LETTER OF THE LAW

Conducting due diligence is getting easier on mainland

PUBLISHED : Tuesday, 19 May, 2015, 2:45am
UPDATED : Tuesday, 19 May, 2015, 2:45am

Hong Kong businesses are increasingly finding themselves doing business with mainland companies and individuals and finding themselves required to "know their mainland customers" via a quick background check.

Although overall transparency on the mainland remains limited, it has improved since the State Council adopted Regulations on Open Government Information (OGI), and particularly since the Communist Party Central Committee held its third and fourth plenums.

The mainland government is making some "big data" available online, so it is easier to do some basic due diligence, free of charge and from your smartphone or computer. Knowledge of Chinese is required because English information is either incomplete or not available at all. Below is a list of some useful websites:

Company registry (mainland version)

The mainland version of the company registry, the State Administration for Industry and Commerce (SAIC) - www.saic.gov.cn - has a platform through which local company registries can be accessed. With details such as a company's location, it is possible to check whether a company is in good standing or on a government watch list. The Shenzhen version of the SAIC can be accessed through the Market and Quality Supervision Commission of Shenzhen - www.szscjg.gov.cn The databases are in Chinese only.

Who is a judgment debtor?

The mainland's highest court, the Supreme People's Court has created a database - shixin.court.gov.cn - that enables checks on whether a business or individual has failed to pay a court judgment. This includes any orders issued by a mainland court to enforce an arbitral award. A quick check reveals that some Hong Kong companies are on the list. This database is in Chinese only.

Securities regulator

To find out whether a person or company holds qualifications (or operating permits) to engage in the securities, funds or futures industry, the Chinese website of the China Securities Regulatory Commission (CSRC) - www.csrc.gov.cn - is key. It lists approvals of senior management of securities, funds and futures companies, and the companies themselves, as well as penalty decisions, including market entry bans imposed on both individuals and companies. The English version lists some penalty decisions, though they are several years out of date and cannot be relied upon.

Insurance regulator

China Insurance Regulatory Commission (CIRC) - www.circ.gov.cn - has an online registry with useful information, including registration of insurance companies, agencies, agents and penalty decisions relating to all of these. These are only in Chinese, although some information relates to major international companies.

Other regulators

Each regulator has its own registry and announcements to the public. Quite a bit of digging may be necessary to find information about recalled food products or penalty decisions concerning drug manufacturers, on the website of the China Food and Drug Administration (CFDA) - www.cfda.gov.cn

A platform for Hong Kong users?

All these websites, plus ones publishing draft legislation, could be useful to Hong Kong people doing business or exploring opportunities in Hong Kong. Perhaps one of the newly-formed think tanks could consider funding a chance for local young people to launch a "one-stop shop" website, encompassing all these links.

Susan Finder is a visiting fellow of the Centre for Chinese Law at HKU and the author of the Supreme People's Court Monitor.