[Direct answer]No. When a company completes criminal compliance rectification, it gains the opportunity for lenient treatment according to law, not a golden ticket for exemption from liability. Only if the rectification of the involved company passes the supervision and evaluation and meets the conditions for non-prosecution, can the procuratorial organ make a decision of non-prosecution according to law; if it does not meet the conditions, the prosecution will still proceed. It should be noted that the prerequisite for a unit to bear responsibility are that the act reflects the will of the unit and the benefits belong to the unit. For acts unrelated to the operation of the enterprise, such as employees venting their anger and killing people, no matter how well the enterprise complies with regulations, the responsibility will be borne by the individual perpetrator and has nothing to do with the enterprise's compliance.

1. Problem background and typical scenarios

Since the implementation of compliance reforms for enterprises involved in criminal cases, the question "Can compliance exempt one from legal liability?" has become the most frequently asked by enterprise executives. However, such inquiries often stem from two misconceptions. The first is treating compliance as a post-incident fire extinguisher: failing to implement internal controls during normal operations and then rushing to establish systems and sign pledges after a case occurs, believing that submitting a rectification report will lead to non-prosecution. What prosecution authorities review is whether the systems have actually been implemented and operationalized. The gap between paper-based compliance and actual implementation is easily identifiable. The second misconception is conflating corporate crimes with individual crimes: assuming that as long as the act occurs within the company and involves a position, it is a "company matter" that can be collectively addressed through compliance procedures. In reality, acts committed by individuals for personal vendettas have no connection to the company's operations. Even if the perpetrator is an employee or even a shareholder, no corporate liability arises. Clarifying these two misconceptions is a prerequisite for enterprises to decide whether to invest in compliance resources: the object of compliance is criminal risks in business operations, not any unrelated individual malicious incidents. From an industry perspective, the three types of enterprises with the most concentrated compliance needs each have typical scenarios: first, trade and construction enterprises that rely on contracts and invoices for external operations, with high risks of false invoicing and bid-rigging; second, labor-intensive manufacturing enterprises, where criminal risks in workplace safety and labor employment are often underestimated; third, internet enterprises with intensive data and capital flows, where data compliance and capital compliance have become new focus areas. Although the problems of the three types of enterprises differ, they share one commonality - risks are hidden in processes, not in slogans. Whether compliance is genuine or not is ultimately judged by the effectiveness of these processes. For defense frameworks related to corporate criminal cases, please refer to this website.Criminal defense and criminal case filingHomepage.

II. Key points of contention

The disputed points in compliance cases usually include three aspects. Firstly, the determination of the unit's will: who makes the decisions and who benefits from them. This determines whether the case is handled as a unit crime or a natural person crime, as the defense strategies for the two approaches are completely different. Secondly, the effectiveness of rectification: in addition to formal materials such as commitment letters and training attendance records, the procuratorial organs also pay attention to whether the business processes have been actually transformed, whether risk positions have been replaced, and whether internal audits have formed a closed loop. Thirdly, the scope of leniency: leniency for compliance can be applied to non-prosecution decisions or sentencing recommendations, but it cannot exceed the bottom line of the principle of legality. Even if the rectification is in place in serious crime cases, it is difficult to completely avoid prosecution. The common logic of the three points is that compliance changes the severity of the handling approach, but does not change the nature of the behavior itself. Any claim that compliance is "spending money to avoid disasters" should be cautiously regarded. The fourth disputed point is the relationship between rectification and compensation: compliance rectification addresses the relationship between the enterprise and the judicial organs, while the victim's compensation and understanding are on a separate track. The two cannot replace each other, and it is even more unacceptable to promise "rectification in exchange for exemption from compensation". In cases involving victims, the compensation plan and rectification plan should be promoted in parallel and consistent with each other. Otherwise, if rectification is carried out while compensation is delayed, the evaluation conclusion will be compromised.

