One-line answer: under Article 272 of China’s Criminal Law, an employee who takes company money for personal use, for a profit-making activity, or for illegal activity commits misappropriation of company funds (挪用资金罪) and faces up to 3 years, 3 to 7 years, or more than 7 years in prison depending on the amount — and since April 2026 the sentencing standards have been expressly aligned with those for public funds.

1. The three situations that make it a crime

Article 272, as amended by Amendment XI to the Criminal Law, covers a staff member of a company, enterprise or other unit who, taking advantage of his position, misappropriates the unit’s funds:

• for personal use or to lend to others, where the amount is relatively large and the funds are not returned within three months;
• for profit-making activity, where the amount is relatively large, even if the three months have not passed; or
• for illegal activity — where the amount threshold is lowest and the three-month rule does not apply at all.

The purpose of the money matters as much as the sum. Using company funds to run a side business, or to pay off a personal debt, is treated differently from placing them in a speculative account for a few weeks.

2. The sentencing tiers

Article 272 sets three tiers: a relatively large amount (or illegal activity) — up to 3 years’ imprisonment or criminal detention; a huge amount — 3 to 7 years; a particularly huge amount — more than 7 years. A specific mitigating rule sits in the same article: if the employee returns the misappropriated funds before the case is transferred for prosecution, the court may impose a lighter or reduced penalty, and where the offence is minor, may reduce or waive the penalty.

Since April 2026, the Supreme People’s Court and Supreme People’s Procuratorate Interpretation (II) on Corruption and Bribery Cases provides in Article 8 that the sentencing standards for misappropriation of company funds under Article 272 are to follow those for misappropriation of public funds under Article 384, with the court weighing the nature and circumstances of the conduct to keep punishment proportionate. For staff of wholly state-owned units, Article 272 expressly converts the conduct into the public-funds offence.

3. What this means in practice

Most of these cases are triggered not by an outside cyber-attack but by an internal audit, a shareholder dispute, or a departing CFO. The two questions that decide the outcome are (i) where the money went and (ii) when it came back. Repayment is genuinely valuable, but only before the case moves to prosecution — after that, its value drops sharply.

Hypothetical: a finance manager moves RMB 800,000 from company accounts into a private trading account, intending to return it in a month. The market moves against him; four months later the funds are still out. That is a relatively large amount used for profit-making activity, unrecovered well past three months — squarely inside Article 272.

FAQ

Q: What is the punishment for misappropriating company funds in China?

A: Under Article 272 of the Criminal Law an employee faces up to 3 years, 3 to 7 years, or more than 7 years in prison depending on the amount, and since April 2026 the sentencing standards have been expressly aligned with those for public funds.

Q: What are the three situations that make it a crime?

A: Misappropriating the unit’s funds for personal use or to lend to others where the amount is relatively large and the funds are not returned within three months; for profit-making activity where the amount is relatively large, even if the three months have not passed; or for illegal activity, where the amount threshold is the lowest and the three-month rule does not apply at all.

Q: Does repaying the money help?

A: Yes. If the employee returns the misappropriated funds before the case is transferred for prosecution, the court may impose a lighter or reduced penalty, and where the offence is minor, may reduce or waive the penalty. After the case moves to prosecution, the value of repayment drops sharply.

Q: What are the sentencing tiers under Article 272?

A: A relatively large amount, or illegal activity, carries up to 3 years of imprisonment or criminal detention; a huge amount carries 3 to 7 years; and a particularly huge amount carries more than 7 years.

Q: Are staff of wholly state-owned units treated differently?

A: Yes. For staff of wholly state-owned units, Article 272 expressly converts the conduct into the public-funds offence, and the 2026 Interpretation provides that the sentencing standards follow those for misappropriation of public funds under Article 384.

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Wang Guan | Co-founder, Beijing Haolue Law Firm | +86 17813108512