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Securities Law of the People's Republic of China (2019 Revision)
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Securities Law of the People's Republic of China (2019 Revision)

 



Order of the President of the People's Republic of China
(No. 37)
The Securities Law of the People's Republic of China, as adopted at the 15th Session of the Standing Committee of the Thirteenth National People's Congress of the People's Republic of China on December 28, 2019, is hereby issued, and shall come into force on March 1, 2020.
Xi Jinping, President of the People's Republic of China
December 28, 2019
Securities Law of the People's Republic of China
(Adopted at the 6th Session of the Standing Committee of the Ninth National People's Congress on December 29, 1998, amended for the first time in accordance with the Decision to Amend the Securities Law of the People's Republic of China adopted at the 11th Session of the Standing Committee of the Tenth National People's Congress on August 28, 2004; amended for the first time at the 18th Session of the Standing Committee of the Tenth National People's Congress on October 27, 2005; amended for the second time in accordance with the Decision to Amend Twelve Laws Including the Cultural Relics Protection Law of the People's Republic of China adopted at the Third Session of the Standing Committee of the Twelfth National People's Congress on June 29, 2013; amended for the third time in accordance with the Decision to Amend Five Laws Including the Insurance Law of the People's Republic of China adopted at the Tenth Session of the Standing Committee of the Twelfth National People's Congress on August 31, 2014; and amended for the second time at the 15th Session of the Standing Committee of the Thirteenth National People's Congress on December 28, 2019)
Table of Contents
Chapter I General Provisions
Chapter II Securities Offering
Chapter III Securities Trading
Section 1 General Provisions
Section 2 Securities Listing
Section 3 Prohibited Trading Acts
Chapter IV Acquisition of Listed Companies
Chapter V Information Disclosure
Chapter VI Investor Protection
Chapter VII Stock Exchanges
Chapter VIII Securities Companies
Chapter IX Securities Depository and Clearing Institutions
Chapter X Securities Service Institutions
Chapter XI Securities Associations
Chapter XII Security Regulatory Authorities
Chapter XIII Legal Liability
Chapter XIV Supplemental Provisions
Chapter I General Provisions
Article 1 This Law is developed for the purposes of regulating securities offering and trading, protecting the lawful rights and interests of investors, maintaining the social and economic order and safeguarding public interest, and promoting the development of the socialist market economy.
Article 2 This Law shall apply to the offering and trading of stocks, corporate bonds, depositary receipts and other securities lawfully recognized by the State Council within the territory of the People's Republic of China. The matters not provided for in this Law shall be governed by the provisions of the Company Law of the People's Republic of China and other relevant laws and administrative regulations.
This Law shall apply to the listing and trading of government bonds and shares of securities investment funds. If it is otherwise provided for in any other law or administrative regulation, such provisions shall prevail.
The administrative measures for the offering and trading of asset-backed securities and asset management products shall be developed by the State Council under the principles of this Law.
Where the offering and trading of securities outside the People's Republic of China disrupt the order of the domestic market of the People's Republic of China and infringe upon the lawful rights and interests of domestic investors, the violator shall be punished in accordance with the relevant provisions of this Law and shall be subject to legal liability.
Article 3 The offering and trading of securities shall follow the principles of openness, fairness and impartiality.
Article 4 The parties to securities offering and trading activities shall have equal legal status and follow the principles of free will, compensation, and good faith.
Article 5 The offering and trading of securities shall comply with laws and administrative regulations. Any fraud, insider trading or manipulation of the securities market shall be prohibited.
Article 6 The operation and administration of the securities industry shall be separated from the operation and administration of banking, trust and insurance industries, and securities companies shall be formed separately from banking, trust and insurance business institutions, except as otherwise provided for by the state.
Article 7 The securities regulatory authority of the State Council shall conduct centralized and unified supervision and administration of the national securities market in accordance with the law.
The securities regulatory authority of the State Council may form local offices as required, and such local offices shall perform their duties of supervision and administration according to authorization.
Article 8 The auditing organs of the state shall conduct the auditing supervision of stock exchanges, securities companies, securities depository and clearing institutions, and securities regulatory authorities in accordance with the law.
Chapter II Securities Offering
Article 9 The public offering of securities shall meet the conditions prescribed by laws and administrative regulations, and shall be legally reported to the securities regulatory authority of the State Council or the department authorized by the State Council for registration. No entity or individual may offer securities to the public without legal registration. The specific scope and implementation procedures of the securities offering registration system shall be prescribed by the State Council.
It shall be deemed as a public offering under any of the following circumstances:
(1) Offering of securities to unspecified investors.
(2) Offering of securities to more than 200 specified investors accumulatively, without calculating the number of employees implementing the employee stock ownership plan in accordance with the law.
(3) Other offering conduct prescribed by laws and administrative regulations.
Securities shall not be placed privately in such forms as advertisements, public inducement and disclosure in any disguised form.
Article 10 An issuer that applies for the public offering of a stock or corporate bond with the option to be converted into shares by means of underwriting in accordance with the law or applies for the public offering of other securities subject to sponsorship rules prescribed by any law or administrative regulation shall retain a securities company as its sponsor.
The sponsor shall observe business rules and industrial norms, have good faith and act with due diligence, prudentially inspect the issuer's application documents and information disclosure materials and supervise the issuer's standard operation.
The measures for the administration of sponsors shall be provided for by the securities regulatory authority of the State Council.
Article 11 Whoever applies for the formation of a joint-stock limited company for the public offering of a stock shall meet the conditions prescribed in the Company Law of the People's Republic of China and other conditions prescribed by the securities regulatory authority of the State Council with the approval of the State Council, and submit an application for the public offering of the stock and the following documents to the securities regulatory authority of the State Council:
(1) The bylaws of the company.
(2) The promoter's agreement.
(3) The name or title of the promoter, the number of shares subscribed for by the promoter, the type of capital contribution and the capital verification certificate.
(4) The prospectus.
(5) The name and address of the bank that receives subscription funds as the agent.
(6) The name of the underwriting institution and the relevant agreement.
Where a sponsor is retained in accordance with the provisions of this Law, the offering sponsorship letter issued by the sponsor shall also be submitted.
Where the formation of a company shall be reported for approval as provided for by any law or administrative regulation, the relevant approval documents shall also be submitted.
Article 12 A company that has an initial public offer (IPO) of a new stock shall meet the following conditions:
(1) It has a sound and well-functioning organizational structure.
(2) It has sustainable operation capability.
(3) No audit report with clean opinions on its financial accounting report in the most recent three years has been issued.
(4) The issuer or its controlling shareholder or actual controller has not committed any crime of corruption, bribery, encroachment upon property, embezzlement of property or disturbance of the socialist market economic order in the most recent three years.
(5) Other conditions prescribed by the securities regulatory authority of the State Council with the approval of the State Council.
A listed company that offers a new stock shall meet the conditions prescribed by the securities regulatory authority of the State Council with the approval of the State Council and the specific administrative measures shall be prescribed by the securities regulatory authority of the State Council.
A company that offers a depositary receipt to the public shall meet the conditions for the IPO of new stocks and other conditions prescribed by the securities regulatory authority of the State Council.
Article 13 A company that offers a new stock to the public shall submit an application for the public offering of the stock and the following documents:
(1) The business license of the company.
(2) The bylaws of the company.
(3) The resolution of the shareholders' meeting.
(4) The prospectus or other public offering documents.
(5) The financial accounting report.
(6) The name and address of the bank that receives the subscription funds as an agent.
Where a sponsor is retained in accordance with the provisions of this Law, the offering sponsorship letter issued by the sponsor shall also be submitted. If underwriting is conducted in accordance with the provisions of this Law, the name of the underwriting institution and the relevant agreement shall also be submitted.
Article 14 A company may use the funds raised through the public offering of a stock according to the purpose set out in the prospectus or other public offering documents. The change of the use of funds shall be subject to a resolution of the shareholders' meeting. If the unlawful change of use of funds is not corrected or not recognized by the shareholders' meeting, the public offering of the new stock is not allowed.
Article 15 A company that offers a corporate bond to the public shall meet the following conditions:
(1) It has a sound and well-functioning organizational structure.
(2) Its average attributable profits in the most recent three years are sufficient to pay the one-year interest of the corporate bond.
(3) Other conditions prescribed by the State Council.
The funds raised through the public offering of a corporate bond shall be used for the purpose set out in the measures for the offering of corporate bonds. The change in the use of funds shall be subject to a resolution made at the bondholders' meeting. The funds raised through the public offering of a corporate bond shall not be used for covering the deficit or non-production expenditure.
A listed company that offers a corporate bond with the option to be converted into shares shall, in addition to meeting the conditions prescribed in paragraph 1, comply with paragraph 2 of Article 12 of this Law, unless the listed company converts the corporate bond by acquiring the shares of the company according to the measures for the offering of corporate bonds.
Article 16 Whoever applies for the public offering of a corporate bond shall submit the following documents to the department authorized by the State Council or the securities regulatory authority of the State Council:
(1) The business license of the company.
(2) The bylaws of the company.
(3) The measures for the offering of corporate bonds.
(4) Other documents prescribed by the department authorized by the State Council or the securities regulatory authority of the State Council.
Where a sponsor is retained in accordance with the provisions of this Law, the Offering Sponsorship Letter issued by the sponsor shall also be submitted.
Article 17 Under any of the following circumstances, no corporate bond may be offered to the public anew:
(1) The company violates the contract on the corporate bond offered to the public or other debts, or has postponed the payment of the relevant principal and interest, and such status still exists.
(2) The company changes the use of funds raised through the public offering of a corporate bond in violation of this Law.
Article 18 The format and ways of submitting application documents by an issuer for the public offering of securities in accordance with the law shall be prescribed by the organ or department in charge of registration in accordance with the law.
Article 19 The application documents for securities offering submitted by an issuer shall fully disclose the information required by investors for making value judgments and investment decisions, and the content shall be true, accurate and complete.
Securities service institutions and their employees that issue relevant documents for securities offering shall strictly perform their statutory duties and guarantee the veracity, accuracy and completeness of the issued documents.
Article 20 Where an issuer applies for an IPO of a stock, it shall, after submitting application documents, disclose the relevant application documents in advance according to the provisions issued by the securities regulatory authority of the State Council.
Article 21 The securities regulatory authority of the State Council or the department authorized by the State Council shall be responsible for the registration of securities offering applications according to statutory conditions. The specific measures for the registration of public offering of securities shall be prescribed by the State Council.
According to the provisions of the State Council, a stock exchange, among others, may examine an application for the public offering of securities, judge whether an issuer meets the offering conditions and information disclosure requirements, and urge the issuer to improve the information disclosure content.
A person participating in the registration of a securities offering application according to the provisions of the preceding two paragraphs shall not be a party of interest of the offering applicant, shall not directly or indirectly accept any gift from the offering applicant, shall not hold the securities involved in the registered offering application, and shall not have any private contact with the offering applicant.
Article 22 The securities regulatory authority of the State Council or the department authorized by the State Council shall, within three months as of accepting securities offering application documents, make a decision on whether to approve the registration or not according to statutory conditions and statutory procedures, but the time required for an issuer to supplement or amend its offering application documents according to the relevant requirements shall not be included in the aforesaid period. If the registration is disapproved, the reasons for disapproval shall be stated.
Article 23 After a securities offering application is registered, the issuer shall, according to the provisions of laws and administrative regulations, announce the public offering documents before the public offering of securities and place such documents at designated places for public reference.
Before securities offering information is disclosed in accordance with the law, no insider may disclose or divulge such information.
An issuer shall not offer securities before announcing public offering documents.
Article 24 Where the securities regulatory authority of the State council or the department authorized by the State Council finds that the decision made by it on approving securities offering registration fails to meet statutory conditions or statutory procedures, it shall revoke the offering registration decision and order the issuer to cease the offering, if securities have not been offered; or revoke the offering registration decision if securities have been offered but not been listed. The issuer shall refund funds equivalent to the issue price plus interest calculated at the bank deposit rate for the corresponding period to securities holders. The issuer's controlling shareholder and actual controller and the sponsor shall assume joint and several liability with the issuer, unless they are able to prove that they have no fault.
Where a stock issuer conceals any important fact or fabricates any major false content in the prospectus or any other securities offering document, if the stock has been offered and listed, the securities regulatory authority of the State Council may order the issuer to repurchase the securities or order the liable controlling shareholder or actual controller to buy back the securities.
Article 25 After the offering of a stock in accordance with the law, the issuer shall be responsible for changes in the issuer's business operation and proceeds. The investment risks resulting from such changes shall be borne by investors themselves.
