>>>>
Chinese
Securities Law of the People's
Republic of China
¡¾Promulgation Date¡¿1998.12.29
¡¾Effective Date¡¿1999.07.01
¡¾Text¡¿
Securities Law of the People's Republic of China
Order of the President of the People's Republic of China
[No.12]
The Securities Law of the People's Republic of China, adopted at
the 6th Meeting of the Standing Committee of the Ninth National
People's Congress of the People's Republic of China on December
29,1998,is hereby promulgated and shall go into effect as of July
1,1999.
Jiang Zemin
President of the People's Republic of China
December 29,1998
Securities Law of the People's Republic of China
Contents
Chapter¢ñGeneral Provisions
Chapter¢ò Issuing of Securities
Chapter ¢ó Trading of Securities
¡¡¡¡Section¢ñGeneral Regulations
¡¡¡¡Section¢òListing of Securities
¡¡¡¡Section ¢ó Continuing Disclosure of Information
¡¡¡¡Section ¢ô Prohibited Trading Acts
Chapter ¢ô Takeover of Listed Companies
Chapter ¢õ Stock Exchanges
Chapter¢ö Securities Firms
Chapter ¢÷ Securities Registration and Clearing Institutions
Chapter ¢ø Securities Trading Service Organizations
Chapter ¢ù The Securities Industry Association
Chapter ¢úSecurities Regulatory Authority
Chapter ¢û Legal Liability
Chapter ¢ü Supplementary Provisions
Chapter¢ñ¡¡General Provisions
¡¡¡¡Article 1¡¡¡¡This Law is enacted in order to standardize the issuing
and trading of securities, protect the lawful rights and interests
of investors, safeguard the economic order and public interests
of society and promote the development of the socialist market economy.
¡¡¡¡Article 2¡¡¡¡This Law is applicable to the issuing and trading
in China of shares, corporate bonds and such other securities as
are lawfully recognized by the State Council. Where their issuing
and trading are not covered by this Law, the provisions of the Company
Law and other laws and administrative regulations shall apply.
¡¡¡¡The issuing and trading of government bonds shall be separately
provided for in laws and administrative regulations.
¡¡¡¡Article 3¡¡¡¡Securities shall be issued and traded in line with
the principles of openness, fairness and equitability.
¡¡¡¡Article 4¡¡¡¡The parties involved in the issuing and trading of
securities shall have equal legal status and adhere to the principles
of voluntariness, compensation and good faith.
¡¡¡¡Article 5¡¡¡¡Securities shall be issued and traded in accordance
with laws and administrative regulations. Fraudulent and insider
trading and manipulation of the securities trading market are prohibited.
¡¡¡¡Article 6¡¡¡¡Securities business shall be engaged in and administered
as a business separate from the banking business, trust business
and insurance business. Securities firms shall be established separately
from banks, trust companies and insurance companies.
¡¡¡¡Article 7¡¡¡¡The securities regulatory authority under the State
Council shall, in accordance with law, implement centralized and
unified regulation of the securities market nationwide.
¡¡¡¡The securities regulatory authority under the State Council may,
where necessary, establish offices which shall perform the regulatory
functions as authorized.
¡¡¡¡Article 8¡¡¡¡On condition that the State regulates the issuing
and trading of securities on a centralized and unified basis, a
Securities Industry Association shall, in accordance with law, be
established for self-regulation.
¡¡¡¡Article 9¡¡¡¡The State audit authority shall, in accordance with
law and through auditing, supervise stock exchanges, securities
firms, securities registration and clearing institutions and the
securities regulatory authority.
Chapter¢ò¡¡Issuing of Securities
¡¡¡¡Article 10¡¡¡¡Public offers of securities shall meet the conditions
prescribed in laws and administrative regulations and shall, in
accordance with law, be reported to the securities regulatory authority
under the State Council or the department authorized by the State
Council for verification or examination and approval. No unit or
individual may make a public offer of securities if the same has
not been verified or examined and approved according to law.¡¡¡¡
¡¡¡¡Article 11¡¡¡¡Public offers of shares shall, in compliance with
the conditions provided for in the Company law, be reported to the
securities regulatory authority under the State Council for verification.
