Memorandum of Understanding on Carrying Out Joint Punishments Against Entities with Serious Illegal Untrustworthiness in the Government Procurement Sector

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The following Opinions on efforts to Carry Out Joint Punishments Against Entities with Serious Illegal Untrustworthiness in the Government Procurement Sector are hereby given so as to implement the spirit of the 19th Party Congress and its second and third plenary sessions, with Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as its guide, to implement the requirements of the "State Council Notice on the Issue of the Planning Outline for the Establishment of a Social Credit System (2014-2020)" (Guofa (2014) No. 21), the "State Council Guiding Opinion on Establishing and Improving a system of Joint Rewards for Trustworthiness and Joint Disciplinary Action Against Untrustworthiness to Accelerate the Establishment of Societal Creditworthiness" (Guoafa (2016) No.33), and the "National Development and Reform Commission and People's Bank of China Guiding Opinion on Strengthening and Regulating Efforts on the Management of Joint Rewards for the Trustworthy and Joint Disciplinary Action for Untrustworthy Blacklist Targets" (FaGaiCaiJinGui(2017) No.1798) and other such documents, and accelerate the establishment of a credit system in the field of government procurement, and establish and complete mechanisms for joint punishment, and it has been agreed upon by the National Development and Reform Commission, People's Bank of China, Ministry of Finance, Organization Department of the CPCC, State Commission Office for Public Sector Reform, Civilization Office of the CPCC, State Internet Information Office, Ministry of Science and Technology, Ministry of Industry and Information, Ministry of Human Resources and Social Security, Ministry of Natural Resources, Ministry of Ecology and the Environment, Ministry of Housing and Urban and Rural Development, Ministry of Transport, Ministry of Water Resources, Ministry of Commerce, State-owned Assets Supervision and Administration Commission, General Customs Administration, State Administration of Taxation, State Administration for Market Regulation, International Development and Cooperation Agency, Banking Insurance Regulatory Commission, Securities Regulatory Commission, Civil Aviation Administration, Foreign Exchange Bureau, All-China Federation of Labor Union, Communist Youth League Central Committee, National Women's Federation, and China Railway Corporation.

I. The targets of joint disciplinary action

The targets of joint disciplinary action primary refers to parties in government procurement that violate the "Government Procurement Law" as well as other laws, regulations, rules and normative documents in business activities in the government procurement sector, go against the principle of good faith [honesty and credit] and have been lawfully designated by the departments for the administration of government procurement as having serious illegal untrustworthy conduct; including (1) suppliers and representative bodies in government procurement as well as the persons who are directly in charge and other responsible persons; and (2) government procurement assessment experts (hereinafter collectively referred to as 'entities responsible for untrustworthiness').

II. Methods for Carrying out Information Sharing and Joint Punishment

The Ministry of Finance is to go through the national credit information sharing platform to provide information on entities responsible for untrustworthiness to the other unit signatories to this memorandum, and follow relevant provisions to actively update it. Other units are to obtain infromation on entities responsible for untrustworthiness from the national credit information sharing platform and make it an important consideration in lawfully performing their duties, and implement joint disciplinary action against entities responsible for untrustworthiness in accordance with the agreed upon content of this MOU and in accordance with laws and regulations. Each unit is to follow the relevant provisions to employ one or more of the following penalty measures against entities responsible for untrustworthiness:

III. Joint Discipline Measures

Each unit is to follow the relevant provisions to employ one or more of the following penalty measures against entities responsible for untrustworthiness:

(1) Lawfully restrict their obtaining government subsidies and social security funding supports.

Lawfully restrict entities responsible for untrustworthiness' applications for government subsidies and social security funding supports.

Implementing Units: The Ministry of Finance, National Development and Reform Commission, Ministry of Human Resources and Social Security, State-owned Assets Supervision and Administration Commission, the International Development and Cooperation Agency, et al.

(2) Lawfully restrict participation in bidding activities for government financed construction projects.

Lawfully restrict entities responsible for untrustworthiness' participation in bidding activities for government financed construction projects.

Implementing Units: National Development and Reform Commission, Ministry of Industry and Information, Ministry of Housing and Urban and Rural Development, Ministry of Transport, Ministry of Water Resources, Ministry of Commerce, International Development and Cooperation Agency, Civil Aviation Administration, China Railways Corporation)

(3) Lawfully restrict the obtaining of government provided lands.

Lawfully restrict or prohibit entities responsible for untrustworthiness from obtaining government provided lands. Implementing Units: Department of Natural Resources

(4) Lawfully restrict the obtaining of qualifications as an authentication organization and authentication certificates

Lawfully restrict entities responsible for untrustworthiness from obtaining qualifications as an authentication body and from obtaining authentication certificates. Implementing Units: State Administration for Market Regulation

(5) Lawfully restrict participation in infrastructure and public utility concessions.

Lawfully restrict entities responsible for untrustworthiness' participation in infrastructure and public utility concessions. Implementing Units: National Development and Reform Commission, Ministry of Finance Ministry of Housing and Urban and Rural Development, Ministry of Transport, and the Ministry of Water Resources.

