LVP Newsletter - Mar 2018

1.Information Security Technology – Personal Information Security Specification (the “Specification”) was promulgated on 29th December 2017 and will become effective on 1st May 2018.

Apart from the definitions of personal information, personal sensitive information, etc., the Specification also provides detailed specification for protection of personal information in respect of collection (e.g. consent and explicit consent should be obtained for collection of personal information and personal sensitive information respectively), storage (e.g. de-identification measures), use (e.g. measures to control access to personal information), handling by a third party, transfer, disclosure, etc.

The Specification falls into the category of recommended standards, i.e. no compulsory enforcement is required. However the Specification provides guidelines for protection of personal information. What worth noting is that the Specification has partially taken reference to the EU General Data Protection Regulation (GDPR) but is, in some aspect, more detailed or restrictive than GDPR. Thus, for those enterprises, multinationals in particular, that will collect personal information of customers, the Specification may be taken as the reference for establishment or improvement of the personal information protection policy.  

2.On 23rd February 2018, the Supreme People’s Court released three judicial interpretations on compulsory enforcement, i.e. Provisions of the Supreme People’s Court on Several Problems regarding Settlement in Enforcement (“Provisions on Settlement in Enforcement”), Provisions of Supreme People’s Court on Several Problems regarding Guarantee in Enforcement (“Provisions on Guarantee in Enforcement”) and Provisions of Supreme People’s Court on Enforcement of Arbitral Awards (“Provisions on Enforcement of Arbitral Awards”), all of which became effective on 1st March 2018.

Provisions on Settlement in Enforcement principally regulates the procedures for settlement in enforcement, suspension of enforcement and resumption of enforcement.

Provisions on Guarantee in Enforcement provides the conditions for provision of guarantee (e.g. the consent of the enforcement applicant should be obtained), the special requirements on the companies providing guarantee (e.g. the relevant Articles of Association and the Board/Shareholders Resolution/Resolutions of Shareholders’ meeting should be provided), the term for suspension of enforcement (i.e. maximum one year), etc.

Provisions on Enforcement of Arbitral Awards expands the scope of the courts for enforcement of arbitral awards (e.g. some district courts may be appointed for enforcement of arbitral awards), provides the rights of and requirements on the party who is not a party to the case for application for refusal of enforcement of arbitral awards, and also stipulates the time limit for application for refusal of enforcement of arbitral awards (usually within 15 days after receipt of notice of enforcement).

We believe that the problem of “difficulties in enforcement ” will be further resolved by enforcement of the above three judicial interpretations.

3.Interim Measures on Recordal (Approval) of Outbound Investment (the “Interim Measures”) was issued and enforced on 18th January 2018, which further regulates the procedures for recordal (approval) and reporting of outbound investment by PRC companies .

PRC companies should submit the relevant information and documents to the relevant authorities for recordal or approval (e.g. sensitive countries and areas, sensitive industries) of outbound investment before the PRC companies can set up (including by way of merger, acquisition and others) overseas companies. An overseas company refers to a company set up in the ultimate place where the outbound investment made by the PRC company is actually used for project construction or continuing manufacturing or business operation.  

The PRC companies with outbound investment should report the information of critical part of outbound investment to the relevant authorities regularly.

Some outbound investment, e.g. the outbound investment where the investment of the PRC party is equivalent to USD300M or more, outbound investment in sensitive countries (areas) or sensitive industries, outbound investment suffering significant loss, will be subject to the special supervision by the relevant authorities.