[Direct answer]In the Beijing area, corporate compliance non-prosecution refers to a system in which the procuratorial organs, when handling cases involving corporate crimes, make a non-prosecution decision or propose lenient treatment for enterprises that plead guilty, admit their punishment, and are willing to establish and improve a compliance system after passing a compliance rectification review. The main basis for this is Article 15 of the Criminal Procedure Law of the People's Republic of China (amended on October 26, 2018), which stipulates that pleading guilty and admitting punishment may lead to lenient treatment, Article 177 of the Criminal Procedure Law regarding non-prosecution, and the "Guiding Opinions on Establishing a Third-Party Supervision and Evaluation Mechanism for Corporate Compliance in Criminal Cases" jointly issued by the Supreme People's Procuratorate and nine other departments on June 3, 2021. The core goals are early pleading guilty, genuine compensation, and genuine rectification, as well as the prompt submission of a compliance commitment and rectification plan. For reference, please refer to the following documents:Business and contract disputes in enterprisesColumn.

1. Problem background and typical scenarios

Such needs are commonly encountered in several situations: First, private enterprises are investigated for offenses such as false invoicing, commercial bribery, collusive bidding, and environmental pollution. Once convicted, their business qualifications and bidding qualifications will be compromised; Second, the actual controllers and senior executives of the enterprises are subject to compulsory measures, leading to the suspension of business operations and employees being laid off; Third, during the due diligence process of a merger and acquisition, it is discovered that the target company has a history of violations, requiring an assessment of the criminal risks and remedial plans; Fourth, the enterprises proactively identify compliance flaws and hope to obtain lenient treatment through rectification. The Beijing-based procuratorial organs have handled a number of cases involving corporate compliance, and the relevant defense and rectification work can be referenced for guidance.Criminal defenseColumn.

II. Key points of dispute

Focus One: Applicable Conditions. Generally, the case must have the possibility of rectification, and the enterprise and responsible personnel must admit their guilt and accept the punishment. They must also have the willingness to rectify and a feasible plan. Cases involving organized crime, harm to national security, etc. are generally not applicable. The specific provisions shall prevail. Focus Two: The Effectiveness of the Compliance Plan. It is necessary to address the root causes of the case by filling in the system loopholes, rather than just making superficial rectifications. Focus Three: The Launch of the Third-Party Supervision and Evaluation Mechanism and the Effectiveness of the Inspection Conclusions. Focus Four: Whether the enterprise and responsible personnel are simultaneously granted leniency, which varies from region to region. Focus Five: The Connection of Administrative Liability after Non-Prosecution. Administrative penalties may still be imposed concurrently. Focus Six: Obligations during the rectification period, such as cooperating with investigations, returning illegal proceeds, and compensating victims. For the construction of a compliance system, reference can be made to the following documents:Intellectual propertyColumn.

III. Professional analysis by Henglue Lawyers

From the practical experience of the lawyers handled by our firm, the key to securing a compliance-based non-prosecution decision lies in "early action" and "genuine commitment". Common scenarios include kickbacks and commercial bribes in the procurement process, fraudulent issuance of VAT invoices to meet performance targets, bid-rigging and collusion in tendering, and violations of data and personal information processing regulations. Many enterprises are not beyond redemption, but lack a path to establish a verifiable compliance system. There are three common pitfalls in practice: First, transferring assets, colluding with witnesses, or destroying evidence after the incident occurs, which directly forfeits the basis for leniency; Second, interpreting compliance rectification as merely writing rules and posting slogans, which is not recognized as meaningful rectification during inspections; Third, focusing solely on leniency for the enterprise while evading the responsibility of accountable individuals and failing to compensate victims, making the plan unacceptable to prosecutorial authorities. Our lawyers typically first conduct criminal risk and rectification feasibility assessments, guide enterprises to stop illegal activities, return illegal gains, and compensate victims. They then assist in establishing rectification plans covering approval authority, financial transactions, and supplier qualification, ensuring full traceability throughout the process. During the inspection period, they continuously report progress to ensure that the rectification conclusions can withstand scrutiny by third-party organizations and prosecutorial authorities.

