Identity card lost, then made a "company boss" with RMB 2 million of debt

Case summary

On 31 August 2019 The Paper published a news item on Weibo headed "Woman born after 1995 loses identity card, three years later finds a company registered in her name with RMB 2 million of debt". The story quickly attracted wide discussion online and trended on the platform.

According to Red Star News, the woman, Zhang Shushu, received a summons from the Futian District People's Court of Shenzhen on 4 April this year, together with a statement of claim and company registration materials compiled by the plaintiff's lawyer.

The difficulty was that Zhang Shushu had never been to Shenzhen and had never registered a company, yet in those materials she appeared as shareholder and legal representative of Shenzhen Xiangaoji Industrial Co. Ltd, together with the company's debt of nearly RMB 2 million.

After puzzling over it for some time she realised that it might all be connected with an identity card she had lost in February 2016. As well as finding that she had become shareholder and legal representative of Xiangaoji Industrial, she discovered that a Postal Savings Bank card had been opened in her name in Shijiazhuang, Hebei, on 23 March 2016, at a time when her identity card was still lost and had not been replaced.

That bank card proved to be the key to the inability to deregister Xiangaoji Industrial. Records of the Shenzhen Market Supervision Administration show that she first registered Xiangaoji on 15 April 2016 and then, on 12 July that year, changed the registration so that she became its legal representative, general manager and executive director. In April this year she asked the Shenzhen market supervision bureau to deregister the company, and was told that because a digital certificate signature had been used when the company was changed the change had legal effect, and that the company was involved in a contractual dispute and could not be revoked.

A digital certificate is a kind of electronic identity card, and applying for one requires the person to attend in person with an identity card. In the past, however, the checks on digital certificates were not strict and there was no facial recognition step, so it was very easy for a lost identity card to be used by someone else to obtain a digital certificate.

Yet none of these steps, from the registration and change of the company to the opening of the bank account and the issue of the digital certificate, involved her presence or her signature. Someone has now used her identity card to register and change a company and to open a bank account, infringing her rights, and the industry and commerce authorities and the bank were to some degree at fault.

Zhang Shushu is entitled to apply in writing to the company registration authority to cancel the erroneous registration, and may also bring administrative proceedings directly in a people's court seeking cancellation of the registration or a declaration that it is void. As for the bank, it bears primary responsibility for the consequences of its failure to carry out its verification duty when handling the business.

What to do when a company is registered with a stolen identity card

Article 280 of the Criminal Law provides that a person who forges, alters, buys or sells a resident identity card, passport, social security card, driving licence or other document that may lawfully be used to prove identity is sentenced to criminal detention, public surveillance or deprivation of political rights, or to fixed-term imprisonment of not more than three years, and is fined; where the circumstances are serious, the person is sentenced to fixed-term imprisonment of not less than three and not more than seven years and is fined.

Article 280A provides that a person who, in an activity in which identity documents must be provided in accordance with State regulations, uses a forged or altered identity document, or one belonging to another person, such as a resident identity card, passport, social security card or driving licence, and the circumstances are serious, is sentenced to criminal detention or public surveillance and is fined or not; where the conduct also constitutes another crime, the person is convicted and punished under the provision imposing the heavier penalty.

So where a person finds that a company has been registered using an identity card belonging to someone else, that person may, once the evidence is in hand, report the matter to the public security authorities, and if the person responsible has caused the victim economic loss or harmed the public interest the conduct may amount to a crime, in which case the public security authorities may open an investigation in accordance with the law.

Article 65 of the Regulation of the People's Republic of China on the Administration of Company Registration provides that where a person obtains company registration by submitting false materials or by other fraudulent means of concealing important facts, the company registration authority orders rectification and imposes a fine of not less than RMB 50,000 and not more than RMB 500,000; where the circumstances are serious, the company registration is cancelled or the business licence is revoked.

Article 70 of the Administrative Litigation Law of the People's Republic of China provides that where an administrative act falls within any of the following circumstances, the people's court shall set it aside in whole or in part and may order the defendant to make a new administrative act: (1) the main evidence is insufficient; (2) the law or regulation applied was wrong; (3) the statutory procedure was violated; (4) the act exceeded the authority; (5) the authority was abused; (6) the act is manifestly improper.

As well as complaining to the industry and commerce authorities and asking them to cancel the administrative licence and strike the company off the register, it is possible to sue the authorities on the basis that the registration act was unlawful and infringed the rights of the person impersonated, seeking cancellation of the registration.

The best course after losing an identity card

On losing an identity card, the holder should at once take the household register to the public security bureau of the place of household registration, report the loss and apply for a replacement, and also publish notice of the loss in a newspaper. The report and the newspaper notice should be kept safely, since they can be used as evidence if the card is later used by someone else. Failure to publish notice of the loss may affect the credit of the genuine holder and expose that person to suspicion of criminal conduct. As a general rule, the holder of an identity card bears no legal responsibility for impersonation that occurs after the loss has been reported.

It is not only a lost identity card that risks being misused: photographs of identity cards stored on a phone, photocopies of identity cards and identity cards posted online may all be taken up by wrongdoers. Care should therefore be taken in the use of such materials and images, so as to avoid greater risk.