The revised “Provisional Regulations on Enterprise Information Disclosure” will come into force from May 1, 2024

On March 10, 2024, the State Council issued the “Decision of the State Council on Amending and Abolishing Some Administrative Regulations”, in which, the “Provisional Regulations on Enterprise Information Disclosure” (hereinafter referred to as the “New Regulations”) has been partially revised. The key changes are as follows:

1. To add the investigation right

The New Regulation adds Article 16, which stipulates that the market regulatory authority may exercise functions and powers when investigating into and punishing the acts that are suspected of violating the provisions of the regulation. The specific functions and powers include: (1) entering the business premises of an enterprise to conduct on-site inspections; (2) consulting, reproducing and collecting contracts, notes, account books and other materials related to the enterprise’s business activities; (3) investigating and obtaining information from organizations and individuals related to the enterprise’s business activities; (4) inquiring into the enterprise’s bank accounts that are suspected of violating the law; and (5) performing other functions and powers stipulated by laws and administrative regulations. Among the above functions and powers, the item (4) shall be subject to approval by the principal of the market regulatory authority.

The New Regulation grants the market regulatory authority the initiative to enforce the public disclosure behavior of enterprises. On the other hand, enterprises should pay more attention to the relevant disclosure obligations and requirements stipulated in the regulations.

2. To modify and improve the management of the list of abnormal operations, and add administrative penalties

According to the original version, enterprises that have not been publicly disclosed in accordance with laws will be included in the list of abnormal operations; those who have not been publicly disclosed in accordance with the law for at least 3 years shall be included in the list of serious illegal enterprises; and those who have not committed any further offenses within 5 years after being listed on the list of serious illegal enterprises may be removed from the list.

The New Regulation has made stricter provisions:

• Where an enterprise fails to publicly disclosed in accordance with lawswill be included in the list of abnormal operations, and be imposed with administrative punishment; where an enterprise is included in the list of subjects with abnormal operations due to its failure to submit annual reports for two consecutive years and makes no correction, and the enterprise is not reached by its registered domicile or business premises, the market regulatory authority at the county level or above shall revoke its business license.
• Where the laws and administrative regulations stipulate on information disclosure by an enterprise concealing facts or committing fraud, such provisions shall prevail; where there are no such provisions, the market regulatory authority shall order such enterprise to make correction and impose a fine ranging from 10,000 yuan to 50,000 yuan on it; in serious cases, it shall be subject to a fine ranging from 50,000 yuan to 200,000 yuan and be included in the list of subjects with serious illegal and dishonest acts, and its business license may be revoked.

It should be noted that although the New Regulation has removed provision that those who have not committed any further offenses within 5 years after being listed on the list of serious illegal enterprises may be removed from the list, the reason for this removal is that the “Administrative Measures on Restoration of Credit Information upon Correction of Dishonest Acts (for Trial Implementation) ” implemented on May 1, 2023, provide detailed provisions on how to remove or terminate dishonest information, that is, if an enterprise actively corrects its dishonest acts, it could be removed from the list accordingly.