The issuer shall submit to the said authority the application documents
prescribed in the Company Law and the relevant documents specified
by the authority.
¡¡¡¡The issuing of corporate bonds shall, in compliance with the
conditions provided for in the Company Law, be reported to the department
authorized by the State Council for examination and approval. The
issuer shall submit to the department authorized by the State Council
the application documents prescribed in the Company Law and the
relevant documents specified by the said department.
¡¡¡¡Article 12¡¡¡¡The formats and ways of delivery of the application
documents to be submitted by an issuer who applies, according to
law, for public offer of securities shall be prescribed by the authority
or department legally responsible for verification or examination
and approval.
¡¡¡¡Article 13¡¡¡¡The application documents for the issuing of securities
submitted by an issuer to the securities regulatory authority under
the State Council or the department authorized by the State Council
shall be truthful, accurate and complete.
¡¡¡¡Professional institutions and individuals that produce relevant
documents for the issuance of securities shall strictly perform
their statutory duties and warrant the truthfulness, accuracy and
completeness of the documents that they produce.
¡¡¡¡Article 14¡¡¡¡In the securities regulatory authority under the
State Council an issuance examination commission shall be established
to examine according to law applications for issuance of shares.
¡¡¡¡The issuance examination commission shall be composed of professionals
from the securities regulatory authority under the State Council
and other relevant specialists engaged from outside the said authority,
who shall vote on applications for issuance of shares and state
their opinions after examination.
¡¡¡¡The specific measures for forming the issuance examination commission,
the term of office of its members and its working procedures shall
be formulated by the securities regulatory authority under the State
Council and submitted to the State Council for approval.
¡¡¡¡Article 15¡¡¡¡The securities regulatory authority under the State
Council shall,in accordance with the statutory conditions,be responsible
for verification of applications for issuance of shares. The verification
procedures shall be made public and shall be subject to supervision
according to law.
¡¡¡¡The persons involved in the verification of an application for
issuance of shares may not have any interests to share with or accept
gifts from the applicant, or hold shares the application for the
issuance of which they have verified, or have any private contact
with the applicant.
¡¡¡¡The department authorized by the State Council shall examine
and approve applications for issuance of corporate bonds by reference
to the provisions in the preceding two paragraphs.
¡¡¡¡Article 16¡¡¡¡The securities regulatory authority under the State
Council or the department authorized by the State Council shall
make a decision on application documents for the issuing of securities
within three months from the date of acceptance of the same. If
it refuses to verify the application documents or to grant approval
to the same upon examination, it shall state its reasons.
¡¡¡¡Article l7 ¡¡¡¡Once an application for issuance of securities has
been verified or approved upon examination, the issuer shall announce
the public offer documents prior to the public issuing of the securities,
as prescribed in laws and administrative regulations, and make the
said documents available at the designated places for the public
to consult.
¡¡¡¡Before information about the issuing of securities is announced
according to law, no person in the know may make public or divulge
such information.
¡¡¡¡No issuer may issue securities before announcing the public offer
documents.
¡¡¡¡Article 18 ¡¡¡¡If the securities regulatory authority under the
State Council or the department authorized by the State Council
discovers that a decision it has made to verify or approve upon
examination the issuing of securities does not conform to the provisions
of laws or administrative regulations, it shall revoke the decision.
If the relevant securities have not yet been issued, they shall
be kept from being issued; if they have already been issued, the
holders of the securities may require the issuer to refund their
money at the issue price plus bank deposit interest for the same
period.
¡¡¡¡Article 19 ¡¡¡¡After shares have been issued according to law,
the issuer shall itself be responsible for any change in its operation
or earnings; and the investors shall themselves be responsible for
any investment risks caused by such change.
