Short answer: yes — a company’s crime can put its directors and managers in prison, but not every officer is automatically guilty. China uses a “dual punishment” model: the company pays a fine, and the individuals who decided on or carried out the offence are personally sentenced. Your exposure turns on what you actually did, not on your title alone.

Who is punished when a company commits a crime?

Under Article 30 of the Criminal Law, a company, enterprise, institution, organ or group that commits a harmful act can be held criminally liable only where the law specifically provides for unit (corporate) liability. Article 31 then sets the standard consequence: the unit is fined, and the “directly responsible managers and other directly responsible personnel” are punished as individuals. In practice, prosecutors and courts split that group in two — the people who made or approved the decision (typically the legal representative, general manager or the board member who signed off), and the people who actually executed it (finance staff, sales leads, the department head who organised the paperwork). Signing an approval, directing a subordinate, or personally benefiting from the arrangement is what creates personal criminal risk; merely being on the board is not enough.

Two offences that show how the split works

Article 205 (falsely issuing VAT special invoices) is a good example. Its unit-liability clause provides that the company is fined, and the responsible individuals face up to three years, then three to ten years for larger amounts or serious circumstances, and ten years or more for the largest cases — the same bands that apply to an individual offender.

Tax evasion shows the other side of the coin. Article 201 of the Criminal Law makes evading tax criminal where the amount is relatively large and reaches 10 per cent of the tax payable (up to three years), or large and reaching 30 per cent (three to seven years). But the fourth paragraph adds an exit: if, after the tax authority issues a recovery notice, the taxpayer pays the tax, pays the late fee and accepts the administrative penalty, no criminal liability is pursued — unless the person was criminally punished for tax evasion, or received two or more administrative penalties for it, within the previous five years. That payment route is a practical lifeline, and it exists only for tax evasion, not for VAT invoice fraud or embezzlement.

What this means in practice

If an investigation starts, three things move the needle: early payment and restitution, demonstrated cooperation, and documented objection. Article 37 of the Criminal Law allows a court to exempt a person from punishment entirely where the circumstances are minor and no punishment is needed, and restitution is one of the discretionary factors that supports that outcome. Keep evidence of dissent — emails, minutes, a written refusal — because a manager who voted against the scheme and can prove it sits in a completely different position from the one who ordered it.

A short scenario

Hypothetical: the general manager of a trading company approves a batch of VAT invoices for goods that were never delivered, and the finance manager prepares them. Both are “directly responsible” once prosecutors accept the invoices were false — the GM as the decision-maker, the finance manager as the executor. The company is fined; the individuals face the Article 205 sentencing bands.

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