Analysis of Issues Related to the Crime of Illegal Operation of Similar Businesses
2025-10-29
According to Article 165 of the Criminal Law, directors, supervisors, and senior management personnel of state-owned companies and enterprises who take advantage of their positions to operate or operate similar businesses for others, and obtain illegal benefits of a huge or particularly large amount, constitute the crime of illegal operation of similar businesses. In practice, there are different opinions on whether the illegal operation of the same type of business as that of the state-owned company by the perpetrator, but the related business is not within the registered business scope of the state-owned company, affects the determination of whether the perpetrator constitutes the crime of illegal operation of the same type of business. The author combines a case study for analysis. Zhang, General Manager of Company A, a state-owned company. The business scope registered by Company A with the industrial and commercial department mainly includes the sale of metal materials, machinery and equipment, chemical products, etc. A company has been engaged in coal purchase and sales business for a long time in actual operation, and coal purchase and sales have become an important part of its business and a source of profit. However, this business is not within the scope of A company's industrial and commercial registration. During the period when Company A was conducting coal purchase and sales business, Zhang registered a private company, Company B, in the name of his relatives, which he actually controlled and operated. He directly engaged in coal purchase and sales business similar to Company A's business cooperation units, seizing the trading opportunities of Company A and earning millions of yuan in profits from it. In this case, there are different opinions on whether Zhang can be deemed to have committed the crime of illegal operation of the same type of business as that of Company A, which is not within the registered business scope of Company A. The first viewpoint holds that the business scope of a company should be based on its registered business scope. Zhang's coal purchase and sales business through Company B is not within the registered business scope of Company A, and there is no competitive relationship. Therefore, Zhang should not be deemed to have committed the crime of illegal operation of similar businesses. The second viewpoint holds that the "similar business" in the crime of illegal operation of similar businesses is not limited to the registered business scope of the company. Zhang, taking advantage of his position as a senior manager of Company A, operated similar businesses to the company he worked for and obtained huge profits, which should be recognized as constituting the crime of illegal operation of similar businesses. I agree with the second viewpoint. Firstly, Zhang belongs to the senior management of state-owned companies and enterprises. From the nature of the company, Company A is a state-owned enterprise. From the perspective of his position, Zhang serves as the general manager of Company A and belongs to the senior management of state-owned companies and enterprises. Therefore, Zhang's subject identity meets the constitutive requirements of the crime of illegal operation of similar businesses. Secondly, the recognition of "similar businesses" should be judged according to substantive standards. In recent years, with the development of the market economy, the legal provisions on the scope of business of companies have shown a gradually relaxed process, reflecting the legislative purpose of protecting the stability of trading entities, promoting the development of companies, and promoting the prosperity of the market economy. In July 1994, China's first "Company Law of the People's Republic of China" was officially implemented. Article 11 stipulates that companies should engage in business activities within their registered business scope, which is a mandatory provision for the company's business scope. In December 1999, the Supreme People's Court issued the "Interpretation on Several Issues Concerning the Application of the Contract Law of the People's Republic of China (Part 1)", which stipulated in Article 10 that if a party signs a contract beyond the registered business scope, as long as it does not violate national restrictions on operation, franchising, or prohibitions on operation by laws and administrative regulations, the contract shall not be deemed invalid on this basis. This clause starts from the perspective of protecting the stability of transactions of business entities, and combines with the market environment at that time to provide equal protection for businesses outside the registered business scope, reflecting the legislative change in the field of civil law from prohibition without authorization to freedom without prohibition. In October 2005, the revision of the Company Law of the People's Republic of China removed the provision that companies should engage in business activities within their registered business scope, further clarifying the positive encouragement attitude of legislators towards market operators. Article 505 of the Civil Code of the People's Republic of China continues the legislative spirit mentioned above, clearly stipulating that the effectiveness of a contract entered into by a party beyond the scope of business shall be determined in accordance with relevant legal provisions, and the contract shall not be deemed invalid solely based on exceeding the scope of business. In judicial practice, it is also believed that businesses engaged in by state-owned companies outside their registered business scope can be classified as "similar businesses" for the crime of illegal operation of similar businesses and should be protected by law. For example, in the case of Wu Moujun's illegal operation of similar businesses in the case library of the People's Court, the reasoning for the judgment is that whether it belongs to the same type of business should adopt substantive examination standards, not limited to the scope indicated on the business license, and the focus should be on whether the company has been deprived of trading opportunities. In this case, although the coal purchase and sale business engaged in by Company A is not within the registered business scope of the company, based on substantive standards, whether Zhang's behavior is considered as illegal operation of similar businesses under the Criminal Law can be analyzed from the following two aspects. One is to check whether the business scope belongs to the same type of business. Zhang engages in the same coal purchase and sales business as Company A through Company B, which belongs to the same type of business; The second key is to grasp whether the business behavior has competition or conflicts of interest with Company A. If Zhang seized the trading opportunity of Company A through Company B and obtained illegal benefits from it, then Zhang's behavior should be deemed as punishable. In fact, Zhang directly engaged in coal purchase and sales business similar to that of Company A through the business cooperation unit between Company B and Company A, which resulted in competition and conflicts of interest with Company A, directly affecting its interests. Therefore, Zhang's behavior should be deemed as illegal operation of similar businesses under criminal law, and the legitimate rights and interests of Company A should be protected by criminal law to exclude the infringement of illegal competition. Finally, Zhang's behavior took advantage of his position as a senior manager of a state-owned company and should be deemed a duty crime. As the general manager of state-owned Company A, Zhang is fully responsible for the company's business operations and should have fulfilled his duty of loyalty, adhered to non compete regulations, and promoted the preservation and appreciation of state-owned assets. However, Zhang, knowing that Company A's actual business scope covers coal purchase and sales, took advantage of his position and the business information and personal connections he gained through his position to seize the opportunity for coal purchase and sales transactions in state-owned companies, which constitutes unfair competition with Company A. Zhang's above-mentioned behavior, taking advantage of his position, has infringed upon the normal management order of state-owned companies and caused damage to their interests, which constitutes a crime of duty. In summary, as a senior manager of a state-owned company or enterprise, Zhang took advantage of his position to operate the same business as the state-owned company he worked for, and obtained huge illegal benefits. Therefore, it should be determined that he committed the crime of illegally operating similar businesses. (Author affiliation: Jing'an District Commission for Discipline Inspection and Supervision, Shanghai) (News Agency)
Edit:Wang Shu Ying Responsible editor:Li Jie
Source:China Discipline Inspection and Supervision Report
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