Newsletter
BOGUS COMPANY APPLICATIONS CRIMINAL EVEN IF REGISTRATION NOT COMPLETED
The Company Act provides that if shareholders have not in fact paid share subscription price due to a company, but the application documents for company registration state that the payments have been received in full, or if shareholders have made such payments, but after the company's registration, the payments are returned to shareholders, or shareholders are permitted to withdraw them, then the responsible officers of the company will face criminal prosecution. However, in practice there has been much doubt over the issue of whether, for the offence of falsely purporting that share payments have been received to be committed, it is necessary that civil servants complete the registration of a company on the basis of application documents containing such false statements.
In a 2007 conference, the Criminal Division of the Supreme Court passed a resolution stating that in view of the facts that the legislative purpose of the above provisions of the Company Act is to prevent the establishment of bogus companies and to deter economic crimes, and that when processing a company registration application the competent authority merely conducts a formality examination, for the offence to have been committed it is necessary only that application documents have been presented to the competent authority, falsely stating that share payments due to a company have been received in full when in fact shareholders have not made such payments; it is not necessary that civil servants have completed registration of the company.