the List shall be subject to penalties including visa restrictions, prohibitions, or restricted conduct in transactions, cooperation, or other activities with Chinese organisations or individuals. Therefore, for foreign companies and individuals doing business in or with China, AFSL significantly impacts external conduct and communications, and public relations.

Whilst some may view a more assertive China negatively, China’s international significance and role cannot be disregarded. Specifically, in the business world, companies involved in the Chinese market should evaluate their full operations and third parties’ relations and update relevant policies or establish China-specific policies, otherwise risk legal penalties and economic losses. Unless companies forgo the China market completely, the recent legislative movements in strengthening national sovereignty and interests should be reflected in company operations and policies. Companies generating business from China cannot disregard China’s principles around national sovereignty and interests.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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