[Direct answer]In the Beijing area, if a senior executive is suspected of committing a crime, the company should initiate a compliance response in accordance with the law. The key point is to distinguish between individual actions and corporate actions, and to protect the legitimate rights and interests of the enterprise and its employees. According to the provisions of the Criminal Law of the People's Republic of China (effective March 1, 2021) on corporate crimes, only when the actions reflect the corporate will, are for the corporate benefit, and have been decided or accounted for by the company, can they be identified as corporate crimes; purely individual actions of senior executives do not necessarily implicate the company. The company should fix the evidence of business and funds, cooperate with the investigation in accordance with the law, avoid destroying evidence or disclosing information illegally, and promptly entrust lawyers to handle matters such as account freezing, personnel interviews, and information disclosure, etc. For more details, please refer to the following link:Business and contract dispute resolution services for enterprises.

I. Problem Background and Typical Scenarios

In the operation of enterprises, executives are often implicated in criminal investigations, which often affect the company. Typical scenarios include: the actual controller or business head being investigated for bribery, embezzlement, or misappropriation of funds, leading to the freezing of the company's accounts and official seals; the financial head being involved in false invoicing or tax evasion, which hampers the normal operation of the enterprise; executives being suspected of illegal fund-raising or contract fraud, implicating the company's contracts and client funds. Many enterprises, lacking contingency plans, rush to deal with the situation after executives are investigated, or conceal the information, or transfer assets without authorization, which exacerbates the risks. Companies need to cooperate with the judicial authorities while maintaining their operations and business reputation, and striking a delicate balance is crucial. For cases involving related criminal procedures, relevant measures can be taken in conjunction with the investigation.Criminal defense and criminal case filing servicesEvaluation; for cases involving frozen funds and creditor's rights, you may refer to the following for reference.Creditor-debtor relations and enforcement case services.

II. Key points of contention

There are three core disputes for enterprises to deal with when their executives are involved in crimes. Firstly, the identification of corporate crime: whether the behavior is decided by the enterprise, for the benefit of the enterprise, and whether the funds are deposited into the enterprise's account, which is the key to distinguishing corporate and individual crimes and directly affects whether the company should bear responsibility. Secondly, the boundaries between assets and operations: whether the scope of the frozen accounts involved in the case is too broad, and whether the normal operating funds can be unblocked, which need to be claimed in accordance with the law. Thirdly, information disclosure and compliance obligations: listed companies or public companies have an obligation to make announcements, and violations of the obligation to remain silent or make false statements will also generate responsibilities. The dispute also lies in how to determine the validity of the company's external contracts and transactions when the executives' personal behavior and official duties are intertwined. For issues involving corporate law and compliance, reference can be made to the relevant provisions.Business and contract dispute resolution services for enterprisesThe governance ideas in the document.

III. Professional analysis by Henglue Lawyers

Based on practical observations in handling criminal cases involving enterprises, it is most important for companies to avoid inappropriate responses when their executives are involved in crimes. There are three common pitfalls: First, destroying or transferring accounting records in panic may constitute a crime and lead to the loss of mitigating circumstances; Second, assuming collective responsibility in the name of the company and mistaking individual actions for corporate actions, thereby increasing the company's risks; Third, neglecting the continuity of operations and allowing account freezes to cripple the business. According to the provisions of the Criminal Law on corporate crimes and the Criminal Procedure Law on case-related assets, companies should actively clarify the nature of the actions: collect decision-making minutes, contracts, and fund flow records to prove whether the actions involved reflect the company's will; for those that are indeed personal, cut them off legally and cooperate with the investigation; for those affected by freezes that hinder normal operations, apply for unfreezing or replacement in accordance with the law. Henglue Lawyers usually advise enterprises to simultaneously launch internal compliance investigations, preserve evidence, designate a liaison person to coordinate external matters, and introduce professional lawyers early to coordinate criminal and civil matters and business affairs. For those involving the establishment of a compliance system, they can seek assistance from relevant professional organizations.Special services and other case-related services.

IV. Practical suggestions and legal basis

The core basis is the provisions of the Criminal Law of the People's Republic of China (implemented on March 1, 2021) regarding corporate crimes, embezzlement of funds, misappropriation of funds, and bribery, as well as the identification rules for "acting in the name of the unit, for the unit's interests, and reflecting the unit's will" in corporate crimes; the provisions of the Criminal Procedure Law of the People's Republic of China (amended and implemented on October 26, 2018) regarding the seizure and freezing of involved assets, defense, and cooperation with investigations; and the definitions of the boundaries between corporate crimes and individual crimes in relevant judicial interpretations. Practical suggestions: Appoint a compliance liaison person immediately and unify internal and external statements; fix decision-making, contract, and fund evidence and do not destroy or transfer them without authorization; distinguish between individual and corporate actions and cooperate with investigations in accordance with the law; apply for the unfreezing or property replacement of assets affected by freezes; and engage lawyers early to coordinate criminal, civil, and business matters. For procedural rights, refer to the relevant provisions.Criminal defense and criminal case filing servicesAdvance.

