Shanghai FTZ introduces new monitoring mechanism

The China Pilot Free Trade Zone in Shanghai's Pudong district has introduced a third-party monitoring and evaluation mechanism for enterprises involved in unlawful acts.

Aimed at creating a more orderly and enabling business environment, the mechanism is expected to allow eligible companies and related personnel suspected of certain crimes to avoid arrest, prosecution or severe punishment should they commit themselves to compliance and remedy their wrongdoings in accordance with the authority's guidance, said Pang Zheng, deputy chief prosecutor of the Shanghai Pudong New District's People's Procuratorate, at a media briefing on Thursday.

The feasibility and results of their action plan will largely be subject to the investigation and evaluation of randomly chosen members from the third-party compliance committee, which involves 13 authorities in Pudong.

"The process involves five steps: case review, field study, third-party evaluation, public hearing and decision-making," said Ren Zhiwei, a prosecutor's assistant.

This move follows the pilot corporate compliance reform launched by China's Supreme People's Procuratorate in March 2020, with Pudong Procuratorate among the six procuratorates in the first batch.

"This mechanism can help enterprises establish a viable compliance management system, thus preventing and reducing crimes and promoting a business environment where the law is respected", said Zeng Guodong, Party secretary of the Pudong Procuratorate.

"Pudong has always been at the forefront of policy innovations not only in Shanghai, but China. This is why startups have been willing to choose Pudong and will welcome this reform," said Yao Qiong, Party secretary of the Pudong Federation of Industry and Commerce.

If the mechanism proves effective, there is chance that it will inspire similar approaches elsewhere in the country, according to experts.

Li Yange contributed to this story.