Whether parties that violate laws and are dishonest could apply for repairing credit? —- The new regulations of SAMR has come into effect on September 1, 2021

In order to provide more opportunities for parties which violate laws and are dishonest to correct their illegal or dishonest acts, rebuild credit, and further stimulate the awareness of honest and law-abiding operations, the SAMR has published 3 policies, which are the “Administrative Measures for the List of Subjects with Seriously Illegal or Dishonest Acts under Market Regulation”, the “Provisions on the Publicity of Administrative Penalty Information on Market Regulation”, and the “Administrative Measures on Credit Repair for Market Regulation”. Those 3 policies have come into force on September 1, 2021.

Due to space limitations, we have chosen the main points related to credit repair as stipulated in the “Administrative Measures on Credit Repair for Market Regulation” (hereinafter referred to as the “Measures”).

1. What does “Credit Repair Management” mean?

Article 2 of the “Measures” stipulates that “Credit Repair Management” refers to administrations for market regulation, under the prescribed procedures, remove the eligible parties from the list of enterprises with abnormal operation in accordance with the law, restore the normal record status of individual businesses, remove them from the list of enterprises with serious illegal or dishonest acts in advance and stop the publicity of relevant information on administrative penalties through the National Enterprise Credit Information Publicity System in advance and lift the relevant administrative measures in accordance with the law, and timely share the credit repair information with the relevant authorities as required.

In short, when a party has met the requirements, it could apply to repair negative information which has been published to the public.

2. What are the requirements?

For different negative information, there are different requirements.

(1) Regarding a party concerned that has been included in the list of enterprises with abnormal operation or marked with abnormal operation status, according to Article 5 of the “Measures”, if the party has amended relevant incorrect information, then it could apply for credit repair.

(2) Regarding the publicity of administrative penalties, the “Measures” prescribes that for those administrative penalties which shall be published for 3 years, if the party meets the relevant requirements; then it could apply for credit repair after those administrative penalties have been published over 6 months. The relevant requirements include, (a) where it has conscientiously performed the obligations stipulated in the administrative penalty decision; (b) where it has actively eliminated the harmful consequences and adverse effects; (c) where it has not been subject to any administrative penalty again on illegal acts of the same type imposed by the administration for market regulation; and (d) where it is not included in the list of enterprises with abnormal operations or the list of enterprises with serious illegal or dishonest acts.

However, the administrative penalties in the fields of food, drug and special equipment shall be publicized for one year before applying for credit repair.

(3) Regarding a party that has been included in the list of enterprises with serious illegal or dishonest acts, it could apply for credit repair after such publicity has lasted for 1 year, and it has met the relevant requirements. The requirements include, (a) where it has conscientiously performed the obligations stipulated in the administrative penalty decision; (b) where it has actively eliminated the harmful consequences and adverse effects; and (c) where it has not been subject to any heavier administrative penalty from the administration for market regulation.

However, if the period for implementation of corresponding administrative measures has not expired, it is not allowed to apply for early removal from the list of enterprises with serious illegal or dishonest acts.

3. How long is the procedure?

The “Measures” prescribes that the administration for market regulation shall, within two working days upon receipt of the application, make a decision on whether to accept the application or not. If the application is accepted, then the follow up time requirements are as follows:

(1) The application for removal from the list of enterprises with abnormal operations: for those which failed to submit on time, the authority shall remove it within five working days from receipt of the application; for those which have corrected relevant information, the authority shall remove it within five working days from the date of verification.

(2) For the rest circumstances, the authority shall make a decision within 15 working days from the date of acceptance. Where the application is approved, the authority shall cease the publicity of administrative punishment information within 3 working days from the date of decision, and the relevant administrative measures shall be lifted pursuant to the law. In addition, the authority shall forward the relevant information to other authorities within three working days from removal the party concerned from the list of enterprises with abnormal operations or cessation of publicity of the relevant information on administrative punishment, etc..