Domestic information

1. The State Council's 2023 legislative plan is announced and plans to submit multiple important draft laws for review

Recently, the General Office of the State Council issued the "2023 Legislative Work Plan of the State Council", which requires highlighting legislative priorities and providing high-quality legislative services to ensure the overall work of the Party and the country. This year, the State Council will submit to the Standing Committee of the National People's Congress the revised draft of the Anti Money Laundering Law, the revised draft of the Arbitration Law, and the revised draft of the Public Security Management Penalty Law, formulate regulations on the punishment of state-owned enterprise managers, regulations on network data security management, revise the provisions of the State Council on the declaration standards for concentration of business operators, and revise the implementation rules of the Patent Law; The draft of the National Development Planning Law, the draft of the Telecommunications Law, the revised draft of the Anti Unfair competition Law, the revised draft of the Lawyer Law, the draft of the Artificial Intelligence Law, the draft of the Consumption Tax Law, the revised draft of the Accounting Law, the revised draft of the Commercial Bank Law, the revised draft of the Banking Supervision and Administration Law, the revised draft of the People's Bank of China Law, and the revised draft of the Insurance Law are to be submitted for deliberation, and the regulations on supervision and administration of listed companies are to be prepared Regulations on the implementation of the Law on the Protection of Consumers' Rights and Interests, regulations on the management of clinical research, transformation and application of new biomedical technologies, provisional regulations on the management of carbon Emissions trading, and the promotion of national anti-corruption legislation. (Source: Chinese government website)

Lawyer's recommendation: This year's legislative plan has many legislative projects on finance. There are 28 legislative projects in "accelerating the construction of a Dual circulation and focusing on promoting high-quality development", of which 7 are related to finance and state-owned enterprises. In line with this, this year's policies in the financial field also involve financial supervision and financial support for the real economy.

2. Shanghai High Court releases the second batch of reference cases for 2023 with a focus on finance

On June 22nd, the official WeChat account of the Shanghai High Court announced the second batch of reference cases for 2023, mainly financial themed cases. This batch of typical cases includes six cases, including the "Zhongrong International Trust Co., Ltd. v. Shanghai Guozhijie Smart Energy Co., Ltd. and other business trust disputes". In reference case No. 157, the court held that in the event of an invalid guarantee, the pledgor was liable for compensation rather than pledging the guarantee, and should assume compensation liability to the creditor with all the responsible property rather than pledging the guarantee. The assumption of responsibility is not based on the sale or auction disposal of the guarantee; After the guarantee contract becomes invalid, the liability of the guarantor at fault should not exceed the value of the collateral. This is the upper limit of the creditor's trust in the validity of the guarantee contract, and it is also the reasonable range of liability that the fault party providing the invalid guarantee can foresee when entering into the contract. (Source: Official website of Shanghai High Court)

Lawyer's recommendation: Most financial cases have complex structures, and reference cases have a positive promoting significance for the "same case, same judgment" approach.

3. The first white paper on the development of data trust in China was released

Data trust, as an emerging data management and sharing model, aims to achieve a reasonable allocation of data ownership, usage rights, and revenue rights, and promote the legitimate, fair, and efficient use of data. Studying and exploring the development path of data trust has become a hot topic of research both domestically and internationally. Recently, AVIC Trust, in collaboration with Guangxi Power Grid Co., Ltd. and DataEase (Beijing) Information Technology Co., Ltd., jointly released the first research report in the field of data trust in China, the "White Paper on the Development of Data Trust". (Source: "Usufruct Research" WeChat official account)

Lawyer's recommendation: As a data management and sharing model, data trust aims to achieve reasonable distribution of data ownership, usage rights, and profit rights. However, the legal basis and structure of data trust still need further attention.

4. The "Regulations on the Supervision and Administration of Private Investment Funds (Draft)" has been reviewed and approved

On June 16th, the Executive Meeting of the State Council reviewed and approved the "Regulations on the Supervision and Administration of Private Investment Funds (Draft)". The meeting pointed out that it is necessary to strengthen source control in response to prominent issues in the industry, establish regulatory bottom lines, and severely crack down on illegal financial activities such as illegal fundraising under the name of "private equity funds". We need to strengthen the coordination and coordination of supervision, management, and development policies, implement differentiated supervision of different types of private investment funds, especially venture capital funds, and promptly introduce specific policies to promote the development of venture capital funds. (Source: official website of China Association for Science and Technology Foundation)

Lawyer's recommendation: The adoption of the "Regulations on the Supervision and Administration of Private Investment Funds (Draft)" will better protect the legitimate rights and interests of investors, help increase investors' confidence in the private investment fund market, and promote the standardized and healthy development of the private investment fund industry.