¡¡¡¡Article 20 ¡¡¡¡To issue new shares, listed companies shall meet
the conditions provided for in the Company Law for the issuance
of new shares. Such shares may be issued in the form of a public
offer or be rationed among existing shareholders.
¡¡¡¡The proceeds of a share issue by a listed company shall be used
in adherence to the purpose of the funds as described in the share
prospectus. Any change in the purpose of the funds described in
the share prospectus shall be subject to approval by the shareholders'
general meeting. If a change in the purpose is made without authorization
and is not rectified, or if such a change is not subsequently ratified
by the shareholders' general meeting, no new shares may be issued.
¡¡¡¡Article 21¡¡¡¡Securities firms shall, in accordance with the provisions
of laws and administrative regulations, underwrite the securities
to be issued to the public by issuers. Securities shall be underwritten
on an agency basis or on a sole agency basis.
¡¡¡¡"Underwriting securities on an agency basis " means
the way whereby the securities firm sells securities as the agent
of the issuer and, at the end of the underwriting period, returns
to the issuer all the securities that remain unsold.
¡¡¡¡"Underwriting securities on a sole agency basis" means
the way whereby the securities firm purchases, pursuant to an agreement,
all the securities to be issued by the issuer or whereby it purchases,
at the end of the underwriting period, all the securities that remain
after sale.
¡¡¡¡Article 22¡¡¡¡An issuer that makes a public offer of securities
shall have the right, independently and according to law, to select
a securities firm to underwrite its securities. Securities firms
may not solicit securities underwriting business by means of unfair
competition.
¡¡¡¡Article 23 ¡¡¡¡To underwrite securities, the securities firm shall
enter into an agreement with the issuer for underwriting as an agent
or as a sole agent .Such agreement shall include the following:
¡¡¡¡(1) the names and domiciles of the parties and the names of their
legal representatives;
¡¡¡¡(2) the type, quantity, amount and issuing price of the securities
to be underwriten on an agency basis or on a sole agency basis;
¡¡¡¡(3) the period during which securities are issued on an agency
basis or on a sole agency basis, including the commencement and
termination dates of the period;
¡¡¡¡(4) the means and date of payment of the proceeds from sale on
an agency basis or on a sole agency basis;
¡¡¡¡(5) the fees for sale on an agency basis or on a sole agency basis
and the means of settlement thereof;
¡¡¡¡(6) liability for breach of contract; and
¡¡¡¡(7) other matters prescribed by the securities regulatory authority
under the State Council.
¡¡¡¡Article 24¡¡¡¡To underwrite securities, a securities firm shall
examine the truthfulness, Accuracy and completeness of the public
offer documents. If it finds any falsehoods, misleading statements
or major omissions in such documents, it may not carry out the sales
activities. If it has already begun to sell the securities, it shall
immediately discontinue the sales activities and adopt remedial
measures.
¡¡¡¡Article 25 ¡¡¡¡Securities to be offered to the public with a total
face value exceeding RMB50m shall be underwritten by an underwriting
syndicate.An underwriting syndicate shall be composed of a securities
firm acting as the lead underwriter and securities firms acting
as participating underwriters.
¡¡¡¡Article 26 ¡¡¡¡The maximum period for underwriting securities on
an agency basis or on a sole agency basis shall be 90 days.
¡¡¡¡During the period for securities underwritten on an agency basis
or on a sole agency basis, securities firms shall ensure that such
securities are first sold to subscribers. Securities firms may not
reserve, in advance, for themselves securities which they underwrite
as agents, or purchase, in advance, and retain securities which
they underwrite as the sole agents.
¡¡¡¡Article 27 ¡¡¡¡Securities firms that underwrite securities as the
sole agents, shall within 15 days after the expiration of the period
for underwriting as the sole agents, report the details of such
underwriting to the securities regulatory authority under the State
Council for the record.
