Compliance and Corruption in China: Foreign Bribery Provision of the PRC Criminal Law

Earlier this year, China passed its own version of the US Foreign Corrupt Practices Act and the UK Bribery Act: the Foreign Bribery Provision, part of the Eighth Amendment to the PRC Criminal Law. For your reference, three important aspects of the new law:

1. It applies to anyone doing business in China:

“The PRC Criminal Law applies to all PRC citizens (wherever located); all natural persons in the PRC regardless of nationality; and all companies, enterprises, and institutions organized under PRC law. Thus, in addition to PRC domestic companies, the PRC Criminal Law applies to all business entities organized under PRC law, including joint ventures, wholly foreign-owned enterprises (“WFOE”) and representative offices.” (From China Beefs Up Its Anti-Bribery Law With Its Very Own Version Of The FCPA by Sheppard Mullin Richter & Hampton LLP)

2. The penalties for violations are severe:

“Depending on the amounts involved, the sentence may be a fixed-term of imprisonment of not more than three years or criminal detention, or when larger amounts are involved, the sentence is a fixed-term of imprisonment of not less than three but not more than ten years, in addition to a fine. If an entity is involved, it may be fined, and the persons directly involved may be imprisoned.” (From China Criminalizes Foreign Bribery by Dinsmore & Shohl LLP)

3. The law is a work in progress:

“The Foreign Bribery Provision is brief and lacks definitions of a number of key terms. The provision’s impact will, therefore, depend heavily on interpretive guidance to be issued by the Supreme People’s Court and the Supreme People’s Procuratorate in the future.” (From China Outlaws Bribery Overseas by Morrison & Foerster LLP)

See also Doing Business in China: A Legal Reading List

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