Advantages and Disadvantages of Incentive Shares Held Directly and Indirectly

By Bai Lituan

Over recent years increasingly more businesses have used incentive shares to retain key employees. They may hold shares in the subject company directly (hereinafter referred to as “holding shares directly”) or indirectly through a limited partnership i.e., a platform for employees to hold shares (hereinafter referred to as “holding shares indirectly”). What are the advantages and disadvantages of holding shares directly or indirectly? This article deals with this issue in the areas of business control and tax burden.......................More

What Problems Does “AI Sun Yanzi” Have in Intellectual Property and Law?

By You Yunting

Various AI generated songs by “AI Sun Yanzi” hit the screen the other day. Related intellectual property issues became hot topics on media. I would like to discuss legal issues relating to songs generated from real person’s voice extracted by AI engines.

In brief, based on intellectual property law, it is not very likely that songs generated by AI trained with real person’s voice and used for non-commercial purposes infringe other person’s rights, but before they are made available online, licenses for copyright, backing music and elements used in videos should be obtained. In Civil Code, however, songs generated by AI trained with real person’s voice must be subject to the person’s authorization or otherwise, could infringe personal rights. Let’s look at the “AI Sun Yanzi” case....................More

1. Obstacle Free Environment Law

Promulgated by National People’s Congress 

Promulgation date: 29 June 2023

Implementation date: 1 September 2023 

Document number: Chinese President Order No.6

The Obstacle Free Environment Law consists of eight chapters and 72 articles, dealing with facility construction, information exchange, social services, etc. under major obstacle free environment policies in a comprehensive and organized way. This law explicitly states that obstacle-free environment is mainly for disabled and old people. The policies, standards, requirements under this law are mainly intended to meet the needs and expectations of disabled and old people, reflect its special characteristics, deal with real issues and make specific provisions more suitable and effective. It also stresses that obstacle-free environment is basic, generally accessible and beneficial to all, stating that people but disabled and old ones who need no obstacle can use the obstacle-free environment to make the obstacle environment benefit all in our society. (Source: NPC website)

http://www.npc.gov.cn/npc/c30834/202306/6327fb6accaf44b6b186fc3684c932c4.shtml

2. Code of Conduct Guide for Blind Box Businesses (Implemented on an Experimental Basis)

Promulgated by State Administration for Market Regulation 

Promulgation date: 15 June 2023

Implementation date: 15 June 2023

Document number: GSJJF[2023] 39

The Guide contains four parts. First, it includes a negative list of sold products that imposes a ban on selling in blind boxes drugs, medical instruments, living animals, flammable or explosive things, etc. that are not suitable to be sold in blind boxes and restrictions on descriptions of cosmetic products and food pertaining to people’s health. Second, it sets out information disclosure provisions requiring that blind box businesses publicly and clearly state the commercial value of the content of the blind box, the draw rules, the probability of winning in the draw and other key information to ensure that consumers know the truth before purchase. Third, it encourage blind box businesses to establish a minimum guarantee system, set time and a maximum amount and number of times for drawing to help people consume in a sensible way and promise on their own initiative not to hoard, hype or directly enter the secondary market of blind boxes. Fourth, it improves the juvenile protection mechanism by setting a strict age limit on people who can buy blind boxes, imposing a ban on selling them to children under eight. (Source: SAMR website)

https://www.spp.gov.cn/spp/xwfbh/wsfbh/202304/t20230426_612558.shtml

3. Industrial and Information Administration Punishment Procedures

Promulgated by Ministry of Industry and Information Technology 

Promulgation date: 13 June 2023

Implementation date: 1 September 2023

Document No.MIIT Order No.63

The latest amendments to the Regulations mainly include a wider range of application, general provisions of the administrative punishment process, improvements to the jurisdiction rules, changes and details of the general process and improvements to the enforcement and closing process. The Regulations provides that if it is hard to ascertain where illegal activities done through telecommunication system took place, the domicile, place of network access, etc. should be deemed as the place where the case took place in order to decide which industry and information technology authority has the jurisdiction. It specifies the jurisdiction dispute resolution process by providing that if two or more industry and information technology authorities are involved, the one that first records the case has the jurisdiction. The Regulations changes and specifies the process of paying penalties late or by installments by modifying and improving measures taken against people who delay acting according to the administrative punishment decision. It includes new circumstances where a case can be closed, clarifies requirements for archives, etc. (Source: MIIT)

