For individual crimes, the Criminal Law adopts a "principal penalty + supplementary penalty" model. The principal penalties include fixed-term imprisonment, criminal detention, and control, while the supplementary penalties consist of fines and confiscation of property. In cases involving relatively minor offenses, supplementary penalties can be applied independently—for instance, a fine.

Regarding corporate crimes, the Criminal Law explicitly states in Article 346—the final article of the chapter dedicated to "Crimes Disrupting Environmental and Resource Protection"—that all 16 specific offenses under this category can be committed by corporations, and sentencing will follow a "dual punishment system." The unit will be fined, and its directly responsible officers and other individuals bearing direct responsibility will be punished according to the provisions governing individual crimes. In judicial practice, the legal representative, shareholders, actual operators, as well as department heads and other supervisory personnel, can all be classified as "directly responsible persons in charge" and "other directly responsible personnel" under corporate criminal liability.

Notably, ecological restoration costs—used as a non-penal sanction—are relatively common in cases of heavy-metal pollution crimes, typically implemented through voluntary restitution or public interest litigation. Criminal Public Interest Civil Litigation The public prosecution authority has filed a claim demanding that both corporations and individuals compensate for the damages caused by environmental pollution, as well as cover the costs of ecological restoration, with joint and several liability. Additionally, if company shareholders abuse the corporation's legal entity status or their limited liability, engaging in actions such as transferring or commingling company assets—thereby preventing the company from fulfilling its compensation obligations—those shareholders shall also be held jointly and severally liable.

[Guiding Case of the People's Courts] Criminal Public Interest Litigation with Civil Claims for Environmental Pollution Involving Kunming Minmou Paper Industry Co., Ltd. and Others ¹

Previously, corporate crimes involving heavy-metal pollution were only addressed in the general provisions of Article 346 of the Criminal Law, lacking detailed criteria for identification. In 2019, the "Minutes of the Symposium on Issues Related to Handling Criminal Cases of Environmental Pollution," jointly issued by the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security, provided more specific guidelines on when corporate offenses occur. Specifically, if a company commits an act of environmental pollution for its own benefit and also meets any one of the following conditions, it should be classified as a corporate crime:

Therefore, the key factors for determining whether a unit constitutes a crime can be summarized as follows: Unit interests, collective decision-making procedures, leadership awareness, and the unit's outward behavior Four aspects. From the perspective of subjective elements, once the head of the organization is knowingly aware of the act of polluting the environment—whether or not there was explicit consent or a formal decision-making process—the mere fact of subsequent ratification, tolerance, tacit approval, or the presence of an apparent corporate behavior pattern is sufficient to establish corporate criminal liability.

However, the appearance of a unit’s actions should not be assessed in isolation—it must be considered within the broader context of the core principles underlying corporate criminal liability. For instance, if specific individuals within the organization misuse the official seal—through unauthorized operations, theft, or other improper means—to carry out external activities, or if they exploit company equipment to engage in polluting practices, such cases should not automatically be classified as corporate crimes. Instead, they should still be treated as individual offenses. This is because failures by the company’s leadership and key personnel to properly safeguard the official seal or equipment typically amount to mere negligence in routine administrative duties. As long as there is no direct or indirect intent to harm the environment, the organization should not be held criminally liable.

In practice, it remains challenging for companies to prove or defend themselves against allegations that their organizations lacked criminal intent. On September 30, 2024, the General Offices of the Supreme People's Procuratorate, the Ministry of Public Security, and the Ministry of Ecology and Environment jointly issued the "Guidelines on Evidence in Handling Cases of Environmental Pollution Crimes" (Document No. Gao Jian Ban Fa [2024] No. 12). ² , to Evidence to verify the unit's identity Provide a list.

The "Guidelines" emphasize the need for a focused review of: (1) Whether the organization was established specifically to commit criminal activities; (2) Whether, after its establishment, conducting environmental pollution crimes became the organization’s primary business; (3) Whether the proceeds from the crime were funneled into accounts owned or controlled by the organization; (4) Whether the decision to commit the crime reflected the will of the organization as a whole—or merely that of an individual. Building on these key areas, eight specific investigative approaches have been developed.

Although this Guidance is primarily intended to help public security and procuratorial organs standardize evidence collection and review processes, it also offers fairly clear direction for the effective defense of both the companies and individuals involved.