¡¡¡¡Securities firms that underwrite securities as agents shall,
in conjunction with the issuer and within 15 days after the expiration
of the period for underwriting as agents, report the details of
such underwriting to the securities regulatory authority under the
State Council for the record.
¡¡¡¡Article 28 ¡¡¡¡Where shares are issued at premium, the issue price
shall be determined through consultation between the issuer and
the securities underwriting company and reported to the securities
regulatory authority under the State Council for verification.
¡¡¡¡Article 29 ¡¡¡¡Enterprises in China that intend to directly or
indirectly issue securities abroad or to list their securities for
trading abroad shall be subject to approval by the securities regulatory
authority under the State Council.
Chapter¢ó Trading of Securities
Section 1 ¡¡General Regulations
¡¡¡¡Article 30 ¡¡¡¡Securities purchased or sold according to law by
the parties to a securities transaction shall be securities that
have been issued and delivered according to law.
¡¡¡¡Securities that have not been issued according to law may not
be purchased or sold.
¡¡¡¡Article 31 ¡¡¡¡Where the transfer of shares, corporate bonds and
other securities issued
according to law is prohibited by law within a certain period, they
may not be purchased or sold during the period.
¡¡¡¡Article 32¡¡¡¡Share, corporate bonds and other securities that
have been lawfully approved for trading shall be quoted and traded
on stock exchanges.
¡¡¡¡Article 33 ¡¡¡¡Securities that are quoted and traded on stock exchanges
shall be traded in the manner of public, centralized trading at
competing prices.
¡¡¡¡Centralized competitive pricing for securities trading shall
follow the principle of price precedence and time precedence.
¡¡¡¡Article 34 ¡¡¡¡The securities purchased and sold by the parties
to a securities transaction may be in the form of scrip or such
other forms as prescribed by the securities regulatory authority
under the State Council
¡¡¡¡Article 35¡¡¡¡Securities trading shall take the form of spot transaction.
¡¡¡¡Article 36 ¡¡¡¡Securities firms may not engage in securities trading
activities that are
financed by funds or securities obtained from their clients.
¡¡¡¡Article 37 ¡¡¡¡Employees of stock exchanges, securities firms and
securities registration and clearing institutions ,staff members
of the securities regulatory authority ,and other persons prohibited
by laws and administrative regulations from participating in share
trading may not , while in office or during the statutory period,
hold, purchase or sell shares directly or under an assumed name
or under the name of another, nor may they receive or accept shares
as gifts.
¡¡¡¡When anyone becomes an employee, a staff member or a person as
mentioned in the preceding paragraph ,he shall, in accordance with
law, transfer all the shares he is holding .
¡¡¡¡Article 38 ¡¡¡¡Stork exchanges, securities firms and securities
registration and clearing institutions shall, in accordance with
law, keep confidential the accounts opened for their clients.
¡¡¡¡Article 39¡¡¡¡Professional institutions and individuals that produce
documents such as audit reports, asset appraisal reports and legal
opinions for share issuance may not purchase or sell the shares
in question during the underwriting period for such shares and for
a period of six months after the expiration thereof.
¡¡¡¡In addition to the provisions of the preceding paragraph, professional
institutions and individuals that produce documents such as audit
reports ,asset appraisal reports and legal opinions for listed companies
may not purchase or sell the shares in question from the date on
which they accept the entrustment by the listed company to the sixth
day after the said documents are made public.
¡¡¡¡Article 40¡¡¡¡The fees charged for securities trading shall be
reasonable. The items for which fees are charged, the rates for
the tees and the collection methods shall be made public.
¡¡¡¡The items for which fees are charged, the rates for the fees
and administrative measures in securities trading shall be prescribed
by the relevant administrative department under the State Council
in a unified manner.
