The pilot work of the compliance reform of enterprises involved in the case has been quietly carried out from within the procuratorial organs, to a groundbreaking event in the practical and theoretical circles, triggering widespread attention and heated discussion from all walks of life in the society, and to the comprehensive promotion of the procuratorial organs throughout the country. A significant measure and system for equal protection of the legitimate rights and interests of enterprises has been formed. So, can enterprises, entrepreneurs, and relevant responsible persons involved in enterprise related crimes apply this reform system in order to obtain the treatment of non arrest, non prosecution, and probation? The answer is no, let's take a specific look.

1、 What is the corporate compliance involved?

1. The concept of corporate compliance involved

In recent years, in order to address the frequent occurrence of criminal cases in enterprises, entrepreneurs and business leaders have been investigated for criminal responsibility, which has led to the survival dilemma of enterprises, enhance corporate compliance awareness, reduce corporate crime rates, promote the healthy development of China's economy and society, and give full play to the procuratorial function to serve to ensure "six stability" and "six guarantees", China's procuratorial organs have promoted a major procuratorial work reform from top to bottom - the pilot reform of enterprise compliance.

Specifically, when the procuratorial organ makes a decision not to approve arrest or prosecute criminal cases involving enterprises in accordance with the law, or proposes a lighter punishment based on the system of pleading guilty and leniency, it also urges the enterprises involved to make compliance commitments and actively rectify and implement them based on the actual situation of the case, promoting the compliance and law-abiding operation of enterprises, reducing and preventing enterprise crimes, and achieving the political effect of judicial case handling The organic unity of legal and social effects.

2. The corporate compliance involved is different from corporate compliance

Corporate compliance and corporate compliance are closely related but significantly different concepts. Corporate compliance is mainly promoted or achieved through the enterprise itself, through government departments in charge, such as the finance and taxation department, the banking regulatory commission, the securities regulatory commission, market regulatory departments, as well as the Federation of Industry and Commerce, industry associations, and so on. They promote and achieve corporate compliance by fulfilling their respective responsibilities. Under the conditions of market economy, compliance is the foundation of business continuity and the cornerstone of sustainable development of enterprises. It is conducive to shaping the company's corporate culture, creating a good brand image and social image, and facilitating the company's risk management and control. Any enterprise should operate in compliance with regulations in order to achieve long-term stable development and avoid various legal risks. The compliance of enterprises involved in a case refers specifically to the procuratorial organ's handling of criminal cases, analyzing and summarizing the risks of illegal and criminal activities in the production, operation, management, and other activities of the enterprises involved, and urging the enterprises involved to improve relevant systems through procuratorial suggestions, carry out compliance rectification, achieve compliance management, and plug relevant institutional loopholes to prevent the recurrence of the same or similar illegal and criminal activities. The compliance of enterprises involved in cases by procuratorial organs is an important driving force for promoting enterprise compliance, promoting administrative supervision departments to strengthen supervision, and establishing a modern enterprise system.

2、 Evolution of compliance of enterprises involved

1. Originator

  Later, in order to create a legal business environment, the Supreme People's Procuratorate issued the "11 Judicial Standards for Regulating the Handling of Cases Involving Private Enterprises", which clarified the requirements of "prudently using mandatory measures such as sealing up, detaining, and freezing", "strictly reviewing whether the arrest conditions stipulated by law are met, and preventing the" arrest upon conviction "and" arrest upon conviction ", to equally protect private enterprises in accordance with the law. The "11 Judicial Standards for Law Enforcement" guide procuratorial organs at all levels in handling cases involving commercial crimes committed by private enterprises and their responsible persons, implementing the principle of "less arrest, cautious prosecution, and cautious custody", and reducing and avoiding the negative impact of case handling activities on the legitimate rights and interests of enterprises and their normal business activities.

In practice, the top procuratorial leadership further explicitly proposed that "for the responsible persons of private enterprises suspected of committing crimes, if they can not be arrested according to the law, if they can not be prosecuted, if they can not be sentenced to a real sentence, they should propose the application of probation and sentencing recommendations.". These policies have won the popularity of private entrepreneurs, but there are also many questions: "Is it fair to simply let go of illegal and criminal enterprises and to law-abiding enterprises?" In order to better implement the principle of equal protection and further optimize the business environment, The Supreme Court of Justice further considered "while implementing the system of less arrest, cautious prosecution, cautious custody, and lenient punishment through pleading guilty, promoting compliance management for the enterprises involved, and avoiding the enterprises involved from 'letting go' by setting up a compliance review period." It is necessary to treat the enterprises with both love and strict management! At this point, the compliance reform pilot of the enterprises involved emerged as the times require.

