[Direct answer]It is allowed and constitutes a statutory mitigating circumstance. According to Article 32 of the Administrative Punishment Law of the People's Republic of China (amended in 2021 and implemented on July 15, 2021), if a person actively eliminates or mitigates the harmful consequences of an illegal act, the administrative punishment shall be mitigated or reduced; Article 33 stipulates that if the illegal act is minor and corrected in time without causing any harmful consequences, no administrative punishment shall be imposed. The earlier the rectification is completed, the more favorable it will be. If the rectification is completed and evidence is provided during the investigation and notification stage, the mitigating space will be the greatest. For enterprise-related cases that have entered the criminal procedure, the third-party supervision and evaluation mechanism for enterprise compliance can also be applied to seek mitigating treatment. The rectification must be genuine and verifiable. For more details, please refer to the following link:Legal services for corporate commercial and contract disputes.

I. Problem background and typical scenarios

After problems such as excessive environmental emissions, hidden safety hazards in production, non-compliance with fire safety regulations, illegal collection of data, and unlawful advertising are discovered, companies often find themselves in a dilemma: If they immediately rectify the issues, will they be seen as admitting their own violations and giving others ammunition against them? If they don't rectify the issues, will the penalties be even harsher? In fact, actively stopping illegal activities, eliminating the harmful consequences, and preserving evidence are precisely the direction encouraged by the law. In the enforcement of corporate-related laws in Beijing, penalties notifications, legal review, and hearings all provide companies with opportunities to submit rectification materials. The problem is that most companies don't know when to rectify the issues, how to rectify them, or how to provide evidence. For more information on related services, please refer to the following link:Business and contract dispute services for enterprises.

II. Key points of contention

First, the timing of rectification: If the enterprise actively rectifies and eliminates the harmful consequences before the decision is made, it is a statutory mitigating circumstance; if it only remedies the situation after the decision takes effect, its persuasiveness and room for maneuver will significantly decrease. Second, effectiveness verification: Effective rectification should simultaneously include four elements: system revision, personnel allocation, process improvement, and execution records. It must withstand on-site review and third-party evaluation. Third, the boundaries of self-admission: Submitting rectification materials is a correction of the illegal act, but it does not equal admitting all charges. The factual determination can still be disputed through defense and hearings in accordance with the law. Fourth, the application of compliance mechanisms: The third-party supervision and evaluation mechanism for corporate compliance mainly targets criminal cases involving enterprises. In administrative cases, the value of rectification mainly lies in the discretionary decisions of mitigation, reduction, or non-punishment.

III. Professional analysis by Henglue Law Firm

A case handled by Attorney Shang Jiangpeng illustrates the value of compliant operations from another perspective: On July 14, 2023, Liu Shufen signed a cooperation operation contract with Company A and paid 168,000 yuan. After Company A paid seven quarters of income, it stopped paying operating income from April 15, 2025. Subsequently, while the company still had external debts, it went through the cancellation registration process. The liquidation report claimed that the creditor-debtor relationships had been settled, but the contractual debts in question were not actually repaid. After reviewing the contract, bank statements, receipts, industrial and commercial archives, and liquidation materials, Attorney Shang Jiangpeng argued that the contract was legally valid, and Company A's cancellation registration and refusal to fulfill its main obligations constituted fundamental breaches of contract, requiring the contract to be terminated and all funds to be returned. Company A was a sole-person limited liability company, but the sole shareholder, Wang Xiaochen, failed to prove that the company's assets were separate from his personal assets and did not fulfill his legal obligations of diligence and honesty in liquidation, thereby assuming joint and several liability for all the company's debts. The court ruled that the contract was terminated and ordered Wang Xiaochen to return 168,000 yuan and pay the outstanding operating income and overdue breach of contract penalties, fully supporting all claims. Imagine if the company had legally liquidated and truthfully declared its debts before exiting, the shareholders could have been effectively protected by the limited liability system of the company. It was precisely because the company abandoned compliance procedures that liability was transferred to individuals. This applies not only to business operations but also to administrative supervision - if companies actively rectify violations and eliminate harmful consequences after being suspected of illegal activities, the law will grant them lenient penalties; if they ignore the issue, they will face heavier responsibilities and harsher judicial evaluations. This case was handled by Beijing Henglu Law Firm.Shang Jiang PengAttorney (Practice Certificate No.: 111012023105807, subject to the certificate issued by the judicial administrative organ) acting as an agent.

