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Issue 38-February 2020 Veritas Update
Release date:
2020-02-28

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Issue 38-February 2020 Veritas Update

CATALOG


  • Latest Hot Spot

       Legal Knowledge Regarding COVID-19 Prevention and Control


  • New Law Express

        Domestic Capital Market Issues New Policies to Deal With COVID-19 

        Notice on Expanding the Trial Scope of Cross-Border E-Commerce Retail Import

        Additional Tariffs Rate Imposed on Some US Goods is Reduced by Half



Latest Hot Spot


Legal Knowledge Regarding COVID-19 Prevention and Control 


Recently, the spread of COVID-19 affects the whole nation, and thus COVID-19 prevention and control has become the focus of attention. At the same time, the governments, medical care personnel and the public showed unprecedented unity and determination to resist the spread of the virus. Provinces and cities have successively launched the first level response (the highest level) to major public health emergencies. During such special fight against COVID-19, the relevant laws should also play an important part.

I. COVID-19 is classified as class B infectious diseases according to the third article of the law on prevention and control of infectious diseases in People's Republic of China.

II. The hoarding of masks and disinfectants and the raise of prices must be punished by law. In accordance with the provisions of Article 6 of the interpretation of the Supreme People's court and the Supreme People's Procuratorate on the specific application of laws in handling criminal cases hindering the prevention and control of sudden infectious diseases and other disasters, in violation of the provisions on market operation and price management during the period of preventing and controlling sudden infectious diseases and other disasters, such as raising prices, making huge profits, and seriously disturbing the market order and the amount of illegal gains is relatively large or there are other serious circumstances, the crime of illegal business operation shall be convicted and a heavier punishment in accordance with the provisions of item (4) of Article 225 of the criminal law may be implemented. The law gives alert to some unscrupulous enterprises and provides legal support for residents who purchase masks and disinfectants to prevent viruses.

III. During the period of quarantine, the government implementing the quarantine measures shall provide living security for the quarantined personnel; if the quarantined personnel have employers, the employers shall not stop paying the working salaries during the period of quarantine. If the COVID-19 suspected patients and those who are closely related to COVID-19 patients and suspected patients, after quarantine or medical observation, is diagnosed as not the patients or carriers of the pathogen, the working salaries paid during quarantine and medical observation period should be consistent with the previous salaries. Employers shall NOT terminate the labor contracts by invoking material breach of rules and regulations arising from absenteeism.

Ⅳ. The patients who infected with COVID-19 and thus have to stop working and start treatment should enjoy medical treatment period. The enterprises shall guarantee that the patients are entitled to enjoy medical treatment period and sick leave wages according to laws. According to the relevant laws and regulations, the employees of an enterprise who stop working for treatment and rest due to illness shall enjoy the medical treatment period. During the medical treatment period of employees, the enterprise shall pay the sick leave wages in accordance with the provisions of the labor contracts or the collective labor contracts. 

Ⅴ. If the labor contracts of patients who infected with COVID-19 expired during the period of quarantine, can the employers be able to terminate the contracts? Pursuant to the Notice on the issue of labor relations during the period of prevention and control of COVID-19 issued by general office of the Ministry of Human Resources and Social Security (人社厅发明电[2020]5号), the enterprises shall pay working salaries and may not terminate the labor contracts, in accordance with articles 40 and 41 of the PRC Labor Contract Law, with the employees who are infected with COVID-19, or are suspected patients infected with COVID-19, or are closely related to COVID-19 infected patients during the period of quarantine or medical observation or those enterprises employees who are not able to carry out normal work due to the implementation of quarantine measures or other emergency measures by the governments. The term of labor contracts otherwise are expired shall be extended to the expiration of the medical treatment period, the medical observation period, the quarantine period or the end of the emergency measures taken by the governments.

VI. Spreading rumors regarding COVID-19 should bear criminal responsibility. The article 10 of the interpretation on the specific application of law in handling criminal cases involved impeding the prevention and control of sudden infectious diseases and other disasters stipulates that: those who fabricate terrorist information related to sudden infectious diseases and other disasters, or knowingly spread such terrorist information and seriously disturb the social order, shall be convicted and punished for the crime of fabricating and intentionally disseminating false terrorist information in accordance with the article 291-1 of the PRC criminal law.

Whoever, by taking advantage of disasters such as sudden epidemic of infectious diseases, creates or spreads rumors, or incites the division of the country and the destruction of nation, or incites the subversion of the state power or the overthrow of the socialist system shall be convicted and punished for the crime of incitement to split the country or the subversion of the state power in accordance with the provisions of the second paragraph of Article 103 and the second paragraph of Article 105 of the PRC criminal law.


New Law Express


Domestic Capital Market Issues New Policies to Deal With COVID-19


Since the outbreak of COVID-19, the relevant departments have attached great importance to it and have successively issued various policies to actively respond to it, so as to guarantee the prevention and control of COVID-19. At the capital market level, China Securities Regulatory Commission (CSRC) and other ministries have issued the Notice on the prevention and Control of COVID-19 (证监办发〔2020〕9号, referred to as 'CSRC COVID-19 Prevention and Control Notice'), and the Notice of support prevention and control of COVID-19 by further strengthening finance(银发〔2020〕29号, referred to as 'Five Ministries COVID-19 Prevention and Control Notice'). Shenzhen Stock Exchange and Shanghai stock exchange have issued the Notice of fully supporting the listed companies and other market players to win the fight for prevention of COVID-19 (深证上〔2020〕67号, referred to as 'Shenzhen Stock Exchange COVID-19 Prevention Notice”), and the Notice of the relevant regulation business arrangements for fully supporting the prevention and control of COVID-19 (上证函〔2020〕202号, referred to as the 'Shanghai Stock Exchange COVID-19 Prevention Notice'). The above-mentioned Notices have put forward a series of support and safeguard measures.