2. Start

In March 2020, the Supreme People's Procuratorate carried out the "reform of the applicable mechanism for relative non prosecution of corporate crimes" in six grassroots procuratorates, namely, the People's Procuratorate of Pudong New Area in Shanghai, the People's Procuratorate of Jinshan District in Shanghai, the People's Procuratorate of Zhangjiagang in Jiangsu Province, the People's Procuratorate of Bao'an District in Shenzhen City, the People's Procuratorate of Nanshan District in Shenzhen City, and the People's Procuratorate of Tancheng County in Linyi County, Shandong Province, to explore and promote the construction of corporate compliance. "When handling criminal cases involving enterprises, the pilot procuratorates are required to urge the enterprises involved to make compliance commitments and actively implement rectification measures to promote the compliance operation of enterprises, while not arresting or prosecuting those who meet the applicable conditions for the pilot enterprise compliance reform, or proposing mitigation of punishment, in accordance with the law.". By exploring how to further promote the compliance construction of enterprises, we can effectively promote private enterprises to establish a legal and compliant business bottom line, and protect the legitimate rights and interests of private enterprises and entrepreneurs with greater efforts.

3. Development

In April 2021, the Supreme People's Procuratorate issued the "Plan for Conducting the Pilot Work of Enterprise Compliance Reform", and launched the second batch of pilot projects. The provincial procuratorates of 10 provinces and municipalities, including Beijing, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Hunan, and Guangdong, independently identified 1 to 2 municipal procuratorates divided into districts and their subordinate grassroots institutions as pilot units based on local conditions, A total of 27 municipal procuratorates and 165 grassroots procuratorates were selected as pilots to steadily promote the pilot work of enterprise compliance reform. Later, it was made clear that non pilot regions could carry out corporate compliance related work within the legal framework based on local conditions.
In June 2021, nine departments including the Supreme Inspection Commission, the SASAC, the Ministry of Finance, and the All-China Federation of Industry and Commerce jointly issued the Guiding Opinions on Establishing a Third Party Supervision and Evaluation Mechanism for Compliance of Enterprises Involved in Cases (for Trial Implementation). In September, nine departments established a third-party monitoring and evaluation mechanism management committee. In December, a professional pool of third-party supervision and evaluation mechanisms at the national level was established. At the same time, the Supreme Court of Inspection has successively released 4 typical cases of corporate compliance in the first batch and 6 typical cases in the second batch of reform pilot projects.

4. Fully push away

On April 2, 2022, the Supreme Procuratorate and the All-China Federation of Industry and Commerce held a special meeting to officially announce the "official announcement" - the pilot compliance reform of enterprises involved in the case was fully launched by the national procuratorial organs. The top procuratorial leadership particularly emphasized the requirement that "county level procuratorates with conditions in principle should boldly explore and try to handle several corporate compliance reform cases this year.".

The pilot work of the compliance reform of enterprises involved in the case has been quietly carried out from within the procuratorial organs, to a groundbreaking event in the practical and theoretical circles, triggering widespread attention and heated discussion from all walks of life in the society, and to the comprehensive promotion of the procuratorial organs throughout the country. A significant measure and system for equal protection of the legitimate rights and interests of enterprises has been formed. So, can enterprises, entrepreneurs, and relevant responsible persons involved in enterprise related crimes apply this reform procedure in order to obtain the treatment of non arrest, non prosecution, and probation? Let's take a specific look.

3、 Scope of cases applicable to the compliance of the enterprises involved

Which enterprises and entrepreneurs are eligible to participate in the compliance of the enterprises involved?

On the positive side, the types of cases applicable to the compliance reform of enterprises involved include various types of criminal cases involving market entities such as companies and enterprises in their production and business activities, including both unit criminal cases committed by companies and enterprises, as well as criminal cases closely related to production and business activities committed by companies and enterprises' actual controllers, management personnel, and key technical personnel.
Whether it is a private enterprise or a state-owned enterprise, whether it is a small, medium-sized, or listed company, as long as the following conditions are met, in principle, they can participate in the compliance of the enterprise involved, and the third-party mechanism of the enterprise involved is applicable:

(1) The enterprise involved and the relevant responsible person plead guilty and accept punishment;

(2) The enterprise can operate normally;

(3) The occurrence of crimes due to institutional loopholes in enterprises;

(4) Commit to establishing or improving the corporate compliance system;

(5) Having the basic conditions for starting a third-party mechanism;

(6) Voluntary application.