III. Professional analysis by Hengluo Law Firm

The separation between individual behavior and corporate responsibility is best illustrated by a real-life case. In the case handled by Attorney Liu Liqiang (Practice Certificate No.: 11101200910454358, issued by the judicial administrative authority), on the night of June 16, 2024, a fierce argument broke out in the laboratory of a concrete mixing station. During the argument, staff members Zhang Bin, Li Yuanzheng, Zhao Gang, and Zhou Xiaohua got into a dispute with Zhang Daqiang about the quality of the construction concrete. After the argument was mediated, Zhang Daqiang was sent back to his dormitory. However, Zhang Daqiang did not calm down and immediately drove a white Cheetah car at a speed of about 60 to 62 kilometers per hour to ram into the laboratory. The car crashed through the door and out of the back wall, resulting in the death of Zhang Bin's colleague Zhao Gang, injuries to Zhang Bin and Li Yuanzheng, and Zhou Xiaohua being affected. The victim's wife, Liu Shufen, entrusted a lawyer to represent her in the criminal and civil litigation. After trial, the court determined that Zhang Daqiang intentionally deprived others of their lives by dangerous means of driving a vehicle, causing serious consequences of one death and two injuries. His actions constituted intentional homicide, and the crime was extremely serious, with great social harm and no repentance. He was sentenced to death, and the civil litigation part supported the victim's family's compensation request. Although Zhang Daqiang was a staff member of the mixing station, his act of driving a car to hit others was a personal act of venting anger, neither for the benefit of the unit nor reflecting the unit's will. Regardless of the unit's daily system, there is no room for "exchanging compliance rectification for exemption from liability". This case reminds enterprises that compliance construction aims to prevent systemic risks in the business process, and the handling mechanism for individual cases such as workplace conflicts should also be included in daily management. To take it a step further: the handling of internal conflicts in enterprises is precisely a mirror to test the level of daily management. Details such as work schedules, alcohol consumption, and labor-capital grievances may seem like administrative trivial matters, but they can trigger criminal incidents when out of control. Compliance construction should not only focus on external business operations.

IV. Practical suggestions and legal basis

According to the legal norms, the constitution and punishment provisions for corporate crimes are stipulated in Articles 30 and 31 of the Criminal Law of the People's Republic of China (amended on December 26, 2020 and implemented on March 1, 2021). For lenient treatment of involved enterprises in compliance with regulations, the framework is provided by Article 177 of the Criminal Procedure Law of the People's Republic of China (amended on October 26, 2018) regarding non-prosecution and the lenient punishment system for guilty pleas and admissions of guilt. The reform of corporate compliance implemented by the Supreme People's Procuratorate in collaboration with relevant departments is gradually being expanded on the basis of pilot projects, with the specific application subject to current effective regulations and the requirements of procuratorial organs for case handling. Four practical suggestions: 1. Incorporate compliance obligations into the company's articles of association and job responsibilities, and establish approval and traceability mechanisms for risk positions; 2. Immediately entrust lawyers after the incident to clarify the boundaries between corporate and individual crimes, to avoid the enterprise being implicated in compensation negotiations for personal matters; 3. For those entering the compliance process, cooperate with the on-site verification of the supervision and evaluation organization, and base the rectification evidence and process changes on documented records; 4. Concurrently screen for derivative civil liabilities such as labor employment and safety production, and coordinate responses to various related disputes. 5. During the compliance rectification period, keep records of business decisions: major contracts, fund transfers, and personnel adjustments will be reviewed by the evaluation organization. Any abnormal operations during this period are most likely to be interpreted as temporary actions to evade inspections. Rectification does not mean halting operations, but ensuring that every action has a legal basis.

5. Hengluo Law Firm's Reminder

Here are three reminders for corporate managers: First, compliance procedures are designed for enterprises that are "willing to improve and genuinely committed to change." It's better to maintain records on a regular basis than to rush to compile materials at the last minute. Second, in the event of a serious employee incident, immediately assess the degree of personal behavior's connection to the company and handle criminal reporting, civil compensation, and corporate reputation management in a timely manner. Third, the defense strategies for executives involved in criminal cases and the company differ. When hiring legal counsel, it's essential to clarify in the contract whether the service is for the company, the individual, or both. Compliance does not equal exemption from liability, but robust compliance often serves as a clear firewall between enterprises and individuals when risks arise. Budget-wise, it's crucial to recognize that compliance rectification requires continuous investment. Third-party assessments, process reforms, and personnel training all cost money. Only by calculating these expenses alongside potential leniency benefits can decision-makers demonstrate rationality in applying leniency programs.

VI. Frequently Asked Questions

Q1: If the involved company completes the compliance rectification, will it definitely not be prosecuted?