First, in view of that the audit and other related work are affected by the COVID-19, Five Ministries COVID-19 Prevention and Control Notice, Shenzhen Stock Exchange COVID-19 Prevention Notice, and the Shanghai Stock Exchange COVID-19 Prevention Notice clearly stipulated the disclosure arrangements of the annual report, the first quarter report, the performance report and the performance forecast of the listed company. For example, if a listed company is affected by COVID-19 and it is expected that it is difficult to disclose the 2019 annual report on the previous appointment date stipulated by laws, the company can apply to the exchanges for an extension of disclosure to April 30, 2020 according to regulations.

Secondly, CSRC COVID-19 Prevention and Control Notice clearly points out that the normal operation of various services in the capital market should be guaranteed during COVID-19 period. Accordingly, during COVID-19 prevention and control period, CSRC and exchanges still accept the relevant normal business applications, including initial public offering and listing, major asset restructuring. Therefore, enterprises in need can submit applications as usual and promote relevant arrangements.

At the same time, considering the need to reduce the flux and gather of individuals during COVID-19 period, CSRC and the exchanges put forward a series of off-site measures to deal with the relevant business, including but not limited to (1) the issuance department of CSRC asked issuers to submit documents mainly in the form of fax, email, CD, etc., and will also send the approval documents for issuance, feedback, notification and other relevant documents in the form of fax, mailing or announcement, etc.; (2) during the approval period for the application of listing on the science and technology innovation board, no on-site communication and consultation appointments will be carried out temporarily. The sponsors can ask the relevant questions online through the approval business system of Shanghai Stock Exchange or dial the relevant phone number to contact the relevant personnel, and the approval institution of Science and Technology Innovation Board of Shanghai Stock Exchange will timely reply. (3) The application documents for issuance and listing may be submitted in electronic form (Shanghai Stock Exchange) or by mail (Shenzhen Stock Exchange), and the on-site listing ceremony would not be arranged temporarily, instead, the listing agreements would be executed by mail; (4) for the submission related to the business of bond, during COVID-19 period, the relevant written materials previously required to be submitted to the exchanges can be sent in electronic form first. The corresponding written materials can be sent by mail subsequently.

Finally, in order to reduce the impact of COVID-19 on China's domestic capital market, Five Ministries COVID-19 Prevention and Control Notice, Shenzhen Stock Exchange COVID-19 Prevention Notice, and the Shanghai Stock Exchange COVID-19 Prevention Notice have made corresponding adjustment arrangements for the timing requirements of securities issuance and major asset restructuring. For example, if a bond issuance license has been obtained, and the issuance cannot be completed within the validity period of the license due to the impacts of COVID-19, an application for extension of the issuance may be filed.


Notice on Expanding the Trial Scope of Cross-Border E-Commerce Retail Import


On January 17, 2020, the Ministry of Commerce, the development and Reform Commission, the Ministry of finance, the General Administration of customs, the State Administration of Taxation, the State Administration of Market Supervision and other six ministries jointly issued the Notice on Expanding the Trial Scope of Cross-Border E-Commerce Retail Import (“Notice”), bringing 50 cities (regions) such as Shijiazhuang and the whole island of Hainan into the trial scope of cross-border e-commerce retail import.

After the expansion, the trial scope of cross-border e-commerce retail import will be expanded from 37 cities to the whole island of Hainan plus other 86 cities (regions), covering 31 provinces, autonomous regions and municipalities directly under the central government, further expanding the trial scope of cross-border e-commerce retail import. The cross-border e-commerce retail import, which for the main purpose of meeting the diversified and high-quality consumption demand of domestic residents, is different from the general trade. The cross-border e-commerce retail import must be directly faced with consumers and limited to personal use. As a result, the goods from cross-border e-commerce retail import are not required to be approved, registered or filed for the first import, thereby simplifying the relevant procedures.

After increasing development, cross-border e-commerce is currently divided into general import and export, and retail import and export. Retail import is further divided into direct purchase import, online purchase free-tax import and online purchase free-tax import A. In contrast, the goods belonging to online purchase free-tax import can be stored in the approved customs special supervision area (place) and then be sold to domestic consumers. Moreover, the goods would be supervised according to personal use. The relevant procedures of supervision is less and more convenient.


Additional Tariffs Rate Imposed on Some US Goods is Reduced by Half


On February 6, 2020, the Tariff Commission of the State Council issued the announcement on adjusting the measures to impose tariffs on some imported goods originating in the United States (税委会公告〔2020〕1号), and decided to adjust the additional tariffs rate stipulated by the announcement of the Tariff Commission of the State Council (“TCSC”) on imposing additional tariffs on some imported goods (the third batch) originating in the United States (税委会公告〔2019〕4号) effective at 13:01 on February 14, 2020. The additional tariffs rate of 270 and 646 items listed in parts I and II of Annex 1 in the above-mentioned Announcement shall be adjusted from 10% to 5%; the additional tariffs rate of 64 and 737 items listed in Parts III and IV shall be adjusted from 5% to 2.5%. Except the above adjustments, other measures to impose tariffs on the US goods shall continue to be imposed in accordance with the provisions.

On January 15, 2020 Eastern US time, China and the United States entered into the first phase of China-US economic and trade agreement. Subsequently, the US issued an announcement that since February 14, 2020, the tariffs rate of goods valued at 120 billion US dollars which have previously been imposed on 15% tariffs rate since September 1, 2019, will be reduced from 15% to 7.5%. The rate of reduction was 1 / 2. As a corresponding measure, the TCSC also reduced the tariffs rates imposed on certain US goods.



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