(Yicai Global) June 3 -- Southeastern China's tech hub of Shenzhen may become the country's first municipality to create legal frameworks for personal bankruptcy.

Shenzhen has started seeking pubic feedback on its draft ordinances published on its website yesterday.

The entrepreneurial city that attracts many immigrant workers proposes that those who have been part of the municipality's social security system for three consecutive years with more than CNY500,000 (USD70,319) in debts could file for bankruptcy.

China's lack of personal bankruptcy means that entrepreneurs are usually personally liable for corporate debts, which could hinder innovation.

Those declared insolvent would have a dent in their credit rating, while they would need to give up any senior executive positions at companies for at least three years. These debtors' consumption would be limited so that they cannot take first-class trains, business-class flights, buy vehicles or property, or stay in hotels above a three-star ranking. Moreover, they could not send their kids to private schools.

The personal bankruptcy law should be progressively put forth with caution to prevent and control risks, the municipality added. Those who have a history of fraud or excessive consumption would not be eligible for the policy.

Editor: Emmi Laine