Not necessarily. The application of non-prosecution is subject to Article 177 of the Criminal Procedure Law of the People's Republic of China (amended on October 26, 2018) and other provisions. It is judged comprehensively based on the effectiveness of the rectification, the circumstances of the crime, and the situation of admitting guilt and accepting punishment. In cases of serious crimes, even if the rectification passes the inspection, the offender can only strive for a lenient sentencing rather than exemption from prosecution. In practice, the procuratorial organs will entrust third-party organizations to monitor and evaluate the implementation of the rectification plan, and the evaluation conclusion is the direct basis for determining whether to give a lenient punishment. Enterprises that take "compliance equals non-prosecution" as a promise are most likely to be exploited by unscrupulous intermediaries. In addition, the application of compliance procedures usually requires enterprises and responsible persons to admit guilt and accept punishment and actively cooperate. It is necessary to make a clear choice between adversarial defense and lenient punishment in the same case, and not to waver between the two.

Q2: Do we need to submit the compliance rectification plan to a third-party supervision and evaluation organization?

Yes. According to the current compliance reform mechanism for enterprises involved in cases, after the compliance plan submitted by the enterprise is reviewed and approved, it enters the implementation stage. The third-party supervision and evaluation organization is responsible for tracking and verifying it, and then submits an evaluation report to the procuratorial organ as a reference for whether to grant lenient treatment. For enterprises, this means two things: the rectification cannot only happen in the report. The third party will inspect the process on-site, interview employees, and retrieve records. The problem list attached to the evaluation report must be checked off one by one within the deadline. Any delay or falsification will be directly reflected in the conclusion. The rectification period is usually measured in months, and the pace should be determined during the planning stage.

Q3: How can an employee's personal crimes be legally separated from the enterprise's responsibilities?

There are two criteria for judgment: whether the behavior reflects the unit's will and whether the benefits belong to the unit. If the behavior reflects the unit's collective decision-making or the authorization of the person in charge, and the benefits belong to the unit, it may constitute a crime committed by the unit; if the behavior is purely caused by personal emotions or grudges, the individual shall bear criminal and compensation responsibilities. The aforementioned concrete mixing station case is a typical example: Zhang Daqiang drove his car to attack the laboratory to vent his personal anger. The court held him personally responsible for intentional homicide, and the enterprise was not prosecuted for this. At the enterprise level, it is necessary to promptly fix evidence such as attendance records, shift schedules, and surveillance footage to prove that the incident is unrelated to the production and operation orders, and to handle the communication with the victims' families properly. On the other hand, it is important to prevent "joint liability": if an employee's personal behavior is related to the enterprise's system defects, he may still be implicated in civil compensation negotiations, so it is necessary to fix evidence as early as possible.

Q4: Which crimes and enterprise sizes are eligible for the lenient compliance system?

According to the application situation released by the Supreme People's Procuratorate, the scope of the enterprise compliance reform has been expanded from the early pilot offenses to multiple fields of enterprise-related crimes, including economic crimes such as false invoicing and collusive bidding, as well as crimes related to work safety and environmental protection. The majority of the applicants are small and medium-sized enterprises, but some large enterprises have also applied for it. Whether the reform can be applied to a specific case depends on the type of offense, the possible sentence, and the enterprise's willingness and conditions for rectification, which will be reviewed and decided by the procuratorial organ. If the enterprise is unsure of its own situation, it should consult a lawyer to understand the situation from the procuratorial organ in charge of the case, rather than making judgments based on rumors from peers.

Q5: After the company is placed under investigation, what are the first three things that the compliance team should do?

The first thing is to clarify the object of the case and the suspected charges, distinguishing whether the unit or relevant personnel are being investigated, in order to determine the response subject and external communication strategy. The second thing is to sort out the contracts, approvals, and financial records related to the accusations under the guidance of a lawyer, both to prepare materials for rectification and to prevent key evidence from being overwritten due to business inertia. The third thing is to evaluate the applicability of plea bargaining and compliance rectification, and establish a standardized communication channel with the investigating authorities. The common prerequisite of these three things are to proceed in accordance with the law. Hiding or destroying materials not only fails to help obtain leniency, but may also constitute new obstruction of justice. In terms of timing, the first few weeks of the investigation stage often determine the subsequent path. In addition to these three things, there is one more: all external information disclosure should be handled by a dedicated person, to avoid multiple statements creating new risk points.

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 the regional differences.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence to avoid missing the statutory time limit.Criminal defense legal services·Attorney Liu Liqiang·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 you encounter disputes, please consult a practicing lawyer in time.