5. The China Securities Regulatory Commission has issued the "Guiding Opinions on Deepening the Reform of the Bond Registration System" and the "Guiding Opinions on Improving the Quality of Bond Business Practice of Intermediary Institutions under the Registration System"

Recently, the China Securities Regulatory Commission issued the "Guiding Opinions on Deepening the Reform of Bond Registration System" and the "Guiding Opinions on Improving the Quality of Bond Business Practice of Intermediary Institutions under the Registration System". Among them, the Guiding Opinions on the Reform of the Bond Registration System made a systematic institutional arrangement for deepening the reform of the bond registration system, and proposed 12 measures in four aspects: first, optimizing the bond review and registration mechanism, second, compacting the responsibilities of issuers and intermediaries, third, strengthening the management of bond duration, and fourth, cracking down on illegal acts of bonds according to law. The Guiding Opinions on Bond Practice of Intermediary Institutions adhere to four principles: serving high-quality development, strengthening duty performance, deepening classified supervision, and strict supervision and law enforcement. They propose a total of 14 measures in five aspects: first, strengthening the practice standards of underwriting and entrusted business, second, improving the practice quality of securities service institutions, third, strengthening quality control, integrity requirements, and investor protection, and fourth, strengthening supervision in accordance with the law, Fifth, improve the three-dimensional accountability system. (Source: Official website of China Securities Regulatory Commission)

Lawyer's recommendation: The introduction of two guiding opinions is conducive to deepening the functions of the bond market, improving the quality and efficiency of bond market services, assisting the development of the real economy, and further promoting the high-quality development of the bond market.

6. The Association of Dealers issued the Notice on Further Strengthening the Standardization of the Issuance Business of the China Interbank Bond Market

On June 20, the China Association of Interbank Market Dealers issued the Notice on Further Strengthening the Standardization of the Issuance Business of the China Interbank Bond Market. The Notice requires that bond issuing participants are strictly prohibited from engaging in acts that violate fair competition, unfair Pay-to-play, and disrupt market order; The issuer shall not interfere with the issuance pricing through comprehensive business cooperation or violate the principles of marketization by illegally specifying the issuance interest rate (price); The issuer shall reasonably set underwriting agency comparison and selection scoring indicators, and the comparison and selection scoring indicators shall not be directly or indirectly linked to the issuance interest rate (price), nor shall they affect the market-oriented formation mechanism of the issuance price; Underwriting institutions shall prevent conflicts of interest between bond underwriting business and other businesses, and ensure the independent operation of bond underwriting business. The Notice also provides for bidding issuance, bookkeeping and filing issuance, underwriting business, and self-discipline management. (Source: Official website of the Dealers Association)

Lawyer's recommendation: The "Notice" demonstrates the determination of the Dealers Association to promote the standardization of the financial market, regulating all aspects involved in bond issuance, which is conducive to further improving the standardization level of bond issuance.

7. Shenzhen Stock Exchange improves the suitability management of convertible bond investors

On June 16th, the Shenzhen Stock Exchange issued a notice on improving the suitability management of investors in convertible corporate bonds, optimizing the regulations for investors, actual controllers of listed companies, and directors and supervisors of listed companies to participate in the subscription, trading, and transfer of convertible bonds. This notice mainly adds pre conditions for individual investors to participate in the buying and trading of convertible bonds issued to unspecified targets that are in the delisting and consolidation period and have not yet been delisted. Specifically, if an individual investor participates in the buying and trading of convertible bonds issued to unspecified targets that are in the delisting and consolidation period and have not yet been delisted, they should also meet the following conditions: firstly, the daily average assets in the securities account and fund account shall not be less than RMB 500000 (excluding the funds and securities that the investor has received through margin trading and securities lending) within the 20 trading days before applying for permission to open; The second is to participate in securities trading for more than 24 months. (Source: Securities Times)

Lawyer's recommendation: The "Notice" has set a consolidation period, improved the trading rules for delisted convertible bonds, and protected the legitimate interests of investors from a systemic perspective. To some extent, it also indicates the potential trend for the delisting or normalization of convertible bonds.

8. The offline net worth estimation function of multiple public fund direct sales platforms has been suspended

On June 15th, multiple public offering direct selling apps quietly discontinued the real-time estimation function of fund net worth, and several top third-party platforms still retain this function. It is reported that public fund companies and third-party platforms have received notifications from regulatory authorities requiring the real-time estimation function of funds to be offline in June. Before June 16th, the real-time estimation function of fund net worth in direct sales channels of fund companies may be offline; Before June 18th, third-party institutions will also take this feature offline. On June 15, from China Asset Management, Guangfa Fund, E Fund Management and other public fund companies, it was found that most platforms could not find the function of "net value estimation". Third party platforms are a different scene. After consulting the three platforms of Tiantian Fund, Ant Wealth, and Tencent Wealth Management, it was found that there is still a net worth estimation function available. (Source: "Usufruct Research" WeChat official account)

Lawyer's recommendation: It is understood that the real-time valuation function has been suspended mainly due to its misleading investment risks and compliance risks.