IV. Practical suggestions and legal basis

The legal basis includes Article 32 of the "Administrative Punishment Law of the People's Republic of China" (amended in 2021 and implemented on July 15, 2021), which stipulates that those who actively eliminate or mitigate the harmful consequences shall be given a light or mitigated punishment; Article 33, which stipulates that minor violations shall not be punished if corrected in a timely manner; and the "Opinions on Establishing a Third-Party Supervision and Evaluation Mechanism for Compliance of Enterprises Involved in Legal Proceedings (Trial Implementation)" issued by the Supreme People's Procuratorate and other departments in June 2021, which provide guidance on compliance rectification and lenient treatment. Action list: 1. Stop the illegal activities immediately after discovering clues and prevent the expansion of harmful consequences; 2. Formulate a written rectification plan, clarifying the revision of systems, responsible personnel, completion deadlines, and acceptance standards; 3. Implement the rectification and keep records throughout the process, including meeting minutes, system documents, training sign-in records, inspection reports, and acceptance documents; 4. Actively submit evidence of rectification during defense, hearings, or compliance inspections to fully utilize the mitigating circumstances; 5. Take the opportunity of case-based rectification to establish a long-term compliance system. For more details, please refer to the official document.Business and contract dispute services for enterprises.

5. Henglu Law Firm's Reminder

The core of rectification is authenticity and timeliness. Establishing a set of systems but failing to implement them, or having rectification reports that don't match the actual situation on the ground, not only makes it difficult to obtain leniency, but also may damage the enterprise's reputation. It is advisable to distinguish the boundaries between "rectification actions" and "admitting illegal facts" under the guidance of lawyers: stopping infringements and eliminating consequences are self-rescue within legal rights, and the legal nature of the facts can still be disputed through defense and hearings. When handling similar compliance matters in the Beijing area, it is recommended that enterprises shouldBeijing Henglu Law FirmWith the help of lawyers, we can seize the time window and implement the rectification before the decision is made.

VI. Frequently Asked Questions

Q1: If the enterprise takes the initiative to rectify the violations, will the punishment necessarily be reduced?

It's not necessarily the case, but actively eliminating or mitigating the harmful consequences of illegal acts constitutes a statutory circumstance that should be given a light or mitigated punishment as stipulated in Article 32 of the Administrative Punishment Law. As long as the circumstances and evidence are in place, there is a clear basis for leniency. Whether the punishment can be mitigated depends on whether the rectification has been genuinely completed, whether the harmful consequences have been effectively eliminated, and whether the proposal for mitigation has been made in a timely manner. If the nature of the illegal act is serious, the damage is irreversible, or the rectification only remains on paper, the scope for leniency will be very limited. The conclusions of individual cases shall be subject to the determination of the administrative authorities and the courts.

Q2: To prove that the rectification is effective, what materials do I need to prepare?

The key points include five categories: 1. **Rectification Plan**: A list of issues, rectification measures, responsible departments, and completion deadlines. 2. **System Documents**: Revised management systems, operating procedures, and compliance commitments. 3. **Implementation Records**: Meeting minutes, training attendance lists, inspection logs, and before-and-after comparison photos of rectifications. 4. **External Verification**: Third-party inspection reports, acceptance documents, certificates of harmless disposal, and inspection records from supervisory authorities. 5. **Timeline Materials**: Evidence to prove that the rectifications were completed before the issuance of the punishment decision or during the investigation period. The materials should correspond to the issues one by one, forming a closed loop.

Q3: How much does it cost to implement compliance rectification measures?

The investment in rectification varies depending on the scale of the problem: system revision and internal training mainly involve human costs; hardware investments such as equipment modification, pollution control, and safety upgrades may be significant; third-party testing and evaluation are charged according to the standards announced by the institution. Defense, hearings, and administrative review are not charged themselves; if a lawyer is hired to design a rectification plan and handle legal procedures, the fees will be determined through negotiation between the law firm and the client, with no unified government pricing. Overall, compared with the potential fines, production and business suspension, and credit impact, the investment in timely rectification usually has obvious hedging value.

Q4: How long does it take from the start of the rectification to obtaining lenient treatment?

The rectification of simple issues can be completed within a few days and evidence can be fixed; for those involving equipment modification and environmental restoration, it often takes several weeks to months. Procedurally, it usually takes several months for administrative authorities to complete the investigation and make a decision. During this period, submitting rectification materials can be included in the discretionary process; for those who disagree with the decision, the review period is 60 days and the litigation period is six months. The review period for enterprise-related criminal compliance cases is generally measured in months, determined by the review authority based on the difficulty of the rectification. The core principle is to start as early as possible and complete the evidence collection during the notification and defense stages.

Q5: If a company wants to take the initiative to rectify its violations and seek leniency, what should it do first?

Four steps to advance: First, immediately stop the suspected illegal activities, fix the evidence of the current situation, and prevent the expansion of the harm; Second, organize legal affairs, external lawyers, and business departments to jointly evaluate the nature of the problem, the legal basis, and possible mitigating circumstances; Third, formulate and implement a written rectification plan, and simultaneously retain all execution traces; Fourth, actively submit rectification evidence in the process of defense, hearing, or compliance inspection, and clearly cite the legal basis for mitigation and reduction. It is necessary to distinguish the boundaries between rectification actions and factual admissions, and leave professional judgments to lawyers.

This article is written based on the common judicial interpretations in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify regional differences.

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

Disclaimer: This article is compiled based on the current effective laws and regulations and public 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 a dispute arises, please consult a practicing lawyer in time.