Article 26 Where the securities offered by an issuer to unspecific investors shall be underwritten by a securities company as provided for by any law or administrative regulation, the issuer shall enter into an underwriting agreement with the securities company. The form of proxy sale or exclusive sale shall be adopted for the underwriting of securities.
“Proxy sale of securities” means an underwriting form, whereby a securities company sells securities on behalf of the issuer and returns all unsold securities to the issuer at the end of the underwriting period.
“Exclusive sale of securities” means an underwriting form, whereby a securities company purchases all securities of an issuer according to the agreement or purchases all remaining unsold securities by itself at the end of the underwriting period.
Article 27 An issuer that offers securities to the public has the right to legally select a securities company for underwriting at its own will.
Article 28 Where a securities company underwrites securities, it shall enter into an agreement on proxy sale or exclusive sale with the issuer, which shall indicate the following matters:
(1) The name and domicile of the party and the name of its legal representative.
(2) The type, quantity, amount and issue price of securities under proxy sale or exclusive sale.
(3) The term of proxy sale or exclusive sale and the beginning and ending dates.
(4) The methods and date of payment for proxy sale and exclusive sale.
(5) The expenses for proxy sale or exclusive sale and settlement methods.
(6) The liability for the breach of contract.
(7) Other matters prescribed by the securities regulatory authority of the State Council.
Article 29 A securities company that underwrites securities shall inspect the veracity, accuracy and integrity of public offering documents. If it finds any false records, misleading statements or material omissions, it shall not conduct sales activities; and if it has conducted sales activities, it shall immediately cease such activities and take corrective measures.
A securities company that underwrites securities may not commit any of the following conduct:
(1) Conducting advertising or publicity or other publicity and promotion activities that are false or mislead investors.
(2) Soliciting the underwriting business by means of unfair competition.
(3) Committing any other violation of the provisions on securities underwriting.
Where a securities company commits any conduct set out in the preceding paragraph and causes any loss to any other securities underwriting institution or investors, it shall assume compensatory liability in accordance with the law.
Article 30 Where an underwriting syndicate is retained to underwrite securities offered to unspecific investors, the underwriting syndicate shall consist of securities companies as the principal underwriter and participants.
Article 31 The term for securities proxy sale or exclusive sale shall not exceed 90 days.
A securities company shall, within the period of proxy sale or exclusive sale, guarantee that the securities under proxy sale or exclusive sale are sold to subscribers in priority, the securities company shall not reserve in advance any securities under its proxy sale or purchase in advance and sustain any securities under its exclusive sale.
Article 32 Where a stock is offered at a premium, the issue price thereof shall be determined through negotiation between the issuer and the securities company that underwrites the stock.
Article 33 Where a stock is offered by proxy sale, and the number of shares sold to investors fails to reach 70% of the number of shares to be offered to the public after the expiration of the period of proxy sale, it shall be deemed as an offering failure. The issuer shall refund funds equivalent to the issue price plus interest calculated at the bank deposit rate for the corresponding period to stock subscribers.
Article 34 In the public offering of a stock, upon the expiration of the period for proxy sale or exclusive sale, the issuer shall report the stock offering information to the securities regulatory authority of the State Council for recordation within the prescribed time limit.
Chapter III Securities Trading
Section 1 General Provisions
Article 35 The securities traded by any party to securities transactions in accordance with the law must be securities offered and delivered in accordance with the law.
Securities not offered in accordance with the law shall not be traded.
Article 36 Where the Company Law of the People's Republic of China or any other law has restrictive provisions on the period of transfer of securities offered in accordance with the law, such securities shall not be transferred within such a period.
The transfer of a company's shares held by shareholders holding 5% or more of shares of a listed company, the actual controller, directors, supervisors and senior executives, as well as other shareholders holding shares offered by the issuer prior to the IPO or shares offered by a listed company to specific investors shall not violate any laws, administrative regulations, and the provisions issued by the securities regulatory authority of the State Council on the holding period, sale time, number of shares sold, sale methods, and information disclosure, among others, and shall comply with the business rules of the stock exchange.
Article 37 Securities offered to the public shall be listed and traded on a stock exchange formed in accordance with the law or traded on any other national stock trading place approved by the State Council.
Securities placed privately may be transferred on a stock exchange, any other national stock trading place approved by the State Council, or the regional equity market formed according to the provisions of the State Council.
Article 38 Securities shall be listed and traded on the stock exchange in the form of open and centralized trading or other forms approved by the securities regulatory authority of the State Council.
Article 39 Securities may be traded by the parties to securities transactions in a paper form or other forms prescribed by the securities regulatory authority of the State Council.
Article 40 An employee of a stock exchange, securities company or securities depository and clearing institution, a staff member of a securities regulatory authority, as well as any other person prohibited by any law or administrative regulation from participating in stock trading shall not, within his or her term of office or the statutory period, hold or trade in a stock or other securities of the equity nature directly or in any assumed name or in the name of any other person, or accept any stock or other securities of the equity nature from any other person as the gift.
The shares or other securities of the equity nature held by anyone before he or she becomes a person set out in the preceding paragraph must be transferred in accordance with the law.
Employees of a securities company implementing an equity incentive plan or an employee stock ownership plan may, according to the provisions of the securities regulatory authority of the State Council, hold or sell the company's stock or other securities of the equity nature.
Article 41 Stock exchanges, securities companies, securities depository and clearing institutions, securities service institutions and their employees shall keep confidential the information on investors in accordance with the law, and shall not trade in, provide or disclose the information on investors in an illegal manner.
Stock exchanges, securities companies, securities depository and clearing institutions, securities service institutions and their employees shall not divulge trade secrets to which they have access.
Article 42 A securities service institution and its employees that produce such documents as audit reports and legal opinions for the offering of securities shall not trade in such securities within the underwriting term of such securities or within six months after the expiration of the underwriting term of such securities.
Except as otherwise prescribed in the preceding paragraph, the securities service institution and its employees that produce such documents as audit reports and legal opinions for the issuer and its controlling shareholder, actual controller or the acquirer or the party to material asset transactions shall not trade in such securities from the date of accepting the entrustment to five days after the aforesaid documents are disclosed to the public. If the date on which the aforesaid work is actually carried out is earlier than the date on which the entrustment is accepted, such securities shall not be traded from the date on which the aforesaid work is actually carried out to the fifth day after the aforesaid documents are disclosed to the public.
Article 43 The fee charge for securities transactions shall be reasonable, and the charging items, fee rates and administrative measures shall be publicized.
Article 44 Where any shareholder holding 5% or more of shares, director, supervisor or senior executive of a listed company or a company of which the stock is traded on any other national stock trading place approved by the State Council sells the stock or other securities of the equity nature of the company held thereby within six months after the purchase thereof, or purchases the stock or other securities within six months after sale, the proceeds generated therefrom shall be owned by the company. The board of directors of the company shall take back the proceeds, unless the securities company holds 5% or more of shares for purchasing remaining after-sale shares in exclusive sale, and under any other circumstance prescribed by the securities regulatory authority of the State Council.
The stock or other securities of the equity nature held by a director, supervisor, senior executive or a natural person shareholder as mentioned in the preceding paragraph shall include the stock or other securities of the equity nature held by his or her spouse, parents or children and by making use of any other person's account.
Where the board of directors of a company fails to implement the provisions of paragraph 1, the shareholders shall have the right to require the board of directors to implement such provisions within 30 days. If the board of directors of a company fails to implement such provisions within the aforesaid period, the shareholders shall have the right to directly file a lawsuit with the people's court in their own names for the interests of the company.
Where the board of directors of a company fails to implement the provisions of paragraph 1, the liable directors shall assume several and joint liability in accordance with the law.
Article 45 Program trading automatically generated by computer programs or conducted based on assigned trading orders shall comply with the provisions issued by the securities regulatory authority of the State Council and be reported to a stock exchange, and shall not affect the system security or the normal trading order of the stock exchange.
Section 2 Securities Listing
Article 46 Whoever applies for securities listing and trading shall file an application with the stock exchange, which shall be subject to the examination and approval of the stock exchange according to the law, and a listing agreement shall be entered into by both parties.
The stock exchange shall arrange for the listing and trading of a government bond according to the decision of the department authorized by the State Council.
Article 47 Whoever applies for securities listing and trading shall meet the listing conditions prescribed in the listing rules of the stock exchange.
The listing conditions prescribed in the listing rules of a stock exchange shall provide for the number of years of operation, financial status, minimum public offering ratio, corporate governance and credit records, among others, of the issuer.
Article 48 Where a stock listed for trading falls under any circumstance where the listing thereof shall be terminated as prescribed by the stock exchange, the stock exchange shall terminate the listing and trading of the stock according to its business rules.
Where a stock exchange decides to terminate securities listing and trading, it shall make an announcement in a timely manner and file a report with the securities regulatory authority of the State Council for recordation.
Article 49 Any entity may apply to the review organ formed by the stock exchange for the review of the listing and trading disapproval and listing and trading termination decision made by the stock exchange.
Section 3 Prohibited Trading Acts
Article 50 Any insider who has access to inside information on securities trading or who has unlawfully obtained inside information is prohibited from using such inside information to conduct securities trading activities.
Article 51 The insiders who have access to inside information on securities trading include:
(1) the issuer and its directors, supervisors, and senior executives;
(2) shareholders holding 5% or more of shares of the company and their directors, supervisors, and senior executives, and the actual controller of the company and its directors, supervisors, and senior executives;
(3) the company of which the controlling shares are held or which is actually controlled by the issuer and its directors, supervisors, and senior executives;
(4) the personnel who have access to the inside information of the company in virtue of their positions held in the company or their business exchange with the company;
(5) the acquirer of a listed company or parties to material asset transactions, and their controlling shareholders, actual controllers, directors, supervisors and senior executives;
(6) the relevant personnel of stock exchanges, securities companies, securities depository and clearing institutions and securities service institutions who may have access to inside information by virtue of their positions or work;
(7) staff members of securities regulatory authorities who may have access to inside information by virtue of their duties or work;
(8) staff members of competent departments and regulatory authorities who may have access to inside information in their performance of statutory duties of administering securities offering and trading or listed companies and their acquisitions and material asset transactions; and
(9) other personnel who may have access to inside information as provided for by the securities regulatory authority of the State Council.
Article 52 “Inside information” means undisclosed information relating to the issuer's business or financial affairs, or may have a significant impact on the market price of securities of the issuer in securities trading activities.
The major events set out in paragraph 2 of Article 80 and paragraph 2 of Article 81 of this Law fall under inside information.
Article 53 Any insider who has access to inside information on securities trading or has unlawfully obtained inside information may not trade in the securities of the relevant company, or divulge such information, or advise any other person to trade in such securities prior to the disclosure of such inside information.
Where the acquisition of shares of a listed company by a natural person, legal person or an unincorporated organization holding 5% or more of shares of the company individually or jointly with others through agreements or other arrangements is otherwise provided for in this Law, such provisions shall prevail.
Whoever conducts insider trading, causing any loss to investors, shall assume compensatory liability in accordance with the law.
Article 54 The employees of stock exchanges, securities companies, securities depository and clearing institutions, securities service institutions and other financial institutions as well as the personnel of the relevant regulatory departments or industry associations shall be prohibited from using any undisclosed information other than inside information to which they have access by virtue of their positions to conduct securities trading activities relating to such information in violation of the relevant provisions, or explicitly or implicitly instructing any other person to conduct the relevant trading activities.
Whoever uses undisclosed information to conduct trading, causing any loss to investors, shall assume compensatory liability in accordance with the law.
Article 55 No one is allowed to manipulate the securities market by any of the following means, so as to affect the securities trading price or securities trading volume:
(1) Concentrating independently or by collusion the advantages in capital or the advantages in shareholding or the advantage in information so as to carry out colluded or continuous transactions.
(2) Colluding with any other person to carry out securities transactions with each other according to the time, price or ways as agreed to in advance.
(3) Conducting securities trading among the accounts under the actual control of his or her own.
(4) Placing frequent or large orders and canceling orders not for the purpose of concluding transactions.
(5) Inducing investors to conduct securities trading by using false or uncertain significant information.
(6) Offering public evaluation, forecast or investment advice on securities or the issuer, and conducts securities transactions contrary to the evaluation, forecast or investment advice.
(7) Conducting activities on any other relevant market so as to manipulate the securities market.
(8) Manipulating the securities market by other means.
Whoever manipulates the securities market, causing any loss to investors, shall assume compensatory liability in accordance with the law.
Article 56 No entity or individual is allowed to fabricate or disseminate false information or misleading information, so as to disrupt the securities market.
Stock exchanges, securities companies, securities depository and clearing institutions, securities service institutions and their employees, as well as securities associations, securities regulatory authorities and their staff members are prohibited from making false statements or giving misleading information in securities trading activities.
