Shenzhen will establish personal bankruptcy law to allow innovations and startup businesses to continue playing a fundamental role in propping up the city’s economy.
The idea was deliberated by the city’s legislature Wednesday, according to the Daily Sunshine.
Personal bankruptcy law allows an individual to be declared bankrupt through a legal procedure.
It enables debtors to receive a discharge after handing in all of their assets for repayment.
Staff from the city’s legislature said that the country has not yet built a personal bankruptcy system due to historical reasons.
In order to perfect enterprise bankruptcy, it is very necessary to deal with personal bankruptcy so as to build a comprehensive bankruptcy system and to create a first-class business environment based on the rule of law.
There are 1.23 million individual businesses in the city as of the end of January, accounting for 37.5 percent of total businesses.
Additionally, there are many others working as freelancers or doing e-business in the city.
The absence of a personal bankruptcy system will make these practitioners vulnerable to market risks. They are not able to enjoy the equal protection when in jeopardy, which is harmful to a startup’s enthusiasm.
Furthermore, businesses’ risks will be transferred to persons when firms apply for bankruptcy under current systems, since the business owners are usually asked to pledge their personal property in financing. This is not only against the spirit of a modern enterprise system but also provides fertile ground for illegal financing.
As a result, building a personal bankruptcy system will encourage people to start their own businesses and to ensure long-term prosperity of the city’s economy, said the report.
In another development, the city is mulling to modify the “citizen civilization regulation” to require people with infectious diseases to take measures to avoid contamination, according to a sznew.com report.