5. Henglu Law Firm's Advice

When executives are involved in criminal cases, the company should prioritize legality and order. Never destroy evidence, transfer assets, or make false statements to "protect" executives, as these actions may drag the company into criminal risks. The correct approach is to immediately secure objective evidence, clarify the nature of the actions, cooperate with the investigation according to the law, and simultaneously initiate business continuity plans to protect the rights and interests of employees and customers. For the accounts involved in the case, claim their unfreezing or replacement according to the law to avoid business disruptions. Disclosures to the public should comply with legal obligations, without exaggeration or concealment. It is essential to grasp the boundaries between corporate crimes and individual crimes, and consult professional lawyers as early as possible to minimize the impact of criminal risks on the company's operations.

VI. Frequently Asked Questions

Q1: If a senior executive commits a crime personally, does the company necessarily bear responsibility as well?

Not necessarily. Whether it constitutes a corporate crime depends on whether the act reflects the corporate will, is carried out for the corporate interests, and is implemented through corporate decision-making or bookkeeping. If it is purely a senior executive's act of embezzlement or misappropriation for personal gain under the guise of his position, and the company is unaware of it, does not benefit from it, and does not book it, it is usually regarded as a personal crime, and the company does not bear direct criminal responsibility, but may need to bear responsibility for management negligence or related transactions in civil matters. On the contrary, acts that are decided by the company collectively, carried out for the company's interests, and booked may be regarded as corporate crimes. Therefore, the company should focus on using decision-making minutes, contracts, and fund flow records to prove the nature of the acts, and legally separate the responsibilities of individuals and the company.

Q2: What materials should the company prepare in response to executives being involved in criminal cases?

The core materials include: the company's articles of association, resolutions, and authorization documents (to prove the boundaries of executives' authority and decision-making mechanisms); contracts, approval processes, and meeting minutes related to the involved business (to distinguish between the unit's will and individual actions); complete fund flow records, account books, and invoices (to prove the flow of funds and whether they have been recorded in the unit's accounts); descriptions of executives' positions and responsibilities, and internal compliance systems; as well as communication records with the investigating authorities. The materials should be organized around the following questions: "Whether the actions were taken by the unit's decision-making body - whether they were for the unit's interests - whether the funds were recorded in the unit's accounts - and the extent of the impact on the company's operations". It is recommended to appoint a dedicated person to collect the original documents, not to modify or transfer them without authorization, and to sort them out under the guidance of a lawyer to avoid being subject to unfavorable presumptions.

Q3: How much does it cost for a company to hire a lawyer to handle the criminal case involving its executives?

The attorney's fees depend on the scope of services. For compliance consulting, internal investigations, and response plans, they are typically charged on a per-case or hourly basis. For representing the company in criminal defense, handling the release of frozen assets, and resolving derivative civil disputes, fees are calculated based on the complexity of the case and the amount in dispute. The specific fees are subject to the terms of the contract and there is no unified standard. Criminal cases involving executives often involve multiple legal fields, including criminal, civil, and corporate law, which require significant workload and thus command higher fees than regular contractual services. It is recommended to clarify the fee ranges for each service module with the law firm before entrusting the case and prioritize budget allocation to clarify the boundaries between the company and individuals, ensure business continuity, and control overall expenditure.

Q4: How long does it usually take for a company to resume normal operations after an investigation into executives' involvement in criminal activities?

The duration of the cycle depends on the progress of the investigation and the disposal of assets. If only individual executives are investigated and the company is not identified as a criminal entity, operations can recover relatively quickly after cooperating with the investigation, taking several weeks to months; if the company's accounts are frozen, it needs to apply for unfreezing or property substitution in accordance with the law, and the duration will depend on the review by the case-handling authorities, which may take several months. The identification of the company as a criminal entity and the trial stage may take even longer. Overall, enterprises with clear evidence and orderly responses recover faster; conversely, concealment or resistance will prolong the process. It is recommended to simultaneously launch business continuity plans to minimize the impact on operations, customers, and employees, rather than waiting passively.

Q5: If a company learns that a senior executive is suspected of committing a crime, what should the company do first?

It is recommended to follow four steps: First, designate a compliance liaison person to unify internal and external communication channels, to avoid multiple people making random statements that could be exploited; Second, immediately fix the evidence of decisions, contracts, funds, and approvals, and do not destroy, alter, or transfer assets without authorization; Third, preliminarily determine the nature of the actions, distinguish between the personal actions of executives and the actions of the company, and cooperate with the investigating authorities in accordance with the law; Fourth, promptly engage professional lawyers to coordinate criminal responses, apply for the unfreezing or replacement of assets involved in the case, handle information disclosure and derivative civil matters, and initiate internal compliance rectification. Throughout the entire process, cooperation must be conducted in accordance with the law. If support is needed, please consult lawyers who are familiar with corporate criminal cases as soon as possible.

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 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 limit.Business and commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available 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 a timely manner.