¡¡¡¡Article 41 ¡¡¡¡A shareholder that holds 5 percent of the shares
issued by a company limited by shares shall, within three days from
the date on which the number of shares held by him reaches this
percentage, report the same to the company ,which shall, within
three days from the date on which it receives the report ,report
the same to the securities regulatory authority under the State
Council. If the company is a listed company, it shall report the
matter to the stock exchange at the same time.
¡¡¡¡Article 42 ¡¡¡¡If the shareholder described in the preceding Article
sells , within six months of purchase, the shares he holds of the
said company or repurchases the shares within six months after selling
the same , the earnings so obtained by the shareholder shall belong
to the company and be recovered by the board of directors of the
company. However, a securities firm that has a shareholding of not
less than 5 percent due to purchase of the remaining shares not
he capacity of a company that underwrites as the sole agent shall
not be subject to the restriction of six months when selling the
said shares.
¡¡¡¡If the company's board of directors fails to comply with the
provisions of the preceding paragraph, the other shareholders shall
have the right to require the board of directors to comply.
¡¡¡¡If the company 's board of directors fails to comply with the
provisions of the first paragraph and thereby causes losses to the
company, the directors responsible therefor shall bear joint and
several liability for the losses.
Section 2¡¡Listing of Securities
¡¡¡¡Article 43 ¡¡¡¡Before a company limited by shares applies for listing
of its shares, it shall report to the securities regulatory authority
under the State Council for verification.
¡¡¡¡The securities regulatory authority under the State Council may
authorize a stock exchange, pursuant to the statutory conditions
and procedures, to verify the application for share listing.
¡¡¡¡Article 44 ¡¡¡¡The State encourages companies that conform to industrial
policies and meet the conditions for listing to have their shares
listed.
¡¡¡¡Article 45 ¡¡¡¡When applying for share listing to the securities
regulatory authority under the State Council, the company shall
provide the following documents:
¡¡¡¡(1) the listing report;
¡¡¡¡(2) the resolution adopted at the shareholders' general meeting
concerning the application for listing;
¡¡¡¡(3) the company's articles of association;
¡¡¡¡(4) the company's business license;
¡¡¡¡(5) the financial and accounting reports of the company for the
last three years, or since establishment , verified by the statutory
verification authority;
¡¡¡¡(6)legal opinions in writing, and a letter of recommendation from
a securities firm; and
¡¡¡¡(7) the most recent share prospectus.
¡¡¡¡Article 46 ¡¡¡¡After an application for share listing is verified
by the securities regulatory authority under the State Council,
the issuer shall submit to the stock exchange the verification document
and the relevant documents specified in the preceding Article.
¡¡¡¡The stock exchange shall make arrangements for the listing and
trading of the said shares within six months from the date of receiving
the documents specified in the preceding paragraph and submitted
by the issuer of the shares.
¡¡¡¡Article 47 ¡¡¡¡After an application for share listing obtains consent
from the stock exchange, the listed company shall, five days prior
to the listing, announce the verified documents relating to the
said share listing and make such documents available at designated
places for the public to consult.
¡¡¡¡Article 48 ¡¡¡¡In addition to announcing the listing application
documents mentioned in the preceding Article, listed companies shall
make the following matters known to the general public:
¡¡¡¡(1) the date on which the shares are approved for trading on
the stock exchange;
¡¡¡¡(2) a name list of the 10 shareholders who hold the largest numbers
of the shares in the company and the number of shares held by each
of them;
¡¡¡¡(3) the names of the directors, supervisors, manager and related
senior management persons, and particulars of their holding of the
company's share and /or bonds.
¡¡¡¡Article 49 ¡¡¡¡When a listed company ceases to meet the condition
for listing prescribed in the Company Law, the listing of its shares
shall be suspended or terminated in accordance with law.
¡¡¡¡Article 50 ¡¡¡¡Companies that apply for listing and trading of
corporate bonds to be issued by them shall be subject to verification
by the securities regulatory authority under the State Council.
