Corporate Criminal Risk Management Practices

In recent years, the cultural and entertainment industry has witnessed a robust recovery, particularly in the live-performance market, where tickets often sell out quickly. However, behind this thriving scene, some unsettling factors have begun to surface. Many entertainment companies, in their pursuit of maximizing short-term financial gains during live events, have been known to disregard regulations by overprinting and selling more tickets than permitted. Such practices not only disrupt the orderly functioning of the entertainment market but also expose these companies to both administrative penalties and potential criminal liabilities.

Currently, there are two main models for ticket design, printing, and sales: one where the event organizer takes full responsibility independently, and another where the organizer collaborates with a ticketing platform, jointly agreeing through a contract that the platform will handle ticket sales and management. However, under the "Regulations on Commercial Performances (Revised 2020)" issued by the State Council (referred to as the "Regulations"), the event organizer remains primarily responsible for ticket management in either scenario.

According to Article 21 of the Regulations, before organizing a performance event, the organizer must submit in advance the estimated number of attendees that the venue can accommodate to the local public security department for approval. The public security authorities will scientifically and reasonably designate audience zones and buffer areas based on the specific conditions of the venue, taking into account factors such as venue size, safety facilities, and evacuation routes. The event organizer must strictly adhere to the approved audience capacity and the designated zones when printing and selling tickets—this is a critical prerequisite for ensuring the safe and orderly execution of the performance.

However, if the event organizer exceeds the audience numbers or audience areas approved by the public security authorities—such as printing or selling tickets beyond the authorized limits ("over-selling tickets beyond approved zones")—it could lead to a series of serious consequences. In such cases, the event organizer may face the following risks:

Administrative penalty. The act of performance organizers selling tickets beyond the allocated quota or outside their designated regions may first result in administrative penalties. According to Article 51 of the Regulations, public security authorities at or above the county level will take strict enforcement actions against such behavior, including ordering corrective measures, confiscating illegal gains, and imposing fines ranging from three to five times the amount of those gains. If no illegal profits were made—or if the illegal earnings are less than 10,000 yuan—organizers will still face fines between 30,000 and 50,000 yuan. In cases where the misconduct leads to severe consequences, the organizer’s commercial performance license may even be revoked. Once revoked, the organizer will lose its eligibility to stage performances altogether, significantly impacting its future business operations.

Criminal liability. In addition to administrative penalties, the act of performance organizers selling tickets beyond capacity or across unauthorized zones may also constitute a criminal offense under the Criminal Law. For performance venues that are relatively enclosed or have limited space, an excessive number of attendees combined with highly interactive show activities can easily lead to overcrowding. When audiences are emotionally charged and excited, this situation significantly increases the risk of individual oxygen deprivation or suffocation, as well as group stampedes—potentially resulting in mass casualties. Should such incidents occur, the head of the performance organizer and other directly responsible individuals could face charges under Article 134 of the Criminal Law, which pertains to the crime of major liability accidents.

Additionally, if the event organizer knowingly sells tickets beyond the venue's capacity—whether by overselling or distributing tickets outside the designated area—leading to situations where audiences cannot enter the venue or properly enjoy the performance, yet continues this practice solely to maximize profits, such behavior is likely to be deemed as having an intent for illegal gain. In cases where the amount of illegal proceeds is substantial, the event organizer and related individuals may be found guilty of contract fraud as defined under Article 224 of the Criminal Law.

To effectively prevent the risks mentioned above and ensure the smooth execution of the performance, the event organizer should strictly adhere to relevant regulations and maintain control across the following key areas.

Conduct a safety inspection of the performance venue. The event organizer must conduct a prior safety inspection of the performance venue, covering fire safety facilities, security and protection plans, as well as fire-fighting and emergency evacuation procedures. Additionally, the organizer should sign a safety responsibility agreement with the venue operator regarding potential emergency incidents, ensuring that swift and effective response measures can be implemented in case of an emergency. If the performance is held in a public space, the organizer must follow relevant regulations to complete the necessary approval procedures and develop a comprehensive safety plan.

Approve the number of participants based on venue conditions. The event organizer must submit the venue's maximum capacity to the public security department for approval. The public security department will then designate specific audience zones and buffer areas. In strict compliance with the approved audience numbers and designated zones, the event organizer must print and sell tickets accordingly—no unauthorized sales beyond the approved limits or into areas outside those officially demarcated.

Monitor ticket sales on the platform. If the event organizer collaborates with a ticketing platform, both parties should clearly define their respective responsibilities in the agreement. Additionally, the event organizer must maintain effective oversight throughout the entire process of ticket printing and sales, ensuring regular communication and coordination to stay updated on ticket availability at all times. This will help promptly address and prevent any instances of over-selling or unauthorized ticket distribution beyond designated areas.

Flexibly manage the number of people entering the venue. The event organizer should deploy professional security personnel to manage crowd control at the entrance. Once the number of attendees reaches the approved capacity—regardless of whether all tickets have been processed—the ticket-checking process must be immediately halted, and the public security authorities must be notified right away. If, outside the venue, crowds gather and cause disorder, or if individual spectators begin inciting disturbances, the event organizer must promptly restore order on-site and immediately report the situation to the public security authorities, working closely with them to ensure safety and handle any necessary follow-up actions.

Actively fulfill civil compensation obligations. If over-selling or selling tickets beyond the allocated capacity results in losses for audiences, the event organizer must proactively fulfill its compensation obligations—such as issuing refunds or providing complimentary performance-related merchandise—to prevent further conflicts and negative repercussions caused by improper handling.