The securities market information disseminated by any media must be true and objective, and the dissemination of misleading information is prohibited. The media and their staff members engaged in the reporting of securities market information may not conduct securities trading in conflict with their duties.
Whoever fabricates or disseminates false information or misleading information, which disrupts the securities market and causes any loss to investors, shall assume compensatory liability in accordance with the law.
Article 57 A securities company and its employees are prohibited from committing any of the following conduct that damages clients' interests:
(1) Trading securities for any client against the entrustment thereof.
(2) Failing to provide any client with trading confirmation documents within the prescribed period of time.
(3) Trading securities for any client without the entrustment thereof, or trading securities under the guise of any client's name.
(4) Inducing any client to conduct unnecessary securities trading in order to charge commissions.
(5) Committing any other conduct against the expression of the client's true intention, which damages the client's interests.
Whoever violates the provisions of the preceding paragraph, causing any loss to clients, shall assume compensatory liability in accordance with the law.
Article 58 No entity or individual is allowed to lend the securities account thereof or borrow any other person's securities account to conduct securities trading in violation of the relevant provisions.
Article 59 The channels for the flow of funds to the market shall be broadened in accordance with the law, and the flow of funds to the stock market in violation of any provision is prohibited.
Investors are prohibited from using fiscal funds and bank credit funds to trade in securities in violation of any provision.
Article 60 Solely state-owned enterprises, solely state-owned enterprises and companies in which the state has a controlling stake that trade in stocks listed for trading shall comply with the relevant provisions of the state.
Article 61 Stock exchanges, securities companies, securities depository and clearing institutions, securities service institutions and their employees shall report any prohibited trading acts discovered in securities trading to the securities regulatory authority in a timely manner.
Chapter IV Acquisition of Listed Companies
Article 62 An investor may acquire a listed company by means of tender offer or agreement and other legal means.
Article 63 When the voting shares offered by a listed company as held by an investor through securities trading on the stock exchange or jointly with others through agreements or other arrangements reach 5%, the investor shall, within three days after the event occurs, submit a written report to the securities regulatory authority of the State Council and the stock exchange, notify the relevant listed company and make an announcement thereon. The investor may not trade in the stock of the listed company within the aforesaid period, unless under any circumstance prescribed by the securities regulatory authority of the State Council.
After the voting shares offered by a listed company as held by an investor or jointly with others through agreements or other arrangements reach 5%, the investor shall, according to the provisions of the preceding paragraph, make a report and announcement each time when the proportion of voting shares offered by the said company increases or decreases by 5%. From the day when the event occurs to the end of three days after the announcement is made, the investor may not trade in the stock of the listed company, unless under any circumstance prescribed by the securities regulatory authority of the State Council.
After the voting shares offered by a listed company as held by an investor or jointly with others through agreements or other arrangements reach 5%, each time when the proportion of voting shares offered by the said company increases or decreases by 1%, the investor shall notify the listed company and make an announcement thereon on the day immediately after the event occurs.
Whoever purchases the voting shares of a listed company in violation of paragraph 1 or 2 shall not exercise the voting right of the shares that exceed the prescribed ratio within 36 months after purchasing them.
Article 64 The announcement made in accordance with the provisions of the preceding Article shall cover the following content:
(1) The name and domicile of the shareholder.
(2) The name of the stock and the number of shares held.
(3) The date when the shareholding or the increase or decrease in the shareholding reaches the statutory ratio, and the source of funds for the increase in shareholding.
(4) The time when the voting shares of a listed company change and the methods of change.
Article 65 Where an investor continues to purchase shares when the voting shares offered by a listed company as held by an investor through securities trading on the stock exchange or jointly with others through agreements or other arrangements reach 30%, the investor shall, in accordance with the law, make a tender offer to all shareholders of the listed company for acquiring all or part of the shares of the listed company.
It shall be agreed upon in a tender offer for acquiring part of the shares of a listed company that, if the number of shares the shareholders of the target company promise to sell exceeds the number of shares intended to be acquired, the acquirer shall carry out the acquisition on a pro rata basis.
Article 66 The acquirer shall, before making a tender offer according to the provisions of the preceding Article, announce the report on the acquisition of a listed company, which shall indicate the following matters:
(1) The name and domicile of the acquirer.
(2) The acquisition decision of the acquirer.
(3) The name of the listed company to be acquired.
(4) The purpose of acquisition.
(5) The detailed description of the shares to be acquired and the number of shares intended to be acquired.
(6) The term and price of the acquisition.
(7) The amount of funds required for the acquisition and fund guarantee.
(8) The proportion of the number of shares of the target company held by the acquirer to the outstanding shares of the company, when the report on the acquisition of the listed company is announced.
Article 67 The acquisition period as specified in a tender offer shall be not less than 30 days but not more than 60 days.
Article 68 Within the period of acceptance as specified in the tender offer, the acquirer may not withdraw its tender offer. If an acquirer needs to modify a tender offer, it shall make an announcement in a timely manner, indicating the specific modification matters, and it shall not fall under any of the following circumstances:
(1) Lowering the acquisition price.
(2) Reducing the number of shares intended to be acquired.
(3) Shortening the acquisition period.
(4) Other circumstances prescribed by the securities regulatory authority of the State Council.
Article 69 All the terms and conditions of acquisition in a tender offer shall apply to all shareholders of the target company.
Where a listed company offers different types of shares, the acquirer may propose different acquisition conditions for different types of shares.
Article 70 In the case of acquisition by tender offer, during the acquisition period, the acquirer may not sell the stock of the target company, or purchase the stock of the target company beyond the forms and terms as specified in the tender offer.
Article 71 In the case of acquisition by agreement, the acquirer may effect share transfer with shareholders of the target company by agreement according to the provisions of laws and administrative regulations.
Where a listed company is acquired by agreement, the acquirer shall, within three days after the acquisition agreement is signed, submit a written report on the acquisition agreement to the securities regulatory authority of the State Council and the stock exchange, and make an announcement thereon.
No acquisition agreement may be performed before the relevant announcement is made.
Article 72 In the case of acquisition by agreement, both parties to the agreement may temporarily entrust a securities depository and clearing institution to take into custody the shares transferred under the agreement and deposit funds at the designated bank.
Article 73 In the case of acquisition by agreement, if the acquirer continues to purchase shares when the voting shares offered by a listed company as purchased by the acquirer or jointly with others through agreements or other arrangement reach 30%, it shall make a tender offer to all shareholders of the listed company for acquiring all of or part of the company's shares in accordance with the law, unless the tender offer is exempted by the securities regulatory authority of the State Council.
The acquirer that purchases the shares of a listed company by tender offer according to the provisions of the preceding paragraph shall comply with the provisions of paragraph 2 of Article 65 and Articles 66 through 70 of this Law.
Article 74 Where, upon the expiration of the acquisition period, the equity distribution of the target company fails to satisfy the requirements for listing and trading prescribed by the stock exchange, the listing and trading of the listed company's stock shall be terminated by the stock exchange in accordance with the law. The shareholders that still hold the stock of the target company have the right to sell their stock to the acquirer on the equal terms and conditions as prescribed in the relevant tender offer, and the acquirer shall purchase such stock.
Where, after the completion of the acquisition, the target company is no longer qualified as a joint-stock limited company, its enterprise form shall be modified in accordance with the law.
Article 75 In the acquisition of a listed company, the stock of the target listed company held by the acquirer shall not be transferred within 18 months after the completion of acquisition.
Article 76 Where, after the completion of acquisition, the acquirer merges with the target company by dissolving the target company, the original shares of the dissolved company shall be exchanged by the acquirer in accordance with the law.
After the completion of acquisition, the acquirer shall, within 15 days, report the acquisition information to the securities regulatory authority of the State Council and the stock exchange, and shall make an announcement thereon.
Article 77 The securities regulatory authority of the State Council shall develop specific measures for the acquisition of listed companies in accordance with this Law.
The division of a listed company or the merger thereof by any other company shall be reported to the securities regulatory authority of the State Council and shall be announced.
Chapter V Information Disclosure
Article 78 The issuer and other parties with information disclosure obligations provided for by laws, administrative regulations and the provisions issued by the securities regulatory authority of the State Council shall legally perform the information disclosure obligation in a timely manner.
The information disclosed by the parties with information disclosure obligations shall be true, accurate and complete, concise and clear, easy to understand, and shall not contain any false records, misleading statements or material omissions.
Where securities are offered to the public and traded both at home and abroad, the information disclosed abroad by the parties with information disclosure obligations shall be disclosed within China at the same time.
Article 79 A listed company, a company of which the corporate bond is listed for trading, or a company of which the stock is traded on any other national stock trading place approved by the State Council shall prepare periodical reports according to the content and format prescribed by the securities regulatory authority of the State Council and the stock exchange, and submit them and make an announcement thereon according to the following provisions:
(1) Submitting and announcing its annual report within four months after the end of each accounting year, of which the annual financial accounting report shall be audited by an accounting firm in compliance with the provisions of this Law.
(2) Submitting and announcing interim reports within two months from the end of the first half of each accounting year.
Article 80 In the case of any major event that may considerably affect the trading price of a stock of a listed company, or a company of which the stock is traded on any other national stock trading place approved by the State Council, when the investor has not yet been notified, the company shall immediately submit an interim report on the said major event to the securities regulatory authority of the State Council and the stock exchange, and make an announcement to state the cause of the event, its current status and possible legal consequences.
“Major events” as mentioned in the preceding paragraph include:
(1) Material changes in the company's business guidelines or business scope.
(2) The company's major investment, the major assets purchased or sold by the company within one year exceed 30% of the company's total assets, or the mortgaged, pledged, sold or discarded value of major assets involved in the company's business operation exceeds 30% of the said assets at a single time.
(3) The company enters into an important contract, provides major guarantee or conducts affiliated transactions, which may have a significant impact on the company's assets, liabilities, rights and interests and operating results.
(4) The company has the default of material debt, or failing to pay off any material debt due.
(5) The company has any major deficit or serious loss.
(6) Material change in the external conditions for the company's production and distribution.
(7) Change of the company's directors, one third or more of supervisors or managers, and the chairman of the board of directors or the manager is unable to perform his or her duties.
(8) A considerable change in the shareholding of shareholders holing 5% or more of shares of the company, or in the actual controller's control of the company, or a considerable change in the provision of same or similar services as those of the company by the company's actual controller and other enterprises controlled by it.
(9) The company's plan for distributing dividends and increasing capital, material change in the company's equity structure, a decision made by the company on its capital reduction, merger, division, dissolution or application for bankruptcy, or the company enters into bankruptcy proceedings according to law or is ordered to close down.
(10) Major litigation or lawsuit involving the company, or the resolution of the shareholders' meeting or the board of directors is legally revoked or announced null and void.
(11) The company is involved in any crime and is subject to case investigation in accordance with the law, or the company's controlling shareholder, actual controller, director, supervisor or senior executive is suspected of any crime and taken against compulsory measures in accordance with the law.
(12) Other matters prescribed by the securities regulatory authority of the State Council.
Where the company's controlling shareholder or actual controller has a significant impact on the occurrence or process of any major event, it shall, in a timely manner, inform the company of relevant information to which it has access and cooperate with the company in performing the information disclosure obligation.
Article 81 Where any major event that may considerably affect the trading price of a corporate bond listed for trading occurs, when the investor has not yet been notified, the company shall immediately submit an interim report on the said major event to the securities regulatory authority of the State Council and the stock exchange, and make an announcement to state the cause of the event, its current status and possible legal consequences.
“Major events” as mentioned in the preceding paragraph include:
(1) Material change of the company's equity structure or production and distribution status.
(2) Change of the credit rating of the corporate bond.
(3) The mortgage, pledge, sale, transfer or write-off of any major asset of the company.
(4) The company fails to pay off any mature debt.
(5) The company's new loan or external guarantee exceeds 20% of its net assets at the end of the previous year.
(6) The claims or property waived by the company exceeds 10% of the company's net assets at the end of the previous year.
(7) The company suffers heavy losses which exceed 10% of its net assets at the end of the previous year.
(8) The company distributes dividends, makes decisions on capital reduction, merger, division, dissolution or application for bankruptcy, or enters into bankruptcy proceedings in accordance with the law or is ordered to close down.
(9) Major litigation or arbitration involving the company.
(10) The company is suspected of any crime and is under case investigation in accordance with the law; or the company's controlling shareholder, actual controller, director, supervisor or senior executive is suspected of any crime and taken against compulsory measures in accordance with the law.
(11) Other matters prescribed by the securities regulatory authority of the State Council.
Article 82 An issuer's directors and senior executives shall sign written confirmation opinions on securities offering documents and periodical reports.
The issuer's board of supervisors shall examine the securities offering documents and periodical reports prepared by the board of directors and offer written examination opinions. Supervisors shall sign written confirmation opinions.
