2024 WLG Whistleblower Guide: China
Is there a law to protect whistleblowers? If so, which law?
So far, there is no overarching legislation protecting whistleblowers. However, laws and regulations containing provisions affording protection for whistleblowers exist. Examples of such laws and regulations include the Civil Code of PRC, the Criminal Law of PRC (Crime of Infringement upon Citizens' Personal Information), and the Personal Information Protection Law of PRC. Improper disclosure of whistleblower information may incur civil, administrative, and criminal liabilities.
Are companies legally obliged to introduce a whistleblowing system?
Centrally administered enterprises and listed companies are obliged to introduce a whistleblowing system under the Measures for Compliance Management of Centrally Administered Enterprises and the Basic Standards for Internal Control of Enterprises. In addition, non-listed large and medium enterprises are recommended to do so.
If so, which companies must introduce a whistleblowing system (number of employees, turnover, sector)?
See the answer to Question 2 above.
What forms can a whistleblowing system take (written, verbal, email, electronic tool)?
As stated in the Measures for Compliance Management of Centrally Administered Enterprises mentioned above, a platform for whistleblowing should be established, and a telephone number, email, or address should be announced.
Which reports must be permitted?
There are no legal requirements on reports that must be permitted. False accusations may incur civil and criminal liabilities.
Must anonymous reporting be guaranteed?
As set out in Question 1 above, there are legislations protecting the identity of whistleblowers. However, such protection may not be absolute. For instance, disclosure of whistleblower information may be required in certain legal proceedings or where national security or significant public safety interests are at stake.
Who must be able to provide information (only employees or also external third parties)?
As indicated in the Constitution of PRC and the Criminal Procedure Law of PRC, any entity or individual has the right to report illegal actions. In addition, under the Guidelines for Enterprises on the Compliance Management of Overseas Operations, employees, clients, and third parties are entitled to report.
Can companies rely on one centralized hotline, or is it necessary to have one hotline for each subsidiary?
As set out in Question 4, a platform should be established in a centrally administered enterprise. The Guidelines for Enterprises on the Compliance Management of Overseas Operations further illustrate that the reporting system should be established based on the companies' characteristics and conditions.
Can a whistleblowing system also be operated by an external body (e.g. consultant)?
There is no prohibition against appointing an external body to operate a whistleblowing system. In addition, Discipline Inspection Committees and Supervisory Committees play a crucial role in PRC's anti-corruption system. As external bodies, they collect reports and protect whistleblowers.
Are sanctions imposed for failure to introduce a whistleblowing system?
As set out in Question 2, Centrally administered enterprises are required to introduce a whistleblowing system. Failure to do so breaches the Measures for Compliance Management of Centrally Administered Enterprises. The State-owned Assets Supervision and Administration Commission of the State Council will pursue the liability if it leads to an illegal act and results in loss or adverse impact.
Is there a law to protect whistleblowers? If so, which law?
So far, there is no overarching legislation protecting whistleblowers. However, laws and regulations containing provisions affording protection for whistleblowers exist. Examples of such laws and regulations include the Civil Code of PRC, the Criminal Law of PRC (Crime of Infringement upon Citizens' Personal Information), and the Personal Information Protection Law of PRC. Improper disclosure of whistleblower information may incur civil, administrative, and criminal liabilities.
Are companies legally obliged to introduce a whistleblowing system?
Centrally administered enterprises and listed companies are obliged to introduce a whistleblowing system under the Measures for Compliance Management of Centrally Administered Enterprises and the Basic Standards for Internal Control of Enterprises. In addition, non-listed large and medium enterprises are recommended to do so.
If so, which companies must introduce a whistleblowing system (number of employees, turnover, sector)?
See the answer to Question 2 above.
What forms can a whistleblowing system take (written, verbal, email, electronic tool)?
What forms can a whistleblowing system take (written, verbal, email, electronic tool)?
As stated in the Measures for Compliance Management of Centrally Administered Enterprises mentioned above, a platform for whistleblowing should be established, and a telephone number, email, or address should be announced.
Which reports must be permitted?
There are no legal requirements on reports that must be permitted. False accusations may incur civil and criminal liabilities.
Must anonymous reporting be guaranteed?
As set out in Question 1 above, there are legislations protecting the identity of whistleblowers. However, such protection may not be absolute. For instance, disclosure of whistleblower information may be required in certain legal proceedings or where national security or significant public safety interests are at stake.
Who must be able to provide information (only employees or also external third parties)?
As indicated in the Constitution of PRC and the Criminal Procedure Law of PRC, any entity or individual has the right to report illegal actions. In addition, under the Guidelines for Enterprises on the Compliance Management of Overseas Operations, employees, clients, and third parties are entitled to report.
Can companies rely on one centralized hotline, or is it necessary to have one hotline for each subsidiary?
As set out in Question 4, a platform should be established in a centrally administered enterprise. The Guidelines for Enterprises on the Compliance Management of Overseas Operations further illustrate that the reporting system should be established based on the companies' characteristics and conditions.
Can a whistleblowing system also be operated by an external body (e.g. consultant)?
There is no prohibition against appointing an external body to operate a whistleblowing system. In addition, Discipline Inspection Committees and Supervisory Committees play a crucial role in PRC's anti-corruption system. As external bodies, they collect reports and protect whistleblowers.
Are sanctions imposed for failure to introduce a whistleblowing system?
As set out in Question 2, Centrally administered enterprises are required to introduce a whistleblowing system. Failure to do so breaches the Measures for Compliance Management of Centrally Administered Enterprises. The State-owned Assets Supervision and Administration Commission of the State Council will pursue the liability if it leads to an illegal act and results in loss or adverse impact.