(6) Consider in the approvals of the establishment of securities companies, fund management companies, or futures companies

Make entities responsible for untrustworthiness' records of illegal untrustworthiness a consideration in approvals or recording of modifications to securities companies', fund management companies', or futures companies'establishment, equity rights, and actual controller, or private investment fund managers registration, modification of major matter, and other fund recording.

Implementing Units: Securities Regulatory Commission

(7) Consider in the review and approval of establishment of banks, bank branches, or representative offices

Lawfully make entities responsible for untrustworthiness' records of illegal untrustworthiness be a consideration in review and approvals of applications for the establishment of commercial banks, bank branches, or representative offices. Implementing Units: The Banking Insurance Regulatory Commission

(8) Consider in reveiw and approval of insurance companies

Make entities responsible for untrustworthiness' records of illegal untrustworthiness a consideration in approvals or recording of modifications of insurance companies' equity rights, and actual controllers.

Implementing Units: The Banking Insurance Regulatory Commission

(9) Not accepting applications to issue corporate bonds.

Do not accept applications of entities responsible for untrustworthiness to issue corporate bonds. Implementing Units: The National Development and Reform Commission

(10) Strengthen management of registration of non-financial corporate debt financing tools

When registering non-financial corporate debt financing tools, strengthen management and follow the work requirements for registered issued to strengthen information disclosure, strengthen mechanisms for investor protection management, preventing relevant risks.

Implementing Units: People's Bank of China

(11) Lawfully consider in approving or recording corporate bonds

Make entities responsible for untrustworthiness' records of illegal untrustworthiness a consideration in approvals or recording of corporate bonds.

Implementing Units: Securities Regulatory Commission

(12) Make information on the untrustworthiness of punishment targets a consideration in reviewing the issuance of stocks and transferable securities and in the medium and small-sized enterprises stock transfer system public review of transfers.

Lawfully make entities responsible for untrustworthiness' illegal untrustworthy conduct a consideration in reviewing the issuance of stocks and transferable securities and in the medium and small-sized enterprises stock transfer system public review of transfers. Implementing Units: Securities Regulatory Commission

(13) Consider in oversight and management during and after the fact of a domestic listed company's implementation of an equity incentive plan or making relevant personnel equity incentive recipients.

Make entities responsible for untrustworthiness' illegal untrustworthy conduct a consideration in oversight and management during and after the fact of a domestic listed company's implementation of an equity incentive plan or making relevant personnel equity incentive recipients.

Implementing Units: Securities Regulatory Commission

(14) Pay key attention in supervision both during and after the event in acquisitions by listed companies or unlisted public companies.

Pay key attention to entities responsible for untrustworthiness in the supervision during and after the event in acquisitions by listed companies or unlisted public companies.

Implementing Units: Securities Regulatory Commission

(15) Strictly review applications for eligibility to engage in securities, funds, or futures operations, and give key scrutiny to entities related persons engaged in securities, funds, or futures operations.

Applications for eligibility to engage in securities, funds, or futures operations from relevant entities that have records of untrustworthiness are to be strictly reviewed, and where they are already an entity related to persons engaged in securities, funds, or futures operations, they are to be given key scrutiny.

Implementing Units: Securities Regulatory Commission

(16) Consideration in the review of major asset reorganizations of unlisted public companies.

Lawfully make information on untrustworthiness a consideration in review of major asset reorganizations of non-listed public companies.

Implementing Units: Securities Regulatory Commission

(17) Consideration in the approval of independent fund sales establishments.

Lawfully make information on untrustworthiness a consideration in the approval of independent fund sales establishments. Implementing Units: Securities Regulatory Commission

(18) Restrict engagement in internet information services, and strictly review applications for telecommunications operation business permits.

Lawfully restrict entities responsible for untrustworthiness' engagement in internet information services, strictly review applications for telecommunications operation business permits.

Implementing Units: Ministry of Industry and Information Technology

(19) Consideration in financial institutions credit financing

Make entities responsible for untrustworthiness' records of illegal untrustworthiness an important consideration in evaluating credit extension, credit financing, management, and expulsion.

Implementing Units: People's Bank of China, China Banking Insurance Regulatory Commission

(20) Strengthening routine oversight, management, and inspection

Giving units related to entities responsible for untrustworthiness may be considered in work such as market oversight and on-site inspections, increasing the strength of routine oversight, and following relevant provisions to raise the ration and frequency of random inspections and announcing inspection results to the public.

Implementing Units: All relevant units

(21) Lawfully restrict service as the legal representative, director, or supervisor of state-owned enterprises

Where the entities responsible for untrustworthiness are individuals, lawfully restrict their registration as the legal representatives of public institutions.

Implementing Units: Organization Department of the CPCC, State-owned Assets Supervision and Administration Commission, Ministry of Finance, State Administration for Market Regulation, and so forth

(22) Lawfully restrict registration as the legal representatives of public institutions

Where the entities responsible for untrustworthiness are individuals, lawfully restrict their registration as the legal representatives of public institutions. Where the entities responsible for untrustworthiness are institutions, the legal representatives of those institutions are to be lawfully restricted from registering as the legal representatives of public institutions.