The issuer's directors, supervisors and senior executives shall ensure that the issuer discloses information in a timely and fair manner, and the information disclosed is true, accurate and complete.
Where any director, supervisor or senior executive is unable to ensure the veracity, accuracy and integrity of the content of securities offering documents and periodical reports or has any objection, it shall give its opinions and explain the reason in written confirmation opinions, and the issuer shall make a disclosure. If the issuer fails to make a disclosure, its directors, supervisors and senior executives may directly apply for disclosure.
Article 83 Information disclosed by the parties with information disclosure obligations shall be disclosed to all investors at the same time and shall not be disclosed to any entity or individual in advance, unless as otherwise provided for by any law or administrative regulation.
No entity or individual shall illegally require the party with information disclosure obligations to provide information that shall be disclosed in accordance with the law but has not been disclosed. The aforesaid information obtained by any entity or individual in advance shall be kept confidential prior to the disclosure thereof in accordance with the law.
Article 84 In addition to the information that shall be disclosed in accordance with the law, the party with information disclosure obligations may voluntarily disclose information relating to investor's value judgment and investment decision-making, but such information shall not contradict the information disclosed in accordance with the law or mislead investors.
Where the issuer and its controlling shareholder, actual controller, directors, supervisors, senior executives, among others, make a public undertaking, such undertaking shall be disclosed. Whoever fails to perform the undertaking, causing any loss to investors, shall assume compensatory liability in accordance with the law.
Article 85 Where the party with information disclosure obligations fails to disclose information according to relevant provisions, or there are any false records, misleading statements or material omissions in the announced securities offering documents, periodical reports, interim reports and other information disclosure materials, which causes any loss to investors in securities trading, the party with information disclosure obligations shall assume compensatory liability. The issuer's controlling shareholder, actual controller, directors, supervisors and senior executives and other directly liable personnel and the sponsor, the underwriting securities company and their directly liable personnel shall assume compensatory liability jointly and severally with the issuer, unless they can prove that they have no fault.
Article 86 Information disclosed in accordance with the law shall be published on the website of the stock exchange and media meeting the conditions prescribed by the securities regulatory authority of the State Council and made available at the domicile of the company and the stock exchange for the reference of the public.
Article 87 The securities regulatory authority of the State Council shall supervise and administer the information disclosure of the parties with information disclosure obligations.
A stock exchange shall supervise the information disclosure of the parties with the obligation to disclose the information on securities of which the trading is organized by it, and urge such parties to legally disclose information in a timely and accurate manner.
Chapter VI Investor Protection
Article 88 When a securities company sells securities and provides services to investors, it shall, according to the relevant provisions, fully understand the basic information, property status, financial asset status, investment knowledge and experience, professional capability and other relevant information of investors, truthfully state the important content of securities and services, and fully disclose investment risks; and sell and provide securities and services in commensurate with the aforesaid status of investors.
Investors shall provide true information set out in the preceding paragraph according to the requirements explicitly provided for by the securities company when purchasing securities or accepting services. If any investor refuses to provide information or fails to provide information as required, the securities company shall inform the investor of the consequences, and refuse to sell securities or provide services to the investor as required.
Where a securities company violates the provision of paragraph 1, causing any loss to investors, it shall assume the corresponding compensatory liability.
Article 89 Investors may be divided into ordinary investors and professional investors according to the asset status, financial asset status, investment knowledge and experience, professional capability and other factors. The standards for professional investors shall be provided for by the securities regulatory authority of the State Council.
Where any ordinary investor has any dispute with a securities company, the securities company shall prove that its conduct complies with laws, administrative regulations and the provisions issued by the securities regulatory authority of the State Council, and shall not fall under any misleading or fraudulent circumstance. The securities company that is unable to prove its compliance with relevant provisions shall assume the corresponding compensatory liability.
Article 90 The board of directors, independent directors, shareholders holding 1% or more of voting shares of a listed company or an investor protection institution formed in accordance with the provisions of laws, administrative regulations or the provisions issued by the securities regulatory authority of the State Council (hereinafter referred to as the “investor protection institution”) may, as the solicitor, publicly request shareholders of the listed company to entrust them to attend the shareholders' meeting and to exercise the right to make proposals, the right to vote and other rights of shareholders on their behalf or entrusting a securities company or a securities service institution to do so.
Where shareholders' rights are solicited according to the provisions of the preceding paragraph, the solicitor shall disclose solicitation documents, and the listed company shall cooperate.
It is prohibited from publicly soliciting shareholders' rights with payments or payments in any disguised form.
Where the public solicitation of shareholders' rights violates any law, administrative regulation or the relevant provisions issued by the securities regulatory authority of the State Council, which causes any loss to the listed company or its shareholders, the violator shall assume compensatory liability in accordance with the law.
Article 91 A listed company shall specify in its bylaws detailed arrangements and decision-making procedures for the distribution of cash dividends, and protect the right to return on assets of shareholders in accordance with the law.
Where a listed company has a surplus after making up loss and withdrawing legal reserve from its after-tax profit of the current year, it shall distribute cash dividends according to the provisions of the company's bylaws.
Article 92 In the public offering of corporate bonds, the bondholders' meeting shall be convened, and the procedures for convening bondholders' meetings, the rules of meetings and other important matters shall be stated in the prospectus.
The issuer that offers a corporate bond to the public shall retain a bond trustee for bondholders, and enter into a bond trustee agreement. The trustee shall be the underwriter for the current offering or any other institution recognized by the securities regulatory authority of the State Council. A resolution on the change of the bond trustee may be made at the bondholders' meeting. The bond trustee shall act with due diligence and perform trustee duties in an impartial manner, and shall not damage the interests of bondholders.
Where a bond issuer fails to pay the principal and interest of a bond as scheduled, the bond trustee may, as entrusted by all or part of bondholders, file or participate in civil lawsuits or liquidation procedures in its own name on behalf of bondholders.
Article 93 Where an issuer causes any loss to investors due to fraudulent offering, false statements or any other major violation of law, the issuer's controlling shareholder, actual controller or the relevant securities company may entrust an investor protection institution to enter into an agreement with investors who suffer losses on compensation matters to make compensation in advance. It may legally claim compensation from the issuer and other parties jointly held liable after making compensation in advance.
Article 94 In the case of any dispute between an investor and an issuer or a securities company, among others, both parties may apply to the investor protection institution for mediation. If an ordinary investor has any dispute over the securities business with a securities company and the ordinary investor files a request for mediation, the securities company shall not reject the request.
The investor protection institution may, in accordance with the law, support an investor in instituting a lawsuit against the act damaging investors' interests with the people's court.
Where the issuer's director, supervisor or senior executive violates the provisions of any law or administrative regulation or the company's bylaws in the performance of corporate duties, causing any loss to the company, or the issuer's controlling shareholder or actual controller, among others, infringes upon the company's lawful rights and interests and causes any loss to the company, and the investor protection institution holds shares of the company, it may file a lawsuit with a people's court in its own name for the interests of the company, the shareholding ratio and shareholding period shall not be subject to the restriction prescribed in the Company Law of the People's Republic of China.
Article 95 When an investor files a lawsuit for civil compensation on securities against false statements, among others, the subject matter of the lawsuit is of the same kind, and the parties on one side of a lawsuit are numerous, they may legally elect a representative to participate in legal proceedings.
For a lawsuit filed according to the provisions of the preceding paragraph, if there may be many other investors who have the same claim, the people's court may issue an announcement to state the case facts of the claim, and notify investors to register with the people's court within a certain period. The judgments or rulings rendered by the people's court shall be valid for the registered investors.
An investor protection institution may, as entrusted by 50 or more investors, participate in legal proceedings as a representative, and shall register the obligee confirmed by the securities depository and clearing institution at the people's court in accordance with the provisions of the preceding paragraph, unless the investors have clearly expressed their unwillingness to participate in legal proceedings.
Chapter VII Stock Exchanges
Article 96 Stock exchanges and other national stock exchange places approved by the State Council shall provide places and facilities for the centralized trading of securities, organize and supervise securities trading, conduct self-regulatory management, be registered in accordance with the law, and obtain the legal person qualification.
The formation, modification and dissolution of a stock exchange or any other national stock exchange place approved by the State Council shall be subject to the decision-making of the State Council.
The organizational structure and management measures, among others, of other national stock trading places approved by the State Council shall be provided for by the State Council.
Article 97 Stock exchanges and other national stock exchange places approved by the State Council may establish different market levels according to the types of securities, industry characteristics, company scale and other factors.
Article 98 Regional equity markets established in accordance with the provisions of the State Council shall provide places and facilities for the offering and transfer of privately placed securities, and the specific administrative measures shall be developed by the State Council.
Article 99 When performing the function of self-regulatory management, a stock exchange shall observe the principle of giving priority to public interest and maintain a fair, orderly and transparent market.
Articles of association must be developed for the formation of a stock exchange. The development and revision of articles of association of a stock exchange shall be subject to the approval of the securities regulatory authority of the State Council.
Article 100 The words “stock exchange” shall be indicated in the name of a stock exchange. No other entity or individual may use the words “stock exchange” or similar words in the name.
Article 101 All kinds of expenses and income that may be distributed by a stock exchange shall first be used to guarantee the normal operation and gradual improvement of the premises and facilities of the stock exchange.
The properties accumulated by a stock exchange implementing the membership system shall belong to its members, the rights and interests thereof shall be jointly shared by its members. No accumulated properties of a stock exchange may be distributed to any member during its existence.
Article 102 A stock exchange implementing the membership system shall have the board of governors and the board of supervisors.
A stock exchange shall have a general manager, who shall be appointed and dismissed by the securities regulatory authority of the State Council.
Article 103 Whoever falls under the circumstance set out in Article 146 of the Company Law of the People's Republic of China or any of the following circumstances shall not serve as the person in charge of a stock exchange:
(1) It has not been five years since the date when the person in charge of a stock exchange or securities depository and clearing institution or a director, supervisor or senior executive of a securities company was removed from office due to any violation of law or discipline.
(2) It has not been five years since the date when the practice certificate of a lawyer, a certified public accountant or a professional of any other securities service institution was revoked or such a person was disqualified due to any violation of law or discipline.
Article 104 An employee of a stock exchange, securities company, securities depository and clearing institution, or securities service institution or a staff member of a state organ who has been dismissed due to any violation of law or discipline shall not be retained as an employee of a stock exchange.
Article 105 A person who enters a stock exchange implementing the membership system must be a member of the stock exchange. A stock exchange shall not allow any non-member to directly participate in the centralized trading of stocks.
Article 106 An investor shall enter into an entrustment agreement on securities trading with a securities company, open a real-name account at the securities company and entrust the securities company to trade in securities on its behalf in writing, by telephone, self-service terminals, through the Internet or by other means.
Article 107 A securities company which opens accounts for investors shall verify the identity information provided by investors according to the relevant provisions.
The securities company shall not provide an investor's account to others for use.
Investors shall conduct transactions by using accounts opened in their true names.
Article 108 A securities company shall, based on the entrustment of investors, place trading orders and participate in centralized trading at a stock exchange according to securities trading rules and shall assume the corresponding clearing and settlement liabilities based on trading results. A securities depository and clearing institution shall, according to trading results and clearing and settlement rules, conduct the clearing and settlement of securities and funds with the securities company, and undergo the formalities of transfer registration of securities for clients of the securities company.
Article 109 A stock exchange shall guarantee fair centralized trading, announce real-time quotations of securities trading, prepare tabulated quotations of the securities market based on trading days, and publish them.
The rights and interests arising from real-time quotations on securities trading shall be enjoyed by the stock exchange in accordance with the law. Without the approval of the stock exchange, no entity or individual may publish real-time quotations on securities trading.
Article 110 A listed company may apply to a stock exchange for the suspension or resumption of trading of its stock listed for trading, but shall not abuse trading suspension or resumption to damage the lawful rights and interests of any investor.
A stock exchange may, according to the provisions of business rules, decide on the suspension or resumption of trading of the stock listed for trading.
Article 111 Where the normal operation of securities trading is affected by force majeure, any accident, major technical failure, major human error or any other emergency, a stock exchange may, for the purpose of maintaining the normal order of securities trading and market fairness, take measures such as technical suspension of trading and temporary closure of the market according to its business rules, and shall file a report with the securities regulatory authority of the State Council in a timely manner.
Where any emergency set out in the preceding paragraph causes significant unusual securities trading result, and settlement according to the trading result will have a significant impact on the normal order of securities trading and market fairness, the stock exchange may, according to its business rules, take measures such as canceling transactions and notifying the securities depository and clearing institution to postpone the settlement, and shall, in timely manner, file a report with the securities regulatory authority of the State Council and make an announcement.
