Legal basis: People's Republic of China (PRC) Company Law.
Article 21 The controlling shareholders, actual controllers, directors, supervisors and senior managers of a company shall not use their related relationships to harm the interests of the company. Anyone who violates the provisions of the preceding paragraph and causes losses to the company shall be liable for compensation.
Article 149 Directors, supervisors and senior managers who violate laws, administrative regulations or the articles of association when performing their duties in the company and cause losses to the company shall be liable for compensation.
Article 169 of the Criminal Law of People's Republic of China (PRC), if a state-owned company, enterprise or the person in charge who is directly responsible by the competent department at a higher level engages in malpractices for personal gain and sells state-owned assets at a low price, thus causing heavy losses to the national interests, he 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. Article 169-1 Any director, supervisor or senior manager of a listed company who, in violation of his duty of loyalty to the company, manipulates the listed company by taking advantage of his position and commits any 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.