Implementing Units: State Commission Office for Public Sector Reform

(23) Lawfully restrict service as the director, supervisor, or senior management of financial institutions

Where the entities responsible for untrustworthiness are individuals, lawfully restrict their registration as the legal representatives of public institutions. Where they already so serve, lawfully issue an opinion that they no longer serve in the relevant position.

Implementing Units: Organization Department of the CPCC, Banking Insurance Regulatory Commission, Securities Regulatory Commission, Ministry of Finance, State Administration for Market Regulation, et al.

(24) Consideration in recruitment (hiring) as civil servants or public institution staff.

Where the entities responsi ble for untrustworthiness are natural persons, make their record of illegal untrustworthiness a major consideration in their recruitment (hiring) as civil servants or public institution staff.

Implementing Units: Organization Department of the CPCC, Ministry of Human Resources and Social Security

(25) Lawfully restrict their participation in selection as outstanding or excellent and their obtaining honorific titles

Lawfully restrict entities responsible for untrustworthiness' participation in selection as outstanding or excellent and the receipt of honorific titles; where they have already received honorific titles, they may be lawfully revoked.

Implementing Units: Civilization Office of the CPCC, All-China Federation of Labor Unions, Communist Youth League Central Committee, and the All-China Women's Federation

(26) Prudential consideration in taxation credit management

In tax credit management of entities responsible for untrustworthiness, lawfully make their untrustworthy conduct a prudential consideration and basis in the collection and assessment of their credit information.

Implementing Units: State Administration of Taxation

(27) Provide as prudential consideration when examining, approving, and managing foreign exchange services

Lawfully make information on untrustworthiness by entities responsible for untrustworthiness' a basis of careful consideration in the examination and approval of foreign investment, and in management of investment amounts for qualified foreign institutional investors and domestic institutional investors.

Implementing Units: Foreign Exchange Bureau

(28) Lawfully restrict becoming customs certified enterprises

Where entities responsible for untrustworthiness apply for customs verified enterprise management, verification is not to be given; for those who have already become verified enterprises, lower their enterprise credit level in accordance with provisions.

Implementing Units: General Customs Administration

(29) Expand the extent of oversight of import and export goods

When entities responsible for untrustworthiness apply to handle related customs business, carry out strict supervision of the goods they export or import, strengthen market control inspections, and subsequent audits or statistical oversight.

Implementing Units: General Customs Administration

(30) Consideration of lawfully restricting rights and interests in collecting fees for public roads.

Lawfully make entities responsible for untrustworthiness' records of illegal untrustworthiness a consideration in granting rights for collection of fees on public roads.

Implementing Units: Ministry of Transport

(31) Temporarily suspend approvals of relevant scientific programs

Lawfully restrict approvals of new science and technology support programs, include their serious untrustworthy conduct in their scientific research credit record, and, on the basis of relevant provisions, suspend review and of their new science and technology program funding reports.

Implementing Units: Ministry of Science and Technology

(32) Strictly and prudently review environment impact assessments of new restructuring and expansion programs for approval.

Lawfully make entities responsible for untrustworthiness' records of illegal untrustworthiness a consideration in reviewing environment impact assessments of new restructuring and expansion programs for approval.

Implementing Units: Ministry of Ecology and the Environment

(33) Consideration in restricting distribution of import tariff quotas

Lawfully make information on the untrustworthiness of entities responsible for untrustworthiness a consideration in the distribution of tariffs on relevant goods.

Implementing Units: Ministry of Commerce, National Development and Reform Commission

(34) Disclosure to the public through the "Credit China" website, the China government procurement network, the national enterprise credit information disclosure system, and other primary news websites

Lawfully disclose information on the untrustworthiness of entities responsible for untrustworthiness to the public through the "Credit China" website, the China government procurement network, the national enterprise credit information disclosure system, and concurrently coordinate with Internet news information service to disclose it to the public.

Implementing Units: The National Development and Reform Commission, Ministry of Finance, State Administration for Market Regulation, State Internet Information Office

IV. Dynamic Management of Joint Disciplinary Action Measure Information

When the Ministry of Finance provides information on the untrustworthiness of entities responsible for untrustworthiness, it should note the date on which the decision was made and the period of enforcement, and on the basis of their legally-prescribed duties, relevant units are to carryout punishments or lift punishments, in accordance with laws, regulations or relevant provisions. Where the period for enforcement is exceeded, the joint disciplinary action is no longer enforced.

V. Other matters

Each unit shall closely coordinate and actively implement this memorandum, drafting and improving normative documents related to their field,promoting and completing legislation related to the field, and guiding all levels of units in corresponding system to carry out joint disciplinary action in accordance with law. Specific issues in the implementation of this memorandum related to the coordination and cooperation between units are to be settled by the units through consultation.

After this memorandum is signed, where any laws, regulations, rules or normative documents that are the basis for any joint punishment measure are revised or adjusted, the revised laws, regulations, or normative documents are controlling.

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