2. Not all corporate related crimes can be subject to corporate compliance

On the contrary, it is not necessary to carry out corporate compliance work as long as it is a corporate crime. To carry out the compliance of enterprises involved in the case, certain conditions must be met, market laws must be followed, and the enterprises involved in the case should have protected public interests and values.
The procuratorial organ shall perform the leading responsibility for the application of the compliance of the enterprises involved in the case, and strictly control the procedure initiation and review. For example, in March 2022, the Beijing Municipal People's Procuratorate formulated and issued the "Guidelines for the Review of the Necessity of Compliance of Enterprises Involved in Cases (for Trial Implementation)", which stipulates that when handling criminal cases involving enterprises, the Beijing procuratorate should review whether the enterprise has the necessity to initiate the enterprise compliance process and make a decision on whether to initiate the enterprise compliance process, Focusing on the requirements of "enterprises and individuals involved in the case plead guilty and accept punishment", "enterprises involved in the case can operate normally", "enterprises involved in the case need to establish and improve rules and regulations due to loopholes in management systems", "enterprises involved in the case commit to establish or improve enterprise compliance systems, and voluntarily apply enterprise compliance procedures", more than 20 specific review standards are listed in detail, improving the "front-end" procedures for enterprise compliance involved in the case, Start the compliance process from the source. It is required to comprehensively and substantially evaluate the necessity and feasibility of carrying out compliance from aspects such as the business scale, business status, tax payment, employment accommodation, and development prospects of the enterprise. It is necessary to prevent both the application of compliance procedures to qualified enterprise related criminal cases and the application of compliance procedures to unqualified enterprise related criminal cases.

Specifically, the following types of corporate related crimes are not suitable for corporate compliance:

(1) "If an individual establishes a company or enterprise for the purpose of carrying out illegal or criminal activities, or if the main activity of the company or enterprise after its establishment is to commit a crime, such as a case of suspected infringement of intellectual property rights, the infringing product is the main business operated by the company and cannot be applied;";

(2) The rules and regulations of the enterprise itself have been relatively sound, and the suspected crimes have nothing to do with system loopholes, which are caused by occasional incidents or intentional violations;

(3) The business scale of the enterprise itself is very small, for example, with only a few people, and there is no need and value to carry out and implement a corporate compliance plan;

(4) The enterprise has been unable to operate normally and has no conditions to establish or improve the enterprise compliance system;

(5) The enterprise or relevant responsible person is unwilling to plead guilty and repent, and does not agree to the application of pleading guilty and punishment;

(6) Suspected of crimes endangering national security, terrorist activities, etc.

In addition, for enterprise related criminal cases in which the responsible person of the enterprise involved may be sentenced to fixed-term imprisonment of more than three years, as well as major, difficult and complex cases, the provincial procurators will conduct unified inspection and trial on a case by case basis, comprehensively and comprehensively evaluate the comprehensive factors such as the operating conditions of the enterprise involved, the criminal circumstances of the responsible person, and the admission of guilt and punishment, and actively and prudently apply them in accordance with the law.

Of course, the fact that the compliance procedures for the enterprises involved are not applicable does not mean that the enterprises and relevant responsible persons involved in the crime must not receive a reprieve. As long as there are circumstances where the punishment is mitigated, mitigated, or lenient in accordance with the provisions of the law, the corresponding reprieve can be obtained.

3. Applying the compliance procedures of the enterprise involved in the case does not necessarily lead to a final non litigation settlement

After going through the "start-up stage" of the procuratorial organ and applying the compliance procedures of the enterprises involved and the relevant responsible persons, only by "true compliance" and "true rectification", and withstanding the "true supervision" and "true evaluation" of the third-party supervision and evaluation mechanism, can the corresponding non prosecution treatment be obtained. Compliance will not become an unconditional "exemption gold medal". If you want to muddle through with "paper compliance" or "false rectification" in order to evade criminal accountability, you still need to file a public prosecution in accordance with the law. For example, in the case of a mining company and its responsible person illegally occupying agricultural land, the third-party supervision and evaluation organization comprehensively gave the results of the compliance review as "unqualified" in response to the situation that the enterprise involved had an impure motivation to apply for compliance supervision, pleaded guilty falsely, and failed to take the initiative to rectify. After that, the procuratorial organ filed a public prosecution in accordance with the law.

In addition, the Supreme Court of Justice has pointed out that it is necessary to abandon the tendency of "conducting compliance means not prosecuting", and has repeatedly emphasized that compliance work can be carried out in both non prosecution and public prosecution cases, especially in cases where the statutory penalty is more than three years of imprisonment. Carrying out compliance does not necessarily mean that enterprises and their responsible persons will not be prosecuted.
In short, the compliance of enterprises involved in the case is a major reform measure taken by the procuratorial organ to "love" and "strictly control" enterprises, releasing reform dividends to enterprises involved in the crime. Qualified enterprises should seize the opportunity to strive for non prosecution or other lenient treatment through the construction and rectification of compliance. Enterprises that are not involved in crimes should also carry out the construction of a compliance system as soon as possible, which not only can standardize the operation of enterprises and improve their competitiveness, but also is an important measure to prevent risks, prepare for a rainy day, and seek a first mover advantage.