A defining feature of crimes involving heavy-metal pollution is the long and complex chain of polluting activities, with numerous interconnected stages involved. Consequently, the perpetrators of these criminal acts often include a mix of corporations, individual business owners, and private individuals. According to the Supreme People's Court's "Interpretation on Specific Issues Concerning the Application of Law in the Trial of Corporate Crime Cases," three specific scenarios are not classified as corporate crimes but should instead be treated as offenses committed by natural persons:

Effectively separating the criminal risks associated with corporate versus individual offenses is, in essence, about isolating the criminal liabilities of corporations and individuals from a corporate compliance perspective—thereby reducing overall criminal risk exposure for both entities and individuals. At the same time, this approach also provides corporations and individuals with practical strategies for mounting robust defenses or even securing non-prosecution outcomes. Drawing on a recent case handled by the Xinglai Environmental Protection team—a high-profile environmental contamination incident involving heavy metals that ultimately resulted in a decision not to prosecute—the author explores how effective risk prevention and legal defense can be achieved from both corporate and individual crime perspectives.

[Case Study] Prosecution Dropped in Environmental Pollution Case Involving a Taizhou Equipment Rental Company

An enterprise in Xianju County, Taizhou City, Zhejiang Province, is suspected of polluting the environment. During an administrative inspection, the company was found to have illegally disposed of waste engine oil. The total volume of hazardous waste involved has already met the threshold required for criminal investigation and prosecution. Additionally, an assessment revealed that the land within the factory premises is contaminated with heavy metals.

After taking on the case, the Xinglai Environmental Protection team immediately traveled to the crime scene for an on-site investigation. Through thorough argumentation and reasoning, they successfully secured a decision allowing the company’s management personnel to be released on bail pending further investigation. During the review and prosecution phase, Xinglai’s lawyers conducted extensive legal analysis—focusing on the classification of the case as a corporate crime, the accurate calculation of illegally disposed quantities, and the statistical methods and conclusions presented in the environmental assessment report. They also prepared a detailed case-research report and submitted it to the procuratorate, engaging in multiple rounds of in-depth discussions with prosecutors and presenting several legal opinion papers. Ultimately, the defense arguments were fully recognized and adopted by the procuratorate, leading to a favorable outcome: the client was granted a decision not to prosecute.

When a company faces criminal risks, an effective accountability management system will serve as solid evidence to clearly separate organizational and individual responsibilities, as well as differentiate the accountability levels of personnel at all tiers. Companies should tailor their systems to the specific industry they operate in and align them with regulatory requirements, establishing scientific decision-making, approval, and reporting processes. It’s crucial to clearly define the specific roles and responsibilities of top executives and each department, breaking down corporate environmental protection duties into granular, actionable steps—assigning clear responsibilities to individual positions and ensuring accountability rests squarely with the right individuals. This approach fosters a work culture characterized by distinct roles and consequences tied directly to performance. Additionally, environmental initiatives related to heavy-metal pollution must be meticulously analyzed and refined, creating a systematic and standardized framework for managing environmental responsibility across the organization.

When a company faces criminal charges, regulatory work records and environmental compliance logs can serve as strong evidence demonstrating the company’s commitment to operating legally and in accordance with regulations. Companies should strengthen their internal rules and procedures by conducting regular, routine inspections and issuing timely reports on daily oversight of heavy-metal-related production processes. Additionally, they should enhance on-site supervision, maintain detailed environmental monitoring logs, document any non-compliant practices or potential environmental risks during production, and promptly communicate these findings while addressing and rectifying issues immediately. Finally, companies must establish robust risk-prevention mechanisms and emergency response plans, clearly outlining specific actions to take when risks arise.

Companies should strengthen training for employees on environmental protection knowledge and legal regulations, conducting regular sessions on relevant laws and company policies—targeting both key personnel in environmentally sensitive roles and general staff. Additionally, organizations should arrange opportunities for employees to study and practice the company’s environmental emergency response plans, enhancing workers' legal awareness and commitment to compliance. This approach not only significantly reduces the risk of employees committing criminal offenses but also effectively safeguards the company from individual employees’ potential criminal liabilities.

Layout: Wang Xin

Review: Management Committee