Supreme People’s Court, CSRC, SAIC, and PBOC tighten the regulatory net

e8fade90gw1ek1l57pt9jj2050050t8sOn 19 December 2014, the Supreme People’s Court (Court) and China Securities Regulatory Commission (CSRC) announced that they were linking their blacklists and regulatory systems, following the arrangements the Court has made with other regulators since it established its judgment debtor database in October, 2013.  One of the major issues for the court system in having judgments enforced is interdepartmental regulatory silos that enable judgment debtors to avoid enforcement against their assets.

As of today, the Court’s database includes over 100,000 companies and almost 700,000 individuals. The goal is to tighten the net around non-compliant companies and individuals.  This initiative of the Court and CSRC is related to the State Council policy document issued in February, 2014,  on registered capital reform, in particular, the requirement that government departments improve interdepartmental sharing of information. Additionally, the Court names and shames one corporate and individual judgment debtor each day on social media.

The arrangement with the CSRC will involve the Court linking its system with the CSRC’s database of almost 700,000 entries concerning individuals and companies that have committed securities violations, and to prevent judgment debtors from accessing the capital markets.

Other arrangements the Court has made include:

  • an October, 2014, arrangement with the State Administration of Industry and Commerce (SAIC), which links  the SAIC’s credit information disclosure system (corporate disclosure system), described here, with the Court’s database (and requires SAIC cooperation in enforcing judgements);
  • a November, 2013  arrangement with the People’s Bank of China, directed at preventing judgment debtors from obtaining loans or financing through the banking system.

A search through the Court’s database is useful to a variety of users:

  • Lawyers, financiers and others engaged in due diligence on Chinese companies and individuals;
  • Companies, Chinese or foreign, contemplating doing business with a Chinese company or individual; and
  • Scholars and students researching the local operation of the Chinese economy and court system.

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