A stock exchange shall not assume civil compensatory liability for losses caused by the measures taken by it according to the provisions of this Article, unless it has any serious fault.
Article 112 A stock exchange shall conduct the real-time monitoring of securities transactions and shall file a report on abnormal transactions according to the requirements of the securities regulatory authority of the State Council.
A stock exchange may, as required and according to business rules, restrict the trading of an investor that conducts major abnormal transactions through its securities account, and shall file a report with the securities regulatory authority of the State Council in a timely manner.
Article 113 A stock exchange shall strengthen the risk monitoring of securities trading. In the case of material abnormal fluctuation, the stock exchange may, according to its business rules, take measures such as restricting transactions and compulsory suspension of trading, and file a report with the securities regulatory authority of the State Council; if the stability of the securities market is seriously affected, the stock exchange may, according to its business rules, take measures such as temporary market closure and make an announcement thereon.
A stock exchange shall not assume civil compensatory liability for losses caused by the measures taken by it according to the provisions of this Article, unless it has any serious fault.
Article 114 A stock exchange shall withdraw a certain proportion of funds from the transaction fees, membership fees and seat fees it has charged to establish a risk fund. The risk fund shall be subject to the administration of the board of governors of the stock exchange.
The specific withdrawal proportion and methods for the use of the risk fund shall be provided for by the securities regulatory authority of the State Council in conjunction with the finance department of the State Council.
A stock exchange shall deposit its risk fund into a special account of its opening bank and shall not use it without authorization.
Article 115 A stock exchange shall, in accordance with laws and administrative regulations and the provisions issued by the securities regulatory authority of the State Council, develop rules on listing, trading and member management as well as other relevant business rules, and file a report with the securities regulatory authority of the State Council for approval.
Whoever conducts securities transactions on a stock exchange shall comply with the business rules developed by the State Council in accordance with the law. Whoever violates business rules shall be taken against disciplinary action or other self-regulatory management measures by the stock exchange.
Article 116 In performing duties related to securities trading, the person in charge or any other employee of a stock exchange shall withdraw if he or she himself or one of his or her relatives is a party of interest.
Article 117 Where transactions are conducted according to trading rules developed in accordance with the law, the trading results thereof shall not be altered, unless it is prescribed in paragraph 2 of Article 111 of this Law. Whoever violates any provision in trading shall not be exempted from civil liability. Gains obtained from trading in violation of any provision shall be dealt with according to the relevant provisions.
Chapter VIII Securities Companies
Article 118 The formation of a securities company shall meet the following conditions and be subject to the approval of the securities regulatory authority of the State Council.
(1) It has the company's bylaws in compliance with the provisions of laws and administrative regulations.
(2) Its major shareholders and the company's actual controller have sound financial status and credit records, and have no records of major violation of law or regulation in the most recent three years.
(3) Its registered capital complies with the provisions of this Law.
(4) Its directors, supervisors, senior executives and employees meet the conditions prescribed in this Law.
(5) It has sound risk management and internal control rules.
(6) It has qualified business premises, business facilities and information technology system.
(7) It meets other conditions prescribed by laws, administrative regulations and the securities regulatory authority of the State Council with the approval of the State Council.
No entity or individual may conduct securities business activities in the name of a securities company without the approval of the securities regulatory authority of the State Council.
Article 119 The securities regulatory authority of the State Council shall, within six months as of accepting an application for the formation of a securities company, conduct examination according to statutory conditions and statutory procedures under the principle of prudential supervision, and make a decision to approve or disapprove the application, and notify the applicant of its decision; if it disapproves the application, it shall explain the reason for disapproval.
Where an application for the formation of a securities company is approved, the applicant shall apply to the company registration authority for formation registration with the prescribed time limit and obtain a business license.
A securities company shall, within 15 days as of obtaining its business license, file an application for a securities business permit with the securities regulatory authority of the State Council. Without a securities business permit, a securities company shall not engage in the securities business.
Article 120 A securities company may provide some or all of the following securities services after obtaining the securities business permit with the approval of the securities regulatory authority of the State Council:
(1) Securities brokerage.
(2) Securities investment consulting.
(3) Financial advisory services relating to securities trading and securities investment activities.
(4) Securities underwriting and sponsorship.
(5) Securities margin trading and short selling.
(6) Securities market making transactions.
(7) Proprietary securities trading.
(8) Other securities services.
The securities regulatory department of the State Council shall, within three months after accepting an application for any matter prescribed in the preceding paragraph, conduct examination according to statutory conditions and procedures, make a decision to approve or disapprove the application and notify the applicant of the decision; and if it disapproves the application, shall explain the reason for disapproval.
Securities companies providing securities asset management services shall comply with the provisions of the Securities Investment Fund Law of the People's Republic of China and relevant laws and administrative regulations.
Except for securities companies, no entity or individual shall provide securities underwriting, securities sponsorship, securities brokerage and securities margin trading and short selling services.
A securities company providing securities margin trading and short selling services shall take measures to strictly prevent and control risks and shall not lend funds or securities to clients in violation of any provision.
Article 121 Where a securities company provides services set out in subparagraph (1) through (3), paragraph 1 of Article 120 of this Law, its minimum registered capital shall be 50 million yuan. If it provides any services set out in subparagraph (4) through (8), its minimum registered capital shall be 100 million yuan. If it provides two or more services set out in subparagraph (4) through (8), its minimum registered capital shall be 500 million yuan. The registered capital of a securities company shall be paid-in capital.
The securities regulatory authority of the State Council may, according to the principle of prudential supervision and in light of the risk degree of all services, adjust the requirement for the minimum registered capital, which shall not be less than the minimum amount prescribed in the preceding paragraph.
Article 122 A securities company's modification of securities business scope, modification of any major shareholder or the company's actual controller, merger, division, split, suspension of business operation, dissolution or bankruptcy shall be subject to the approval of the securities regulatory authority of the State Council.
Article 123 The securities regulatory authority of the State Council shall provide for the net capital and other risk control indicators of securities companies.
Except the provision of margin trading and short selling services to clients according to the relevant provisions, a securities company shall not provide financing or guarantee to its shareholders or the affiliates thereof.
Article 124 The directors, supervisors and senior executives of a securities company shall be honest and upright, have good character and conduct, be familiar with the laws and administrative regulations on securities, and have the business management capability required for the performance of their duties. The appointment and removal of directors, supervisors and senior executives of a securities company shall be filed with the securities regulatory authority of the State Council.
Whoever falls under any circumstance set out in Article 146 of the Company Law of the People's Republic of China or falls under any of the following circumstances shall not serve as the director, supervisor or senior executive of a securities company:
(1) It has not been five years since the person in charge of a stock exchange or securities depository and clearing institution or a director, supervisor or senior executive of a securities company was removed from office for any violation of law or discipline.
(2) It has not been five years since the date when the practice certificate of a lawyer, a certified public account or a professional of any other securities service institution was revoked or the said person was disqualified for any violation of law or discipline.
Article 125 Personnel of a securities company providing securities services shall have good character and conduct, and have the professional capability for providing securities services.
An employee of a stock exchange, securities company, securities depository and clearing institution, or securities service institution or any staff member of a state organ, who was dismissed for any violation of law or discipline, shall not be retained as an employee of a securities company.
A staff member of a state organ or any other person prohibited by any law or administrative regulation from holding concurrent positions in companies shall not concurrently hold any position in a securities company.
Article 126 The state shall establish a securities investor protection fund. The securities investor protection fund shall be composed of the funds paid by securities companies and other funds raised in accordance with the law. The size and specific measures for the raising, administration and use of funds shall be developed by the State Council.
Article 127 A securities company shall withdraw a trading risk reserve from its annual business income to make up the loss in securities trading. The specific proportion for withdrawal shall be prescribed by the securities regulatory authority of the State Council in conjunction with the finance department of the State Council.
Article 128 A securities company shall establish and improve internal control rules, and take effective isolation measures to prevent the conflicts of interest between the company and its clients and among different clients.
A securities company shall separate its provision of securities brokerage, securities underwriting, proprietary securities, securities market making and securities asset management services and shall not mix them up in operation.
Article 129 A securities company shall conduct its proprietary business in its own name and shall not do so in the name of any other person or in the name of an individual.
A securities company shall conduct its proprietary business with its own funds and funds raised in accordance with the law.
A securities company shall not lend its account for proprietary business to others for use.
Article 130 A securities company shall conduct prudential operation in accordance with the law, act with due diligence and have good faith.
The business activities of a securities company shall be commensurate with its governance structure, internal control, compliance management, risk management and risk control indicators, composition of employees, and other circumstances, and comply with the requirements for prudential supervision and protecting the investors' lawful rights and interests.
A securities company enjoys the right to conduct independent business operation in accordance with the law and its lawful business operation shall not be interfered with.
Article 131 The trading settlement funds of clients of a securities company shall be deposited at a commercial bank and be managed through separate accounts opened in the name of each client.
A securities company shall not include its clients' trading settlement funds or securities in its own property. No entity or individual may misappropriate any client's trading settlement funds or securities in any form. If a securities company undergoes bankruptcy procedures or conducts liquidation, its clients' trading settlement funds and securities do not fall under the bankruptcy property or property for liquidation. The clients' trading settlement funds and securities shall not be sealed up, frozen, withheld, deducted or subject to compulsory enforcement, except for the purpose of settling the client's own debt or under any other circumstance provided for by any law.
Article 132 Where a securities company provides brokerage services, it shall make available uniformly formulated power of attorney for clients' securities trading. If other forms of entrustment are adopted, such entrustment must be recorded.
With respect to clients' entrustment for trading securities, no matter whether a transaction is concluded, the entrustment records shall be kept at the securities company within the prescribed period.
Article 133 Upon accepting an entrustment for securities trading, a securities company shall, on the basis of the description of the securities, trading volume, method of offering bid price, and price range, among others, as indicated in the power of attorney, trade in securities as an agent according to trading rules and make trading records in a faithful manner. After a transaction is concluded, a securities company shall, according to the relevant provisions, prepare a transaction report and deliver it to clients.
The statements of account confirming the activities and results of securities transactions must be true so as to ensure correspondence between the balance of securities on account books and the securities actually held.
Article 134 A securities company providing brokerage services shall not decide on the trading of securities, select the types of securities, or decide on the quantity or price of securities on the basis of full entrustment of its client.
A securities company shall not allow any other person to directly participate in the centralized trading of securities in the name of the securities company.
Article 135 A securities company shall not make any undertaking to its clients on securities trading proceeds or on compensating the loss as incurred from securities trading by any means.
Article 136 Where any employee of a securities company violates trading rules by implementing the instructions of the securities company as his or her employer or taking advantage of his or her position in securities trading, the securities company shall assume all liabilities.
No employee of a securities company may privately accept the entrustment of any client to trade in securities.
Article 137 A securities company shall establish client information inquiry rules to ensure that clients can consult their account information, entrustment records, trading records and other important information relating to the acceptance of services or purchase of products.
A securities company shall property retain clients' account opening materials, entrustment records, trading records and information on its internal management and business operations. No one may conceal, forge, falsify or destroy any of the aforesaid materials. The aforesaid information shall be retained for not less than 20 years.
Article 138 A securities company shall, according to relevant provisions, submit its business, financial and other business management information and materials to the securities regulatory authority of the State Council. The securities regulatory authority of the State Council has the right to require the securities company and its major shareholders and actual controller to provide the relevant information and materials within a prescribed period.
The information and materials submitted or provided by the securities company and its major shareholders and actual controller to the securities regulatory authority of the State Council shall be true, accurate and complete.
Article 139 The securities regulatory authority of the State Council may, when it considers necessary, entrust an accounting firm or asset appraisal institution to audit or assess the financial status, internal control and asset value of a securities company. The specific measures shall be developed by the securities regulatory authority of the State Council in conjunction with the relevant administrative departments.
Article 140 Where the governance structure, compliance management or risk control indicators of a securities company fails to comply with the relevant provisions, the securities regulatory authority of the State Council shall order it to take corrective action within a prescribed time limit; if it fails to do so within the prescribed time limit, or its conduct seriously endangers the sound operation of the securities company or damages the lawful rights and interests of its clients, the securities regulatory authority of the State Council may take the following measures against it in light of different circumstances:
(1) Restricting its business activities, ordering it to suspend some business operations and ceasing the approval of any new business.
(2) Restricting its distribution of dividends, restricting the payment of remuneration or provision of welfare to its directors, supervisors and senior executives.
(3) Restricting the transfer of property or setting other rights on its property.
(4) Ordering it to replace its directors, supervisors or senior executives, or restricting their rights.
(5) Revoking the relevant business permit.
(6) Determining the liable director, supervisor or senior executive as unfit.
