Monthly Archives: October 2015

The First Amendment to PRC ADVERTISING LAW

For legal in-house counsels working closely with their marketing / sales team, especially those working in Fortune 500s, advertisement law may be one of the most frequently used pieces of legislation. On 24 April, the Standing Committee of State Council of PRC has promulgated the first amendment to the PRC Advertisement Law, the first of its kind since 1995.

The amendment is extensive and deserves close attention during legal work for ordinary course of business including without limitation review of product claims, regulatory advice on industry such as healthcare, pharmaceutical, alcohol and tobacco, engagement with celebrities, online marketing / sales services contract, and so on.

Chinese “Deep Rock” Subordination of Shareholder Loan?

–A Brief Comment on Precednet Case Published by the PRC Supreme People’s Court (2015) regarding Shagang v. Kaitian

On 31 March, the PRC Supreme People’s Court (“SPC”) published 4 precedent cases with binding effect. Among others, the enforcement objection case between Shagang and Kaitian was considered the first PRC case borrowing the “Deep Rock Doctrine”, a U.S. equitable subordination doctrine well established in the Taylor v Standard Gas & Electric Company (1939) case holding that claims, as creditors, upon an insolvent subsidiary company by controlling shareholders or other insiders (such as managers or directors) shall be deemed to receive the same treatment as shares of stock owned by the said insider, and thus shall be subordinated to the claims of all other creditors.

The Chinese Case Law System

–A Brief Comment on Notice of the Supreme People’s Court on Issuing the Provisions on Case Guidance

It has been conventional wisdom that PRC is a codified and civil law jurisdiction where the cases already ruled by the court is not binding and precedent effect upon the later case. In that sense, legal practitioners can only rely upon the general and vague black and white statutes and thus give rise to unbridled judicial discretion for possible corruption.