CHINA Law and Practice Contributed by: Xing Nan (Nancy), AnJie Broad Law Firm
7.3 Circumvention 7.3.1 Prohibiting Provisions
being “owned or controlled” by a directly designat - ed person. According to the Anti-Foreign Sanctions Law of the People’s Republic of China, the relevant departments of the State Council may decide to take countermeasures against the following individuals and organisations: • spouses and immediate family members of indi - viduals included in the list of countermeasures; • senior management personnel or actual controllers of organisations included in the list of counter - measures; • organisations where individuals listed on the countermeasures list serve as senior management personnel; • organisations that are actually controlled, or were established and operated by, individuals and organisations included in the countermeasures list; and • organisations that the individuals or organisa - tions included in the countermeasures list actually control or participate in their establishment and operation. The Company Law of the People’s Republic of China (Revised in 2023) stipulates that a controlling share - holder refers to a shareholder whose capital contribu - tion accounts for more than 50% of the total capital of a limited liability company or whose shares account for more than 50% of the total share capital of a joint stock company. Additionally, a shareholder with less than 50% ownership may still be considered control - ling if their voting rights, based on capital contribution or shareholding, are sufficient to exert a significant influence over the resolutions of the shareholders’ meeting. An actual controller refers to a person who can actually control the company’s behaviour through investment relations, agreements or other arrange - ments. These provisions help to analyse ownership and control.
According to the Anti-Foreign Sanctions Law of the People’s Republic of China, organisations and indi - viduals within China shall implement countermeasures taken by relevant departments of the State Council, and otherwise they shall be dealt with by relevant departments of the State Council in accordance with the law, and their activities shall be restricted or pro - hibited. Any organisation or individual that fails to implement or co-operate in implementing countermeasures shall be held legally responsible in accordance with the law. 7.3.2 Criminal Penalties If the circumvention of sanctions endangers national security or involves the disclosure of state secrets, the offender could be subject to criminal liabilities of life imprisonment or imprisonment for more than ten years under the Criminal Law of the People’s Republic of China. According to the Anti-Foreign Sanctions Law of the People’s Republic of China, no organisation or indi - vidual shall enforce or assist in enforcing discrimina - tory restrictive measures taken by foreign countries against Chinese citizens and organisations. If an organisation or individual conducts those behaviours and infringes upon the legitimate rights and interests of Chinese citizens or organisations, Chinese citizens or organisations may file a lawsuit with the People’s Court, demanding that they stop the infringement and compensate for the losses. Those who have the abil - ity to execute judgments or rulings of the people’s court but refuse to do so, and the circumstances are deemed serious, shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or a fine. If the circumstances are particu - larly serious, the organisation or individual shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.
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