Business social credit regulations revised

Release time：2024-05-21 17:43:39 Source：Stellar Scope news portal

China unveiled revised regulations on Friday aimed at strengthening its credit-based enterprise regulatory system, establishing a business social credit restoration mechanism and streamlining the exit process for inactive businesses.

The amendments follow a recent decision by the State Council, China's Cabinet, to update eight administrative regulations, including interim regulations on the disclosure of information regarding companies' practices, and abolish 13 others. The updates aim to address evolving development needs and improve regulatory practices.

Guo Qiwen, an official with the Ministry of Justice's Second Bureau of Legislation, said the revisions prioritized social credit within the regulatory framework, targeting prominent issues in information disclosure and credit oversight across various sectors.

"These changes will further regulate information disclosure practices and cultivate a market environment built on honesty and trust," Guo said.

The revised regulations promote the creation of a business social credit restoration system. They support enterprises' efforts to rebuild their creditworthiness and encourage government departments to recognize such efforts. Businesses will be given incentives to proactively rectify misconduct, mitigate negative consequences and apply for the legal removal of negative records.

To facilitate the removal of inactive "zombie enterprises" from the market, the regulations stipulate that businesses listed on the abnormal business operations registry for two consecutive years without rectification and with incorrect contact information will have their licenses revoked.

Additionally, the regulations strengthen penalties for information disclosure violations, clearly defining legal consequences for companies that conceal or falsify information in public disclosures.

Liu Min, head of the credit supervision and administration department at the State Administration for Market Regulation, highlighted the agency's ongoing efforts to promote a business social credit-based regulatory system. The system prioritizes information collection and disclosure as its foundation, while utilizing credit constraints and penalties to incentivize compliance.

She cited last year's nationwide campaign to improve social credit through commitments. The initiative resulted in over 24 million businesses obtaining licenses or restoring their credit.

The administration also collaborated with the National Development and Reform Commission to refine the credit restoration mechanism. The partnership enabled over 22 million businesses to regain their creditworthiness and remove restrictions on activities such as bidding, investment and financing, as well as the ability to receive honorary titles.

Liu also highlighted advances in the streamlining of annual reporting for companies and the establishment of coordinated supervision with 18 central government departments through the sharing of business-related social credit information. The collaboration aims to improve regulatory efficiency.

She said efforts to combat dishonest behavior have been intensified, with social credit-based punishments imposed on violators. Information regarding such violations is promptly published online on the National Enterprise Credit Information Disclosure System, which receives over 131 million visits a day.

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