【Copyright Notice】The copyright belongs to the original author, only for learning and reference, it is forbidden to use it for commercial purposes, if the source is marked incorrectly or violates your rights and interests, please inform us, we will delete it immediately. Source: Procuratorate Daily, page 3, March 27, 2024. Author: Wang Yingxin, Deputy Procurator General, People's Procuratorate of Qinhuai District, Nanjing, Jiangsu Province; Liu Xun is the deputy director of the Fifth Procuratorate Department of the People's Procuratorate of Qinhuai District, Nanjing, Jiangsu Province.
Amendment (12) to the Criminal Law, which came into effect on March 1, 2024, amends the crime of illegally operating similar businesses, expands the subject of the crime from "directors and managers" to "directors, supervisors and senior managers", and adds a new clause that "if the directors, supervisors and senior managers of other companies or enterprises violate the provisions of laws and administrative regulations and carry out the acts described in the preceding paragraph, resulting in major losses to the interests of the company or enterprise, they shall be punished in accordance with the provisions of the preceding paragraph", which further strengthens the equal protection of private enterprises. In the author's opinion, in judicial practice, the following four aspects should be paid attention to when determining the "same type of business" in this crime:
The violation of the non-compete obligation of the pre-existing law is the premise for the "same kind of business" to constitute a crime. As a new crime added to the Criminal Law in 1997, the crime of illegally operating the same type of business is a concrete embodiment of the non-compete obligation of corporate executives under the Company Law in the Criminal Law. As a specific person who grasps the company's core information and has the company's management and decision-making power, while enjoying the company's operating profits, he also has the obligation of non-competition to prohibit engaging in business that conflicts with the interests of the company. It is a typical criminal act of breach of trust that violates the duty of loyalty to the company to alienate the authority entrusted by the company for business development into a tool for grabbing illegal benefits, undermining the normal operation and management order of the company and harming the interests of the company. Therefore, when applying the crime, the judiciary should first consider whether the act violates the provisions of the Company Law and other provisions, that is, whether the act is "illegal" under the administrative precedent law. Although the 12th Amendment to the Criminal Law only stipulates in Article 165, Paragraph 2 of the crime of private enterprise personnel that the perpetrator needs to "violate the provisions of laws and administrative regulations" and other constituent elements, of course, this constituent element is equally applicable to state-owned companies and enterprises, because according to the Company Law and other provisions, the "same kind of business" with the consent of the company's shareholders' meeting and board of directors is a kind of exercise of autonomy by the company, and it should not be punished as a crime in accordance with the principle of unity of law and order. In addition, the Company Law and other precedent laws also stipulate that the directors, supervisors and senior managers of the company shall not open accounts in the name of individuals to store the company's funds, disclose company secrets without authorization, directly or indirectly enter into contracts and transactions with the company, and other duties of diligence and loyalty to the company, but the criminal law only recognizes the "similar business" behavior that is more harmful to society as a crime, and special attention should be paid to distinguishing the criminal offense of "similar business" from the breach of trust in the precedent law such as "entering into contracts and transactions with the company in violation of regulations" in judicial practiceAlthough the latter also has a certain moral hazard, if the act does not form a "similar business" competition relationship with the company, it is more appropriate to uphold the modesty of criminal law and hand over such acts to the company law and other civil and commercial pre-emptive laws.
The standard for determining "similar business" should be based on the "sub-category" in the Industrial Classification of the National Economy. According to paragraph 2 of Article 14 of the Regulations on the Administration of Registration of Market Entities, market entities shall register their business scope in accordance with the classification standards for business projects published by the registration authorities. Article 9 of the Provisions on the Administration of Registration of Enterprise Names also stipulates that the industry or business characteristics in the name of an enterprise shall be indicated in accordance with the classification standards for the main business of the enterprise and the national economy. Where there are no provisions in the national economic industry classification standards, industry customs or professional literature may be referred to. The national standard of the Industrial Classification of the National Economy (GB/T 4754-2017) uses the principle of homogeneity to divide industry categories, and divides the mainland's social and economic activities into four levels: category, large category, medium category and small category, including a total of 20 categories such as manufacturing, wholesale and retail trade, as well as 97 major categories, 473 medium categories and 1382 sub-categories after industry subdivision. Therefore, in order to better distinguish this type of criminal conduct from violations of discipline and law such as illegal part-time employment for remuneration and running a business, the judicial determination of "similar business" should also be based on the basic principle of whether the business scope of the actor concurrently runs the company and the company in which he works belongs to the same category in the "sub-category" of the "National Economic Industry Classification", and takes into account the product classification and the specific facts of the case.
The manifestations of "similar business" include both horizontal competition and vertical competition that partially harms the interests of the company. An important purpose of the establishment of the crime of illegal operation of the same type of business is to prevent the company's executives from using their power to form unfair competition with the company, and then to protect the company's interests. In a broad sense, the market operation behavior carried out by the company to obtain commercial benefits includes not only the production and manufacturing of goods (services) itself, but also the business activities related to the transportation, warehousing, wholesale and retail of goods (services) with upstream and downstream vertical links. The fact that the perpetrator is concurrently running a company and the company where he works produces or provides the same kind of goods (services) that are consistent in terms of product functions, types, uses, etc., and the two form a horizontal parallel competition relationship in which they compete for customer resources and trading opportunities, is a typical external manifestation of this crime. However, as this type of crime is a highly professional crime committed by the company's senior management, the above-mentioned situations rarely occur in practice, and in order to avoid risk punishment, the perpetrator often chooses to covertly carry out the corresponding acts in the related party transaction link that has an upstream and downstream relationship with the company's goods (services). Therefore, some vertical competition behaviors that conflict with or damage the interests of the company they work for should also be a manifestation of "similar business" behavior.
The determination of the specific scope of "similar business" shall be limited to the actual business scope of the company where the actor works. The business scope is the business scope of the business activities of the enterprise, which includes or reflects the company's industry or business characteristics. With the social and economic development and the transformation and upgrading of the industrial structure, the company's business scope is becoming more and more extensive, especially with the increase of new business forms and cross-industry operating companies, sometimes the actual business scope of the company is inconsistent with the registration scope, which brings certain troubles to the identification of "similar business". In the author's opinion, at this time, it is necessary to focus on the actual business scope of the company where the actor works, and make a substantive judgment on whether the actor's concurrent company and the company for which the actor works have formed a competition or conflict of interest. In addition, the manifestation of "similar business" includes both the same and some identical business scopes, and if the actor is a concurrent company and a company in which he works for both have the business scope of multiple industries, the two can still constitute the crime within the business scope of the intersecting or overlapping part of the industry, and the illegal profits such as that part of the actor's business profits should still be "owned by the company" in accordance with the provisions of the Company Law. On the other hand, if the company where the actor works is registered with a variety of business scopes, but in fact only engages in business activities in some of the industries, and the actor carries out concurrent business outside of them, because the "similar business" acts only overlap in form with the business scope of the company in which the actor works, and will not cause harm to the interests of the company in substance, it is not appropriate to be punished as this crime.
Transferred from Criminal Defense Network