(7) Ordering the liable shareholder to transfer equity, or restricting its liable shareholder from exercising the shareholders' rights.
A securities company shall, after making rectification, submit a report to the securities regulatory authority of the State Council. If the securities regulatory authority finds upon acceptance check that the governance structure, compliance management and risk control indicators comply with the relevant provisions, it shall, within three days after the completion of acceptance check, remove the relevant restrictive measures prescribed in the preceding paragraph taken against the securities company.
Article 141 Where a shareholder of a securities company makes false capital contribution or withdraws capital contribution, the securities regulatory authority of the State Council shall order him or her to take corrective action within a prescribed period and may order him or her to transfer the equities of the securities company held.
Before a shareholder prescribed in the preceding paragraph corrects his or her violation of law and transfers the equities of the securities company held as required, the securities regulatory authority of the State Council may restrict the shareholders' rights thereof.
Article 142 Where any director, supervisor or senior executive of a securities company fails to act with due diligence, resulting in the securities company's major violation of law or regulation or major risks, the securities regulatory authority of the State Council may order the securities company to replace him or her.
Article 143 Where a securities company has illegal operation or major risks, which seriously disrupts the order of the securities market and damages the interests of investors, the securities regulatory authority of the State Council may take such regulatory measures as ordering it to cease business operation for rectification, designating any other institution to manage or take over its business, and administratively dissolving it against the securities company.
Article 144 During a period when a securities company is ordered to cease business operation for rectification, or any other institution is legally designated to manage or take over its business or it is liquidated, or when any major risk occurs, the following measures may be taken against the directly liable directors, supervisors, senior executives and other directly liable persons of the securities company with the approval of the securities regulatory authority of the State Council:
(1) Notifying the exit-entry administrative authority to prevent him or her from leaving China in accordance with the law.
(2) Applying to the judicial authority for prohibiting him or her from transferring, assigning or otherwise disposing of the property thereof, or setting other rights on the property.
Chapter IX Securities Depository and Clearing Institutions
Article 145 A securities depository and clearing institution is a legally registered not-for-profit legal person that provides centralized registration, depository and settlement services for securities trading and is qualified as a legal person.
The formation of a securities depository and clearing institution shall be subject to the approval of the securities regulatory authority of the State Council.
Article 146 Whoever applies for the formation of a securities depository and clearing institution shall meet the following conditions:
(1) Its own funds are not less than 200 million yuan.
(2) It has the premises and facilities required for the provision of securities registration, depository and settlement services.
(3) Other conditions prescribed by the securities regulatory authority of the State Council.
The words “securities depository and settlement” shall be indicated in the name of a securities depository and clearing institution.
Article 147 A securities depository and clearing institution shall perform the following functions:
(1) The opening of securities accounts and settlement accounts.
(2) The custody and transfer of securities.
(3) The registration of roster of securities holders.
(4) The clearing and settlement of securities transactions.
(5) The distribution of securities rights and interests as entrusted by an issuer.
(6) The provision of inquiry and information services relating to the aforesaid businesses.
(7) Other businesses approved by the securities regulatory authority of the State Council.
Article 148 The registration and settlement of securities traded on stock exchanges and other national stock trading places approved by the State Council shall adopt a centralized and unified operation mode nationwide.
The registration and settlement of securities other than those prescribed in the preceding paragraph may be handled by an entrusted securities depository and clearing institution or any other institution providing securities registration and settlement services in accordance with the law.
Article 149 A securities depository and clearing institution shall develop its articles of association and business rules, which shall be subject to the approval of the securities regulatory authority of the State Council. The securities depository and clearing business participants shall abide by the business rules developed by the securities depository and clearing institution.
Article 150 Securities traded on stock exchanges or other national stock trading places approved by the State Council shall be all deposited at a securities depository and clearing institution.
A securities depository and clearing institution may not misappropriate the securities of its clients.
Article 151 A securities depository and clearing institution shall provide the roster of securities holders as well as the relevant materials to securities issuers.
A securities depository and clearing institution shall, according to the result of securities registration and settlement, confirm the fact that securities holders hold securities and provide the relevant registration materials of securities holders.
A securities depository and clearing institution shall guarantee the authenticity, accuracy and integrity of the roster of securities holders as well as registration and transfer records, and shall not conceal, forge, falsify or destroy such materials.
Article 152 A securities depository and clearing institution shall take the following measures to guarantee the sound operation of its business:
(1) It has necessary service equipment and sound data security protection measures.
(2) It has established sound business, financial, security protection and other management rules.
(3) It has established a complete risk management system.
Article 153 A securities depository and clearing institution shall properly preserve the original vouchers of registration, depository and settlement as well as the relevant documents and materials. Such documents and materials shall be retained for not less than 20 years.
Article 154 A securities depository and clearing institution shall establish a securities settlement risk fund so as to pay in advance or make up any loss of the securities depository and clearing institution as incurred from default delivery, technical failure, operation failure or force majeure.
The securities settlement risk fund shall be withdrawn from the business income and proceeds of the securities depository and clearing institution and may be paid by clearing participants according to a certain proportion of securities trading volume.
The measures for raising and managing the securities settlement risk fund shall be prescribed by the securities regulatory authority of the State Council in conjunction with the finance department of the State Council.
Article 155 The securities settlement risk fund shall be deposited into a special account of a designated bank and shall be subject to special management.
A securities depository and clearing institution shall, after making compensation with the securities settlement risk fund, claim compensation from the relevant liable person.
Article 156 The application for dissolution submitted by a securities depository and clearing institution shall be subject to the approval of the securities regulatory authority of the State Council.
Article 157 An investor that entrusts a securities company to conduct securities transactions shall apply for opening a securities account at the securities depository and clearing institution through the securities company. The securities depository and clearing institution shall open securities accounts for investors according to the relevant provisions.
An investor that applies for opening an account shall hold the legal certificate certifying the investor's identity as a citizen, legal person or partnership enterprise of the People's Republic of China, except as otherwise provided for by the state.
Article 158 Where a securities depository and clearing institution provides securities settlement services as the central counterparty, it is a common clearing and settlement counterparty of the clearing participant, conducts netting and provides centralized performance guarantee for securities transactions.
A securities depository and clearing institution shall, when providing netting services for securities transactions, require the clearing participant to deliver securities and funds in full amount and provide the guarantee for settlement under the principle of delivery versus payment.
Before the completion of settlement, no one may use the securities, funds or collaterals for settlement.
Where a clearing participant fails to perform the settlement obligation on schedule, the securities depository and clearing institution has the right to dispose of the property prescribed in the preceding paragraph according to business rules.
Article 159 All kinds of clearing funds and securities collected by a securities depository and clearing institution according to business rules shall be deposited into a special account for clearing and settlement, may only be used in the clearing and settlement of completed securities transactions according to business rules, and shall not be subject to compulsory enforcement.
Chapter X Securities Service Institutions
Article 160 Accounting firms, law firms and securities service institutions providing securities investment consulting, asset appraisal, credit rating, financial advisory, and information technology system services shall act with due diligence and adhere to their duties, and provide services for securities transactions and related activities according to the relevant business rules.
Whoever provides securities investment consulting services shall be subject to the approval of the securities regulatory authority of the State Council. No one shall provide services for securities trading and relevant activities without approval. Whoever provides other securities services shall undergo recordation formalities at the securities regulatory authority of the State Council and the competent department of the State Council.
Article 161 A securities investment consulting institution and its employees that provide securities trading services shall not commit any of the following conduct:
(1) Making securities investment as an agent on behalf of the client.
(2) Agreeing upon with the client on sharing the gains or losses of securities investment.
(3) Trading in the securities for which the securities investment consulting institution provides services.
(4) Committing any other conduct prohibited by any law or administrative regulation.
Whoever commits any of the conduct prescribed in the preceding paragraph, causing any loss to investors, shall assume compensatory liability in accordance with the law.
Article 162 A securities service institution shall properly preserve clients' entrustment documents, inspection and verification materials, working papers as well as the information and materials relating to quality control, internal management and business operation. No one may divulge, conceal, forge, falsify or destroy such materials. The aforesaid information and materials shall be retained for not less than 10 years, which shall commence from the date of completion of entrustment.
Article 163 A securities service institution that prepares and issues such documents as audit reports and other authentication reports, asset appraisal reports, financial advisory reports, credit rating reports and legal opinions for securities offering, listing, trading and other securities business activities shall act with due diligence and inspect and verify the veracity, accuracy and integrity of the content of the documents and materials serving the basis. If the documents prepared and produced by it have any false records, misleading statements, or material omissions, causing any loss to any other person, it shall assume compensatory liability jointly and severally with the client, unless it can prove that it has no fault.
Chapter XI Securities Associations
Article 164 The securities association is a self-regulatory organization of the securities industry and is a social organization with the status of a legal person.
A securities company shall join a securities association.
The power organ of a securities association is the members' assembly composed of all members.
Article 165 The articles of association of a securities association shall be developed by the members' assembly and be filed with the securities regulatory authority of the State Council.
Article 166 A securities association shall perform the following duties:
(1) Educating and organizing its members and employees to comply with securities laws and administrative regulations, organizing integrity construction in the securities industry, and urging the securities industry to perform social responsibility.
(2) Protecting the lawful rights and interests of members in accordance with the law and reflecting the suggestions and demands of members to the securities regulatory authority.
(3) Urging its members to conduct investor education and protection activities and protecting the lawful rights and interests of investors.
(4) Developing and implementing the self-regulatory rules of the securities industry, supervising and inspecting the practice of its members and their employees, and taking disciplinary actions or other self-regulatory measures according to relevant provisions against any violation of laws, administrative regulations, self-regulatory rules or articles of association of the association.
(5) Developing business rules of the securities industry and organizing the business training of employees.
(6) Organizing its members to conduct research on the development and operation of the securities industry and the relevant content, collecting, reviewing and releasing securities-related information, providing member services, organizing industrial exchanges and guiding the innovation and development of the industry.
(7) Mediating securities business disputes between members or between a member and its clients.
(8) Performing other duties prescribed in the articles of association of the securities association.
Article 167 A securities association shall have the board of governors. The members of the board of governors shall be elected in accordance with the provisions of the articles of association.
Chapter XII Securities Regulatory Authorities
Article 168 The securities regulatory authority of the State Council shall conduct the supervision and administration of the securities market in accordance with the law, maintain the openness, fairness and impartiality of the securities market, prevent systematic risks, protect the lawful rights and interests of investors, and promote the sound development of the securities market.
Article 169 The securities regulatory authority of the State Council shall perform the following duties in the supervision and administration of the securities market:
(1) Developing the rules and regulations on the supervision and administration of the securities market in accordance with the law, conducting approval, confirmation and registration in accordance with the law, and undergoing recordation.
(2) Conducting the supervision and administration of securities offering, listing, trading, registration, depository, settlement and other conduct in accordance with the law.
(3) Conducting the supervision and administration of the securities business activities of securities issuers, securities companies, securities service institutions, stock exchanges and securities depository and clearing institutions in accordance with the law.
(4) Developing the codes of conduct for securities business personnel in accordance with the law and supervising the implementation thereof.
(5) Supervising and inspecting the disclosure of information on securities offering, listing and trading in accordance with the law.
(6) Guiding and supervising the self-regulatory management activities of securities associations in accordance with the law.
(7) Monitoring, preventing and disposing of risks in the securities market in accordance with the law.
(8) Conducting investor education in accordance with the law.
(9) Investigating and punishing securities violations of law in accordance with the law.
(10) Performing other duties prescribed by laws and administrative regulations.
Article 170 The securities regulatory authority of the State Council shall have the power to take the following measures in its performance of duties in accordance with the law:
(1) Conducting the on-site inspection of a securities issuer, securities company, securities service institution, stock exchange or securities depository and clearing institution.
(2) Entering the place where any suspected violation of law is committed to conduct investigation and collect evidence.
(3) Inquiring of the parties concerned or any entity or individual relating to an event under investigation and requiring the relevant entity or individual to give explanations on the matters relating to the event under investigation; or requesting the entity or individual' submission of documents and materials relating to the event under investigation according to designated methods.
(4) Consulting and duplicating documents and materials relating to the event under investigation, such as those on property right registration and communication records.
(5) Consulting and duplicating the securities trading records, registration and transfer records, financial accounting materials and other relevant documents and materials of the party concerned and any entity or individual relating to the event under investigation; and may freeze or detain the documents and materials that may be transferred, concealed or destroyed.