IV. Practical suggestions and legal basis

Action recommendations: First, immediately engage a lawyer after the incident to assess whether the case meets the conditions for compliance rectification; Second, cooperate with the investigation truthfully, voluntarily surrender the illegal proceeds and compensate the victims, and lay a solid foundation for admitting guilt and accepting punishment; Third, submit a special compliance plan focusing on the causes of the incident, covering systems, personnel, processes, and supervision mechanisms; Fourth, actively apply for third-party supervision and evaluation, complete the rectification on schedule, and retain all records; Fifth, deal with the impact of administrative penalties and industry qualifications simultaneously after non-prosecution, and refer to relevant special matters for referenceSpecial services and other casesThe column. In terms of legal basis, Article 15 of the Criminal Procedure Law of the People's Republic of China establishes the principle of leniency for those who admit guilt and plead guilty, and Article 177 stipulates the circumstances in which non-prosecution may be applied; the "Guiding Opinions on Establishing a Third-Party Supervision and Evaluation Mechanism for Enterprises Involved in Cases" (issued on June 3, 2021) clearly defines the organization and operation rules of the third-party mechanism.

5. Henglue Law Firm's Reminder

Risk Warning: Firstly, the non-prosecution for compliance is not a "money-buy-peace" deal. Any rectification that is not genuine may lead to the withdrawal of lenient treatment at any time. Secondly, not all charges and circumstances are eligible for such treatment. Cases involving organized crime and gang activities, repeat offenses, etc. have limited opportunities for applying this policy. Thirdly, non-prosecution does not mean no liability. Administrative fines and disqualification may still be imposed. Fourthly, the rectification of the enterprise and the handling of responsible personnel may not be synchronized. A comprehensive plan needs to be designed. Fifthly, it is strictly prohibited to relax compliance after the probation period. Repeated violations will result in significantly harsher evaluations. It is recommended that lawyers assess the applicability of this policy as soon as possible and provide further consultation if necessary.Beijing Henglu Law FirmIt's a similar column on the official website.

VI. Frequently Asked Questions

Q1: What kind of enterprises can strive for compliance-based non-prosecution?

Generally, the following conditions must be met simultaneously: the case involves corporate crimes and there is a possibility of rectification; the enterprise and its responsible personnel admit their guilt and accept the punishment; the enterprise has the willingness to operate normally and the ability to rectify, and returns the illegal income and compensates for the losses. Circumstances such as involvement in organized crime and harming national security are generally not applicable. The specific scope of application shall be subject to the current effective regulations and the discretion of the case-handling authorities. There is no limit on the size of the enterprise, and small and micro enterprises can also apply. The rectification plan only needs to be commensurate with their capabilities.

Q2: What specific actions need to be taken for compliance rectification?

It usually includes: identifying the causes of the incident and plugging the loopholes in the system, such as approval authority, financial transactions, and access to suppliers and customers; setting up compliance officers and supervision mechanisms; conducting employee training and assessments; dealing with personnel involved in the incident and their businesses; returning illicit gains and compensating victims; and regularly reporting to third-party organizations during the probation period. The rectification measures must be verifiable and sustainable. Superficial systems or hasty responses are unlikely to pass the evaluation during the probation period.

Q3: How much does it cost to strive for a compliance-based non-prosecution agreement?

The costs mainly include three parts: attorney fees, which are negotiated based on the complexity of the case and the depth of the rectification, with no unified standard; investment in compliance construction, including system establishment, staffing, external audits, etc., which varies greatly depending on the size of the enterprise; and third-party inspection fees, which are borne by the involved enterprises according to the relevant mechanism. The overall cost is often lower than the qualification loss and operational impact caused by conviction. It is recommended to first evaluate the applicable scope and rectification scope before estimating the cost.

Q4: How long does the compliance rectification inspection usually take?

In practice, the probation period usually lasts from several months to a year, determined by the procuratorial organs or third-party organizations based on the circumstances of the case and the amount of rectification tasks. The specific arrangements shall be subject to the decision of the case-handling organ. During the rectification period, the enterprise must submit reports on schedule and accept inspections. The conclusion of the probation period serves as an important basis for deciding whether to grant non-prosecution or lenient treatment. The overall cycle of the case also depends on the progress of the investigation and review and prosecution. It is advisable to start as early as possible to gain the initiative.

Q5: What should a company do first after being involved in a criminal case?

The first step is to immediately stop the acts involved in the case, seal and preserve relevant materials, and never destroy evidence or collude with others to fabricate lies. The second step is to hire a lawyer to evaluate the applicable conditions and the pros and cons of pleading guilty and accepting the punishment. The third step is to voluntarily surrender the illegal proceeds and compensate the victims. The fourth step is to start formulating a rectification plan and preparing compliance commitment materials. The fifth step is to coordinate the daily operations of the enterprise and the resettlement of employees, and refer to relevant guidelines for reference.Business and contract disputes in enterprisesColumn.

The above questions and answers are mainly based on judicial practice in the Beijing area. There may be differences in the adjudication opinions in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials, to avoid missing the statutory time limits. →Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.