(File photo)

The top legislature on Monday adopted a law on the film industry, promising harsh punishment for firms that fabricate box office earnings, data or information.

Film distributors and theaters will have all their illegal earnings confiscated and be fined upward of 500,000 yuan (about 73,800 U.S. dollars) if they falsify ticket sales data, according to the law adopted at the National People's Congress (NPC) Standing Committee bi-monthly session after a third reading.

If their illegal earnings exceed 500,000 yuan, the fine will be up to five times their illegitimate earnings.

They may also be slapped with an operating suspension or have their business certificates revoked in serious cases, according to the law.

The law is the first of its kind in China, currently the world's second largest film market.

China's box office takings had already exceeded 38 billion yuan as of October, leading many to speculate that China's market will surpass North America's as early as 2017.

Shi Chuan, vice president of Shanghai Film Association, lauded the law calling it "a milestone," as it gave the industry a legal foundation on which it can further develop.

Box office fraud is not a new phenomenon in China, this new law will provide a legal basis for law enforcers and help better protect the interests of the public, Shi said.

In March, the film watchdog suspended the license of a distributor that had inflated box office figures for domestic movie "Ip Man 3."

This case was just the tip of the iceberg, as statistics indicate at least one percent of all box office takings had been "stolen" in recent years.

There are two ways in which people "forge ticket sales," generally. One, the distributors inflate box office takings to make the film appear popular, thus, attracting more viewers and screenings. Two, theaters conceal their true ticket sales and then pocket the earnings without sharing with the film makers.

To accurately count ticket sales is of utmost importance to ensure the healthy development of the industry, said Ren Zhonglun, president of Shanghai Film Group Corp.

He said the law was drafted in response to public concern and the stipulations outlined in the law are feasible.