(6) Consulting the information on capital accounts, securities accounts, bank accounts and other accounts with the functions of payment, custody and settlement of the party concerned and the entity and individual relating to the event under investigation, and duplicating the relevant documents and materials; and if there is any evidence proving that any property involved in a case such as illegal funds and securities have been or may be transferred or concealed or any important evidence has been or may be concealed, forged or destroyed, freezing or sealing-up measures may be taken with the approval of the principal person in charge of the securities regulatory authority of the State Council or any other person in charge authorized by it for a period of six months. If it is necessary to extend the term for any special reason, the period of each extension shall not exceed three months and the maximum period of freezing or sealing-up measures shall not exceed two years.
(7) When investigating any major securities violation of law such as the manipulation of the securities market and insider trading, with the approval of the principal person in charge of the securities regulatory authority of the State Council or any other person in charge authorized by him or her, the securities regulatory authority may restrict the securities trading of the party under investigation, but the restriction period shall not exceed three months; if the case circumstances are complicated, the restriction period may be extended by three months.
(8) Notifying the exit-entry administrative authority to legally prevent any person suspected of any violation of law, person in charge of an entity suspected of any violation of law and other directly liable persons from leaving China.
For the purposes of preventing the risks of the securities market and maintaining the market order, the securities regulatory authority of the State Council may take such measures as ordering corrective action, holding a regulatory talk and issuing a warning letter.
Article 171 Where, during the period when the securities regulatory authority of the State Council investigates an entity or individual suspected of securities violation of law, the party under investigation submits a written application undertaking to correct the suspected violation of law within a prescribed time limit recognized by the securities regulatory authority of the State Council, and compensate the relevant investor for any loss incurred and eliminate the damage or adverse impact, the securities regulatory authority of the State Council may decide to suspend the investigation. If the party under investigation has performed its undertaking, the securities regulatory authority of the State Council may decide to terminate the investigation; if the party under investigation fails to perform its undertaking or falls under any other circumstance set out by the State Council, the investigation shall be resumed. The specific measures shall be provided for by the State Council.
Where the securities regulatory authority of the State Council decides to suspend or terminate the investigation, it shall publicize the relevant information as required.
Article 172 Where the securities regulatory authority of the State Council conducts supervision and inspection or investigation in its legal performance of duties, it shall assign at least two persons to conduct the supervision and inspection or investigation, who shall show their lawful certificates and the notice of supervision and inspection or investigation or other law enforcement documents. If the personnel conducting supervision and inspection or investigation are less than two or fail to show their lawful certificates and the notice of supervision and inspection or investigation or other law enforcement documents, the entity and individual under inspection and investigation have the right to refuse to accept the inspection and investigation.
Article 173 Where the securities regulatory authority of the State Council performs its duties in accordance with the law, the entity or individual under inspection and investigation shall cooperate, provide the relevant documents and materials in a faithful manner and shall not refuse to provide them, obstruct the provision of or conceal any document or material.
Article 174 The regulations, rules and regulatory work rules developed by the securities regulatory authority of the State Council shall be disclosed in accordance with the law.
The decisions on punishing the securities violation of law made by the securities regulatory authority of the State Council according to the investigation result shall be disclosed.
Article 175 The securities regulatory authority of the State Council shall establish a regulatory information sharing mechanism with other financial regulatory authorities of the State Council.
When the securities regulatory authority of the State Council conducts supervision, inspection or investigation in its legal performance of duties, the relevant departments shall cooperate.
Article 176 Any entity or individual shall have the right to report any suspected securities violation of law or regulation to the securities regulatory authority of the State Council.
Where any clue to the real-name reporting of any suspected major violation of law or regulation is verified to be true upon inspection, the securities regulatory authority of the State Council shall give rewards to the person who files the report as required.
The securities regulatory authority of the State Council shall keep confidential the identity of the person who files the report.
Article 177 The securities regulatory authority of the State Council may, in conjunction with the securities regulatory authorities of other countries or regions, establish a supervision and administration cooperation mechanism to conduct cross-border supervision and administration.
The overseas securities regulatory authority shall not conduct investigation, evidence collection and other activities directly within the territory of the People's Republic of China. Without the consent of the securities regulatory authority of the State Council and the competent departments of the State Council, no entity or individual may provide documents or materials relating to securities business activities to the overseas without approval.
Article 178 Where the securities regulatory authority of the State Council finds that any securities violation of law is suspected of any crime in its legal performance of duties, it shall transfer the case to the judicial organ for handling in accordance with the law. If it finds that any public official is suspected of any duty-related violation of law or duty-related crime, it shall legally transfer the case to a supervisory organ for handling.
Article 179 An employee of the securities regulatory authority of the State Council shall act with due diligence, handle affairs in accordance with the law, and be fair and honest, and shall not take the advantage of his or her position to seek illicit benefits, or divulge the trade secrets of the relevant entity or individual to which he or she has access.
The employee of the securities regulatory authority of the State Council shall not hold a position in an enterprise or any other for-profit organization directly relating to his or her original work duties or conduct for-profit activities directly relating to his or her original work duties, during his or her term of office or within the period set out in the Civil Servant Law of the People's Republic of China after his or her resignation.
Chapter XIII Legal Liability
Article 180 Where a company offers securities to the public without approval or in any disguised form in violation of Article 9 of this Law, it shall be ordered to cease the offering, return the funds raised plus the bank deposit rate for the corresponding period, and be fined not less than 5% but not more than 50% of the funds it has illegally raised. A company formed through public offering of securities without approval or in any disguised form shall be closed down by the organ or department that legally performs the duties of supervision and administration in conjunction with the local people's government at or above the county level. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 500,000 yuan but not more than five million yuan.
Article 181 An issuer that conceals any important fact or fabricates any major false content in its announced securities offering documents shall be fined not less than two million yuan but not more than 20 million yuan if it has not offered securities; or if the issuer has offered securities, it shall be fined not less than 10% but not more than one time the amount of funds unlawfully raised. The directly responsible person in charge and other directly liable persons shall be fined not less than one million yuan but not more than 10 million yuan.
Where the issuer's controlling shareholder or actual controller organizes or instigates the commission of any violation of law prescribed in the preceding paragraph, its illegal income shall be confiscated and it shall be fined not less than 10% but not more than one time the amount of illegal income; if it has no illegal income or its illegal income is less than 20 million yuan, it shall be fined not less than two million yuan but not more than 20 million yuan. The directly responsible person in charge and other directly liable persons shall be fined not less than one million yuan but not more than 10 million yuan.
Article 182 Where a sponsor issues a sponsor letter containing any false records, misleading statements or material omissions, or fails to perform other statutory duties, it shall be ordered to take corrective action and given a warning, its business income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of its business income. If it has no business income or its business income is less than one million yuan, it shall be fined not less than one million yuan but not more than 10 million yuan. If the circumstances are serious, its sponsorship business permit shall be suspended or revoked. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 500,000 yuan but not more than five million yuan.
Article 183 Where a securities company underwrites or sells any securities offered to the public without approval or in any disguised form, it shall be ordered to cease the underwriting or sale, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income; if it has no illegal income or its illegal income is less than one million yuan, it shall be fined not less than one million yuan but not more than 10 million yuan; and if the circumstances are serious, its relevant business permit shall be suspended or revoked. If it causes any loss to investors, it shall assume the joint and several liability for compensation with the issuer. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 500,000 yuan but not more than five million yuan.
Article 184 Where a securities company underwrites securities in violation of Article 29 of this Law, it shall be ordered to take corrective action and given a warning, its illegal income shall be confiscated and it may be fined not less than 500,000 yuan but not more than five million yuan; if the circumstances are serious, its relevant business permit shall be suspended or revoked. The directly responsible person in charge and other directly liable persons shall be given a warning and may be fined not less than 200,000 yuan but not more than two million yuan; and if the circumstance are serious, they may be fined not less than 500,000 yuan but not more than five million yuan.
Article 185 An issuer that changes the use of funds raised through the public offering of securities without approval in violation of the provision of Article 14 or 15 of this Law shall be ordered to take corrective action, and may be fined not less than 500,000 yuan but not more than five million yuan; and the directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 100,000 yuan but not more than one million yuan.
Where the issuer's controlling shareholder or actual controller commits, or organizes or instigates the commission of any violation of law set out in the preceding paragraph, it shall be given a warning and be fined not less than 500,000 yuan but not more than five million yuan; and the directly responsible person in charge and other directly liable persons shall be fined not less than 100,000 yuan but not more than one million yuan.
Article 186 Whoever, in violation of Article 36 of this Law, transfers securities within the transfer restriction period or transfers a stock in non-compliance with the provisions of any law, administrative regulation or the provisions issued by the securities regulatory authority of the State Council, shall be ordered to take corrective action and given a warning, the illegal income shall be confiscated and the violator may be fined not more than the equivalent value of the securities traded.
Article 187 Where anyone prohibited by any law or administrative regulation from participating in stock trading, in violation of Article 40 of this Law, holds or trades in a stock or other securities of the equity nature directly or in any assumed name or in the name of any other person, he or she shall be ordered to dispose of the illegally held stock or other securities of the equity nature in accordance with the law, his or her illegal income shall be confiscated and he or she shall be fined not more than the equivalent value of the securities traded. If such a person is a staff member of a state organ, disciplinary action shall be taken against him or her in accordance with the law.
Article 188 A securities service institution or any of its employees that trades in securities in violation of Article 42 of this Law shall be ordered to legally dispose of the unlawfully held securities, the illegal income thereof shall be confiscated and the violator shall be fined not more than the equivalent value of the securities traded.
Article 189 Where a listed company, any director, supervisor or senior executive of a company of which the stock is traded on any other national stock trading place approved by the State Council, or any shareholder holding 5% or more of shares of such a company trades in the company's stock or other securities of the equity nature in violation of Article 44 of this Law, the violator shall be given a warning and fined not less than 100,000 yuan but not more than one million yuan.
Article 190 Whoever affects the system security or normal trading order of the stock exchange through program transactions in violation of Article 45 of this Law shall be ordered to take corrective action and be fined not less than 500,000 yuan but not more than five million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 100,000 yuan but not more than one million yuan.
Article 191 Where any insider who has access to inside information on securities transactions or any person who has unlawful access to inside information conducts insider trading in violation of Article 53 of this Law, he or she shall be ordered to dispose of the securities illegally held, the illegal income thereof shall be confiscated and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or his or her illegal income is less than 500,0000 yuan, he or she shall be fined not less than 500,0000 yuan but not more than five million yuan. If an entity conducts insider trading, the directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan. Any staff member of the securities regulatory authority of the State Council who conducts insider trading shall be given a heavier punishment.
Whoever, in violation of Article 54 of this Law, conducts transactions by using undisclosed information shall be punished in accordance with the provisions of the preceding paragraph.
Article 192 Whoever manipulates the securities market in violation of Article 55 of this Law shall be ordered to legally dispose of the securities illegally held, the illegal income thereof shall be confiscated and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or the illegal income thereof is less than one million yuan, the violator shall be fined not less than one million yuan but not more than 10 million yuan. If an entity manipulates the securities market, the directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 500,000 yuan but not more than five million yuan.
Article 193 Where anyone, in violation of paragraph 1 or 3 of Article 56 of this Law, fabricates or disseminates any false information or misleading information to disrupt the securities market, the illegal income thereof shall be confiscated and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or the illegal income thereof is less than 200,000 yuan, the violator shall be fined not less than 200,000 yuan but not more than two million yuan.
Whoever makes false statements or disseminates misleading information in securities trading activities in violation of paragraph 2 of Article 56 of this Law shall be ordered to take corrective action and fined not less than 200,000 yuan but not more than two million yuan; if the violator is a staff member of a state organ, disciplinary action shall be taken against him or her in accordance with the law.
Where any media or any of its employees engaged in the reporting of information on the securities market trades in securities that are in conflict with the work duties thereof in violation of paragraph 3 of Article 56 of this Law, the illegal income thereof shall be confiscated, and the violator shall be fined not more than the equivalent value of the securities traded.
Article 194 Where a securities company or any of its employees commits any conduct that damages clients' interests in violation of Article 57 of this Law, the violator shall be given a warning, the illegal income thereof shall be confiscated, and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or its illegal income is less than 100,000 yuan, the violator shall be fined not less than 100,000 yuan but not more than one million yuan; and if the circumstances are serious, its relevant business permit shall be suspended or revoked.
Article 195 Whoever, in violation of Article 58 of this Law, lends his or her securities account or borrows the securities account of any other person to conduct securities trading shall be ordered to take corrective action, be given a warning and may be fined not more than 500,000 yuan.
Article 196 An acquirer that fails to perform its obligations to make an announcement on the acquisition of a listed company and make a tender offer in accordance with the provisions of this Law shall be ordered to take corrective action, be given a warning and fined not less than 500,000 yuan but not more than five million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Where an acquirer or its controlling shareholder or actual controller uses the acquisition of a listed company to cause any loss to the target company and its shareholders, the violator shall assume compensatory liability in accordance with the law.