https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/ggjgs/art/2023/art_ab97d5643ddc45ae861e7f351842f512.html

4. Instructions on Deepening the Reform of the Bond Registration System

Promulgated by China Securities Regulatory Commission 

Promulgation date: 20 June 2023

Implementation date: 20 June 2023

Document number: CSRC Announcement [2023]46

The Instructions sets out twelve measures to 1. improve the bond review and registration mechanism, 2. fully implement the responsibilities of publishers and agencies, 3. strengthen bond duration management and 4. legally attack illegal activities relating to bonds. The Instructions strengthens the information disclosure requirement with an accent on the ability to pay debts, establishes clear and effective review and registration procedures, improves full arrangements for the regulatory system, enhances quality control and corruption risk precautions, sets out that publishers should strictly comply with the obligations to pay principals and interests, improves fund raising management, gives qualified businesses more convenience for financing, actively helps important national strategies and projects and fully implements responsibilities of agencies as “gatekeeper”. (Source: CSRC)

https://www.mee.gov.cn/xxgk2018/xxgk/xxgk02/202305/t20230516_1030091.html

5.Circular on Issuing the 44th Batch of Instructive Cases

Promulgated by Supreme People’s Procuratorate 

Promulgation date: 13 June 2023 

Implementation date: 1 September 2023 

Document number: F[2023]88

The Circular states that the 44th instructive batch of cases (financial crimes) consisting of three cases, including the illegal fund raising case of Zhang Yeqiang, etc. (Case No.175-177) were published for reference. This batch of instructive cases stresses the requirement of dealing with financial cases effectively to prevent and reduce financial risks. The illegal fund raising case of Zhang Yeqiang, etc. is an emerging criminal case relating to private funds and helpful for distinguishing legal private funds and illegal fund raising. The money forging case of Guo Siji, Xu Weilun, etc. is a cross-regional case in which criminals contacted with each other on the internet and worked together to forge money, with each having their own job duties and helpful for legal professionals to find joint crimes and primary criminals and accomplices. The illegal business case of Sun Xudong was found from “another case”, investigated and decided on the basis of key evidence gathered by prosecution officers on their own and is helpful for prosecution authorities to conduct investigations on their own. (Source: SPP)

https://www.spp.gov.cn/xwfbh/wsfbt/202306/t20230613_617257.shtml#2

6.Provisions on Asking and Replying to Questions about Legal Application 

Promulgated by Supreme People’s Court

Promulgation date: 6 June 2023

In the Regulations, in one of the five circumstances, including a serious law application issue arising from an ambiguity in a law, rule, legal interpretation, official document, etc., a high court can request the supreme court give instructions. In one of the circumstances, the court of first trial can request the supreme court give instructions on technical intellectual property and anti-monopoly law application issues, but not on ascertainment of the case facts. The Regulations explicitly states that the supreme court should reply in its own name with definite instructions on the law application issue and the basis on which the instructions are made. It also requires that the supreme court should finish the work within two months from acceptance of the request. If the supreme court seeks advice from outsiders or asks the judicial committee for deliberation, this period may increase by two months. Reference numbers of replies to requests for instructions should contain “SCR” as symbols representing the type of cases.

https://www.court.gov.cn/zixun/xiangqing/401172.html

Picture of the month:

Photographer: Lawyer Pan Liyun
Caption: Kurderlin, the Xinjiang Uygur Autonomous Region in June 2023