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Home > Compliance
China’s Administrative Punishment Law Awards Meaningful Credits for Compliance Efforts
By Henry Chen | 2021/1/24 0:25:20

On January 22, 2021, the 25th Session of the Standing Committee of the 13th National People's Congress amended the Administrative Punishment Law of the People's Republic of China (hereinafter referred to as the “Administrative Punishment Law”), which will come into force on July 15, 2021.  Among many other significant amendments, the amended Administrative Punishment Law provides meaningful credits for compliance efforts.

The amended Administrative Punishment Law provides a new Article 33 which provides that: 


If an illegal act is minor and is corrected in a timely manner without causing harmful consequences, no administrative penalty shall be imposed. Those who violate the law for the first time and have minor harmful consequences and make corrections in time may not be subject to administrative punishment.

If the party concerned has sufficient evidence to prove that there is no mens rea, no administrative penalty shall be imposed. Where there are other provisions in laws and administrative regulations, such provisions shall prevail.


This article is of great significance to the compliance management.  It can be said that the Administrative Punishment Law has brought brand new compliance credits to the great efforts for compliance management.  Limited by the first paragraph of this article, the compliance credits may only be limited to "minor violations and timely correction", but after all, it is the first time that the compliance credits have been affirmed black-lettered for all violations in such a high-levelled law.  Comparatively, Article 7 of Anti-Unfair Competition Law grants some meaningful credits for compliance efforts, but the credits are granted for nothing but managing risks on commercial bribery.   


What kind of common evidence can prove that there is no mens rea for all different kinds of violations of laws? The answer is ISO 37301 Compliance management system – Requirements with guidance for use.

ISO 37301, a certifiable standard, will soon replace the "ISO 19600 guidelines for compliance management systems". In other words, whether an organization's compliance management system is strong or not could be measured by a third-party certification body against the standard.

ISO 37301, which is an international standard, has been developed by China, the United States, Germany, the United Kingdom, France and other countries and regions.  This standard is an international common language for "compliance management system".  In other words, a management system can be certified under this standard and thus recognized by law enforcers in China as well as other countries.

The regulatory agencies and certification and accreditation committees of various countries are all working hard to wait for the adoption of this standard - the voting deadline of the international standard final draft is February 26, 2021 - after that, each country will transform this standard into its own national standard by means of equivalent conversion or modified conversion.  Similarly, the institutions waiting for the adoption of this standard include those consulting service institutions and certification bodies, which will provide consulting service and certification service respectively under this standard.

Henry Chen, the author of this article, is a member of TC 309 Technical Committee WG4 in drafting this ISO 37301 Compliance management system – Requirements with guidance for use.


The author, Henry Chen, licensed to practice law in China and New York, is a senior partner at the Dentons office in Shanghai. Before joining Dentons, Henry was AP Compliance Director of Ford.  Henry's practice areas include cyber security and data governance, FCPA, anti-bribery and fraud investigations, economic sanctions and trade controls, compliance management systems, corporate matters and dispute resolution. You can reach Henry by sending an email to Henry is the author of the book Risk Management on Commercial Bribery in China and the book Compliance Risks of Enterprises in Globalization: Outbreak and Control.

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