Article 197 Where the party with information disclosure obligations fails to submit the relevant report or perform the information disclosure obligation in accordance with the provisions of this Law, it shall be ordered to take corrective action and given a warning and fined not less than 500,000 yuan but not more than five million yuan; and the directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan. If the issuer's controlling shareholder or actual controller organizes or instigates the commission of the aforesaid violation of law, or conceals the relevant information, resulting in the occurrence of any of the aforesaid circumstances, it shall be fined not less than 500,000 yuan but not more than five million yuan; and the directly responsible person in charge and other directly liable persons shall be fined not less than 200,000 yuan but not more than two million yuan.
Where the report submitted or information disclosed by the party with information disclosure obligations has any false records, misleading statements or material omissions, it shall be ordered to take corrective action and given a warning and fined not less than one million yuan but not more than ten million yuan; and the directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 500,000 yuan but not more than five million yuan. If the issuer's controlling shareholder or actual controller organizes or instigates the commission of the aforesaid violation of law, or conceals the relevant information, resulting in the occurrence of any of the aforesaid circumstances, it shall be fined not less than one million yuan but not more than ten million yuan; and the directly responsible person in charge and other directly liable persons shall be fined not less than 500,000 yuan but not more than five million yuan.
Article 198 Where a securities company fails to perform investor suitability management obligations or fails to do as required in violation of Article 88 of this Law, it shall be ordered to take corrective action, be given a warning and fined not less than 100,000 yuan but not more than one million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not more than 200,000 yuan.
Article 199 Whoever solicits shareholders' rights in violation of Article 90 of this Law shall be ordered to take corrective action, be given a warning and may be fined not more than 500,000 yuan.
Article 200 Any securities trading place formed in an illegal manner shall be closed down by the people's government at or above the county level, the illegal income shall be confiscated and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or the illegal income is less than one million yuan, the violator shall be fined not less than one million yuan but not more than 10 million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Any stock exchange that allows any non-member to directly participate in the centralized trading of stocks in violation of Article 105 of this Law shall be ordered to take corrective action and may be fined not more than 500,000 yuan.
Article 201 A securities company that fails to verify the identity information provided by investors for opening an account in violation of paragraph 1 of Article 107 of this Law shall be ordered to take corrective action, be given a warning and fined not less than 50,000 yuan but not more than 500,000 yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not more than 100,000 yuan.
Where a securities company provides the investor's account to any other person for use in violation of paragraph 2 of Article 107 of this Law, it shall be ordered to take corrective action, be given a warning and fined not less than 100,000 yuan but not more than one million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not more than 200,000 yuan.
Article 202 Whoever, in violation of Article 118, paragraph 1 or 4 of Article 120 of this Law, forms a securities company without approval, unlawfully provides securities services, or conducts securities business activities in the name of a securities company without approval shall be ordered to take corrective action, the illegal income shall be confiscated and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or the illegal income is less than one million yuan, the violator shall be fined not less than one million yuan but not more than 10 million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan. The securities company formed without approval shall be closed down by the securities regulatory authority of the State Council.
Where a securities company provides securities margin trading and short selling services in violation of paragraph 5 of Article 120 of this Law, its illegal income shall be confiscated and it shall be fined not more than the equivalent value of margin trading and short selling; if the circumstances are serious, it shall be prohibited from providing securities margin trading and short selling services within a certain period. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 203 Where anyone submits false certification documents or takes any other fraudulent means to obtain the permit for the formation of a securities company, business permit or the confirmation of modification of any major event, the relevant permit shall be revoked and the violator shall be fined not less than one million yuan but not more than 10 million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 204 Where, in violation of Article 122 of this Law, a securities company modifies the securities business scope without approval, modifies the major shareholder or the company's actual controller, or undergoes merger, division, business suspension, dissolution or bankruptcy, it shall be ordered to take corrective action, be given a warning, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income; if it has no illegal income or its illegal income is less than 500,000 yuan, it shall be fined not less than 500,000 yuan but not more than five million yuan; and if the circumstances are serious, its relevant business permit shall be revoked. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 205 A securities company that provides financing or guarantee to its shareholder or the affiliate of the shareholder in violation of paragraph 2 of Article 123 of this Law shall be ordered to take corrective action, be given a warning and fined not less than 500,000 yuan but not more than five million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 100,000 yuan but not more than one million yuan. If the shareholder has fault, the securities regulatory authority of the State Council may restrict the shareholders' rights thereof before the shareholder takes corrective action as required; if the shareholder refuses to take corrective action, he or she may be ordered to transfer the stock right of the securities company held by him or her.
Article 206 Where a securities company fails to take effective isolation measures to prevent the conflicts of interest, or fails to provide relevant services separately and mixes the operation in violation of Article 128 of this Law, it shall be ordered to take corrective action and given a warning, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income; if it has no illegal income or its illegal income is less than 500,000 yuan, it shall be fined not less than 500,000 yuan but not more than five million yuan; and if the circumstances are serious, its relevant business permit shall be revoked. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 207 Where a securities company engages in the proprietary business in violation of Article 129 of this Law, it shall be ordered to take corrective action and given a warning, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income. If it has no illegal income or its illegal income is less than 500,000 yuan, it shall be fined not less than 500,000 yuan but not more than five million yuan; and if the circumstances are serious, its relevant business permit shall be revoked or it shall be ordered to close down. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 208 Where a securities company includes its client's funds and securities in its own property or misappropriates the client's funds and securities in violation of Article 131 of this Law, it shall be ordered to take corrective action and given a warning, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income; if it has no illegal income or its illegal income is less than one million yuan, it shall be fined not less than one million yuan but not more than 10 million yuan; and if the circumstances are serious, its relevant business permit shall be revoked or it shall be ordered to close down. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 500,000 yuan but not more than five million yuan.
Article 209 Where a securities company trades in securities upon the full entrustment of any client in violation of paragraph 1 of Article 134 of this Law or makes an undertaking on the client's proceeds or compensation to the client's loss in violation of Article 135 of this Law, it shall be ordered to take corrective action and given a warning, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income; if it has no illegal income or its illegal income is less than 500,000 yuan, it shall be fined not less than 500,000 yuan but not more than five million yuan; and if the circumstances are serious, its relevant business permit shall be revoked. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Any securities company that allows any other person to participate directly in the centralized trading of securities in its name in violation of paragraph 2 of Article 134 of this Law shall be ordered to take corrective action and may be fined not more than 500,000 yuan.
Article 210 An employee of a securities company who privately accepts a client's entrustment to trade in securities in violation of Article 136 of this Law shall be ordered to take corrective action and given a warning, his or her illegal income shall be confiscated and he or she shall be fined not less than one time but not more than ten times the amount of illegal income; if the employee has no illegal income, he or she shall be fined not more than 500,000 yuan.
Article 211 Where, in violation of Article 138 of this Law, a securities company or any of its major shareholders or its actual controller fails to submit or provide information and materials or the submitted or provided information and materials have any false records, misleading statements or material omissions, the violator shall be ordered to take corrective action and given a warning, and fined not more than one million yuan; and if the circumstances are serious, its relevant business permit shall be revoked. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not more than 500,000 yuan.
Article 212 Whoever forms a securities depository and clearing institution without approval in violation of Article 145 of this Law shall be closed down by the securities regulatory authority of the State Council, the illegal income thereof shall be confiscated and the violator shall be fined not less than one time but not more than ten times the amount of illegal income; if the violator has no illegal income or the illegal income thereof is less than 500,000 yuan, the violator shall be fined not less than 500,000 yuan but not more than five million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 213 Where a securities investment consulting institution provides securities services in violation of paragraph 2 of Article 160 of this Law or commits any conduct prescribed in Article 161 of this Law in the provision of securities services, it shall be ordered to take corrective action, its illegal income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of illegal income. If it has no illegal income or its illegal income is less than 500,000 yuan, it shall be fined not less than 500,000 yuan but not more than five million yuan. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Where an accounting firm, law firm or institution providing asset appraisal, credit rating, financial advisory or information technology system services provides securities services without undergoing recordation in violation of paragraph 2 of Article 160 of this Law, it shall be ordered to take corrective action and may be fined not more than 200,000 yuan.
Where, in violation of Article 163 of this Law, a securities service institution fails to act with due diligence, and the prepared and issued documents have any false records, misleading statements or material omissions, it shall be ordered to take corrective action, its business income shall be confiscated and it shall be fined not less than one time but not more than ten times the amount of its business income. If it has no business income or its business income is less than 500,000 yuan, it shall be fined not less than 500,000 yuan but not more than five million yuan. If the circumstances are serious, its provision of securities services shall be suspended or prohibited. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 200,000 yuan but not more than two million yuan.
Article 214 Where an issuer, securities depository and clearing institution, securities company or securities service institution fails to preserve the relevant documents and materials according to the relevant provisions, it shall be ordered to take corrective action, be given a warning and be fined not less than 100,000 yuan but not more than one million yuan. If it divulges, conceals, forges, falsifies or destroys the relevant documents and materials, it shall be given a warning and be fined not less than 200,000 yuan but not more than two million yuan; and if the circumstances are serious, it shall be fined not less than 500,000 yuan but not more than five million yuan, and its relevant business permit shall be suspended or revoked or it shall be prohibited from providing relevant services. The directly responsible person in charge and other directly liable persons shall be given a warning and fined not less than 100,000 yuan but not more than one million yuan.
Article 215 The securities regulatory authority of the State Council shall include the relevant market entities' compliance with this Law in the securities market integrity files in accordance with the law.
Article 216 Where the securities regulatory authority of the State Council or the department authorized by the State Council falls under any of the following circumstances, disciplinary actions shall be taken against the directly responsible person in charge and other directly liable persons according to the law.
(1) Confirming, registering or approving any application for offering securities or forming a securities company, among others, in non-compliance with the provisions of this Law.
(2) Taking measures such as on-site inspection, investigation and evidence collection, inquiry, freezing and seizure in violation of the provisions of this Law.
(3) Taking regulatory measures against the relevant institution or person in violation of the provisions of this Law.
(4) Imposing administrative punishment on the relevant institution or person in violation of the provisions of this Law.
(5) Any other conduct of failing to perform duties in accordance with the law.
Article 217 Where any staff member of the securities regulatory authority of the State Council or any department authorized by the State Council fails to perform the duties prescribed in this Law, abuses power, neglects duty, takes advantage of his or her position to seek illicit benefits or divulges any trade secret of the relevant entity or individual to which he or she has access, the violator shall be subject to legal liability in accordance with the law.
Article 218 Where anyone refuses to accept or obstructs the performance of functions of supervision and inspection and investigation by the securities regulatory authority or any of its staff members, the securities regulatory authority shall order him or her to take corrective action and impose a fine of not less than 100,000 yuan but not more than one million yuan on the violator, and the public security organ shall impose a public security administration punishment on him or her in accordance with the law.
Article 219 Where any violation of this Law is criminally punishable, the offender shall be held criminally liable in accordance with the law.
Article 220 Where anyone violates the provisions of this Law and shall assume civil compensation liability and pay fines, penalties and illegal income, if the property of the violator are inadequate for making payment, the property shall be first used to assume civil compensation liability.
Article 221 Where anyone violates any law, administrative regulation or the relevant provisions of the securities regulatory authority of the State Council and the circumstances are serious, the securities regulatory authority of the State Council may take the measure of prohibiting the relevant liable person from entering the securities market.
For the purposes of the preceding paragraph, “prohibition from access to the securities market” means the rules under which a person may not engage in the securities business or provide securities services for a certain period of time until lifelong, shall not serve as the director, supervisor or senior executive of a securities issuer, or trade in securities in a stock exchange or any other national stock trading place approved by the State Council.
Article 222 The fines collected and the illegal income confiscated in accordance with this Law shall be all turned over to the State Treasury.
Article 223 A party may legally apply for administrative reconsideration or in accordance with the law, directly institute a lawsuit with a people's court against the punishment decision made by the securities regulatory authority or the department authorized by the State Council.
Chapter XIV Supplemental Provisions
Article 224 Where a domestic enterprise directly or indirectly offers securities abroad or lists its securities for trading abroad, the enterprise shall comply with the relevant provisions of the State Council.
Article 225 The specific measures for the subscription and trading of stocks of domestic companies in foreign currencies shall be provided for by the State Council separately.
Article 226 This Law shall come into force on March 1, 2020.

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Mr. Deng Guangming, Assistant Prosecutor, Division Chief of International Cooperation, General Office
The People's Procuratorate of Guangxi Zhuang Autonomous Region
Tel: +86-771-5506175 E-mail:dmg2939@163.com
Address:3 Fengxiang Road, Nanning, Guangxi P.R. China