9. The State Administration of Taxation optimizes the application method for additional deduction of research and development expenses to help enterprises enjoy preferential treatment in advance

Recently, the State Taxation Administration issued the Announcement on Matters Related to Optimizing Prepayment Declaration and Enjoying the Plus Deduction Policy for R&D Expenses (hereinafter referred to as the Announcement), specifying that from 2023, eligible enterprises can declare and enjoy the plus deduction policy preference for R&D expenses in the first half of the year in the July declaration period. (Source: State Taxation Administration, China News Network)

Lawyer's recommendation: The R&D expense deduction policy is a special preferential policy that incentivizes enterprises to increase R&D investment, and is a type of corporate income tax based preferential treatment. Simply put, when calculating the taxable income of corporate income tax, the R&D expenses incurred by the enterprise can not only be deducted based on the actual amount of expenses, but also be deducted by a certain proportion before the corporate income tax, thereby achieving incentives and promotion for the enterprise's R&D behavior. The introduction of this optimization measure will "reduce and loosen the burden" for enterprises, especially for technology-based small and medium-sized enterprises and enterprises with tight capital chains.

10. Strengthening the Unified Big Market by "Managing Taxes with Numbers"

The "Golden Tax Phase IV" is a further upgrade of the Golden Tax Project, with a focus on promoting the electronic transformation of invoices, forming a "fully electronic invoice". This means that all processes such as invoice issuance, reimbursement, accounting, storage and archiving are electronic, and invoices are issued, delivered, and inspected in real time. If the focus of the "Golden Tax Phase III" is on networking, then the focus of the "Golden Tax Phase IV" is on going to the cloud and implementing full process supervision. It is expected to upgrade from the "ticket based tax control" in Phase III to "digital tax control", and connect non-tax business information to develop intelligent information processing mechanisms. The tax Big data can directly and indirectly reflect the flow of many factors of production in the investment and public service environment in the unified big market, as well as the transaction behavior of the Chinese side in resource allocation. It is also conducive to timely finding the blocking points and deviations in the factor flow, supply and demand cycle, so as to purposefully solve problems and promote high-quality development. (Source: Economic Daily)

Lawyer's recommendation: The "Golden Tax Project" has been upgraded and developed from phase to phase, so that tax Big data can gradually improve its function based on scientific and technological innovation achievements, and increasingly have the panoramic cognitive ability of "looking at the overall situation from the perspective of tax". Timely and convenient grasp and processing of specific perspectives and local relevant information under the panoramic view will effectively support macro governance, provide better services for enterprises and taxpayers, promote fine supervision and economic structure optimization, and improve comprehensive performance. Use tax Big data to strengthen the unified big market.

11. The basic formation of the "four beams and eight pillars" of smart taxation

Wang Jun, Director General of the State Taxation Administration, mentioned in his "New Contribution to Promoting Tax Modernization and Serving the Chinese path to modernization Development Bureau" that in recent years, the tax authorities have conscientiously implemented the Opinions on Further Deepening the Reform of Tax Collection and Management (hereinafter referred to as the "Opinions") issued by the Office of the People's Republic of China and the Office of the People's Republic of China, adhered to a long and continuous effort, and initially established a unified and standardized national electronic tax bureau and launched it as a pilot project, Steadily promoting comprehensive digital electronic invoices, the "four beams and eight pillars" of smart taxation have basically formed. (Source: State Taxation Administration)

Lawyer's recommendation: This is the latest update on the construction of smart tax in China. The construction of smart taxation will further facilitate taxpayers in handling and paying taxes, and will also vigorously and effectively investigate and punish tax violations. In the future, taxpayers need to handle taxes and pay taxes in accordance with the law, and tax compliance work is also urgent.

Overseas information

1. CIMA releases rules and guidance on corporate governance of regulated funds

On April 14, 2023, the Cayman Islands Monetary Authority (CIMA) published the "Corporate Governance Rules for Regulated Entities" (Rules) and the "Guidance Statement on Corporate Governance - Mutual and Private Equity Funds" (SoG) in the Cayman Gazette. The Rules will come into effect on October 14, 2023, and SoG will take effect immediately from April 14, 2023. (Source: waystone)

Lawyer's recommendation: Operators of regulated funds must be familiar with the rules and SoG to ensure robust and prudent governance of regulated funds.

2. Action Plan for the Cayman Islands to Meet the Financial Action Task Force on Money Laundering

The Cayman Islands have fully met the action plan proposed by the Financial Action Task Force (FATF), and as long as FATF successfully completes on-site inspections, the Cayman Islands are eligible to be removed from the FATF's list of countries monitoring deficiencies in their anti money laundering and counter-terrorism (AML/CFT) systems. (Source: mfs. ky&ogier)
Lawyer's recommendation: After the Cayman Islands are removed from the AML/CFT system defect list, it is expected that the EU will remove the Cayman Islands from the EU's "high-risk third country" list.