In the news: China passes Anti-terrorism Law, the NDRC fines 8 shipping companies and the IPO system is being reformed
December 30, 2015 | BY
Katherine JoThis week the PRC Anti-terrorism Law was approved to take effect on January 1, the NDRC fined foreign shipping firms $62 million for price fixing and regulators made progress towards adopting a registration system for IPOs
Foreign companies have criticized the new PRC Anti-Terrorism Law, which will go into effect on January 1, saying it has potentially over-arching data and security obligations. A National People's Congress official defended the move at a recent press conference, asserting that the law will not affect companies' normal business operations nor will the government install backdoors to infringe IP rights. MNCs are particularly worried about Article 18, which the official said requires telecom operators and ISPs to provide technical support and assistance, including decryption, to police and authorities in order to prevent and investigate terrorist activities. Some China watchers say the authorities could enforce this provision on companies under the guise of combating terrorism or protecting national security. Foreign companies have little choice but to comply, and take China's stated aim of fighting evil in good faith.
More from CLP:
China fined eight international shipping companies a total of Rmb407 million ($62.8 million) for alleged price fixing. The firms, which transport cars and other vehicles to and from China, agreed to keep freight rates at high levels, the NDRC said. It added that the penalties are equivalent to 4%-9% of the companies' global shipping sales related to China, and that the investigation lasted over a year. South Korea's Eukor Car Carriers was ordered to pay the largest single fine at Rmb284 million. Oslo-based Wallenius Wilhelmsen Logistics was penalized Rmb45 million, the next largest, while Japan's Mitsui O.S.K. Lines was tagged with Rmb38 million. Market manipulation and cartels are taken very seriously in China, and companies – especially those operating in highly regulated and scrutinized industries – would do well to comply with the Anti-monopoly Law and all relevant rules. MNCs that agree on a pricing arrangement in one country frequently do so in others as well, but they should remind themselves of the increasingly enforced foreign antitrust laws and their cross-border impact.
More from CLP:
The Standing Committee of the NPC passed a resolution to allow the State Council to revise securities laws as early as March to introduce a new registration system for initial public offerings. The China Securities Regulatory Commission (CSRC) currently acts as a gatekeeper for IPOs, with a seven-person committee examining each application as part of an approval process. Reforming this into a registration system would leave it to the companies and the market, rather than the regulators, to determine IPO supply and timing, as well as boost the investment-banking operations of Chinese brokerages by giving them more power to determine pricing. It could also potentially encourage individual investors to be more careful as to where they put their money, leading to more stable capital markets.
More from CLP:
Circular on Issues Relevant to the Policy of Graduated Individual Income Tax on Dividends and Extra Dividends from Listed Companies PRC Securities Investment Fund Law (Revised in 2015) State Council, Several Opinions on Further Promoting the Healthy Development of Capital Markets IPO reform not going as planned
This premium content is reserved for
China Law & Practice Subscribers.
A Premium Subscription Provides:
- A database of over 3,000 essential documents including key PRC legislation translated into English
- A choice of newsletters to alert you to changes affecting your business including sector specific updates
- Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
Already a subscriber? Log In Now