Legal analysis
State-owned companies, enterprises or the persons directly in charge who practice favoritism and malpractice and convert state-owned assets into shares or sell them at low prices, thus causing heavy losses to national interests, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention; Whoever causes particularly heavy losses to the interests of the state shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years. Directors, supervisors and senior managers of a listed company who, in violation of their loyal obligations to the company, take advantage of their positions to manipulate the listed company to engage in one of the following acts, thus causing heavy losses to the interests of the listed company, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; Whoever causes particularly heavy losses to the interests of listed companies shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years, and shall also be fined: (1) providing funds, commodities, services or other assets to other units or individuals free of charge; (2) Providing or accepting funds, commodities, services or other assets on obviously unfair terms; (3) Providing funds, commodities, services or other assets to units or individuals that are obviously insolvent; (four) to provide guarantees for units or individuals that are obviously insolvent, or to provide guarantees for other units or individuals without justifiable reasons; (5) Abandoning creditor's rights and assuming debts without justifiable reasons; (6) harming the interests of listed companies in other ways. If the controlling shareholder or actual controller of a listed company instructs the directors, supervisors and senior managers of the listed company to commit the acts mentioned in the preceding paragraph, they shall be punished in accordance with the provisions of the preceding paragraph. If the controlling shareholder or actual controller of a listed company that commits the crime mentioned in the preceding paragraph is a unit, the unit shall be fined, and the directly responsible person in charge and other directly responsible personnel shall be punished in accordance with the provisions of the first paragraph.
legal ground
Article 16 of the Company Law of People's Republic of China (PRC), if a company invests in other enterprises or provides guarantees for others, it shall be decided by the board of directors or the shareholders' meeting in accordance with the provisions of the articles of association; Where the articles of association stipulate limits on the total amount of investment or guarantee and the amount of individual investment or guarantee, it shall not exceed the prescribed limits. Where a company provides a guarantee for the company's shareholders or actual controllers, it must be resolved by the shareholders' meeting or the shareholders' meeting. Shareholders specified in the preceding paragraph or shareholders controlled by actual controllers specified in the preceding paragraph shall not participate in voting on matters specified in the preceding paragraph. The voting shall be passed by more than half of the voting rights held by other shareholders present at the meeting.