¡¡¡¡The securities regulatory authority under the State Council may
authorize a stock exchange, pursuant to the statutory conditions
and procedures, to verify an application for listing of corporate
bonds.
¡¡¡¡Article 51 ¡¡¡¡A company that applies for listing and trading of
its corporate bonds shall meet the following conditions:
¡¡¡¡(1) The term of the corporate bonds is not less than one year;
¡¡¡¡(2) the amount of corporate bonds to be actually issued is not
less than RMB50m; and
¡¡¡¡(3) the company still meets the statutory conditions for the issuing
of corporate bonds at the time of application for the listing of
its bonds.
¡¡¡¡Article 52¡¡¡¡When applying for listing of corporate bonds to the
securities regulatory authority under the State Council, the company
shall provide the following documents:
¡¡¡¡(1) the listing report;
¡¡¡¡(2) the resolution adopted by the board of directors concerning
the application for listing;
¡¡¡¡(3) the company's articles of association;
¡¡¡¡(4) the company's business license;
¡¡¡¡(5) measures for offer of the corporate bonds; and
¡¡¡¡(6) the number of corporate bonds to be actually issued.
¡¡¡¡Article 53 ¡¡¡¡After an application for listing of corporate bonds
is verified by the securities regulatory authority under the State
Council, the issuer shall submit to the stock exchange the verification
document and the relevant documents specified in the preceding Article.
¡¡¡¡The stock exchange shall make arrangements for the listing and
trading of the said bonds within three months from the date of receiving
the documents specified in the preceding paragraph and submitted
by the issuer of the bonds.
¡¡¡¡Article 54 ¡¡¡¡After an application for listing of corporate bonds
obtains consent from the stock exchange, the issuer shall, five
days prior to the listing of the corporate bonds, announce its report
for listing of the corporate bonds, the verification document and
the documents relating to its application for the listing and make
its application documents available at the designated places for
the public to consult.
¡¡¡¡Article 55¡¡¡¡After corporate bonds are listed, the securities
regulatory authority under the State Council may decide to suspend
their listing:
¡¡¡¡(1) if the company commits a major illegal act;
¡¡¡¡(2) if the company no longer meets the conditions for listing
corporate bonds due to a major change in it;
¡¡¡¡(3) if the proceeds of the corporate bond issuance are not used
for purposes approved by the examination and approval authority;
¡¡¡¡(4) if the company fails to perform its obligations stipulated
in the measures for offer of corporate bonds;
¡¡¡¡(5) if the company has been operating at a loss over the past
two years.
¡¡¡¡Article 56 ¡¡¡¡If a company is in the situation described in sub-paragraph
(1) or (4) of the preceding Article and the consequences are verified
to be serious, or if a company is in the situation described in
sub - paragraph (2), (3), or (5) of the preceding Article and fails
to eliminate the same within a specified time limit, the securities
regulatory authority under the State Council shall decide to terminate
the listing of the company's bonds.
¡¡¡¡If a company is dissolved, lawfully ordered to close down or
declared bankrupt, the stock exchange shall terminate the listing
of the company's bonds and report the same to the securities regulatory
authority under the State Council for the record.
¡¡¡¡Article 57 ¡¡¡¡The securities regulatory authority under the State
Council may authorize stock exchanges to lawfully suspend or terminate
the listing of shares or corporate bonds.
Section 3¡¡Continuing Disclosure of Information
¡¡¡¡Article 58 ¡¡¡¡Pursuant to the Company Law, a share prospectus
or measures for offer of corporate bonds shall be announced where
shares are issued according to law upon verification by the securities
regulatory authority under the State Council or where corporate
bonds are issued according to law upon approval by the department
authorized by the State Council. When new shares or corporate bonds
are issued according to law, financial and accounting reports shall,
in addition, be announced.
¡¡¡¡Article 59¡¡¡¡The documents for the issuing and listing of shares
or corporate bonds announced by companies shall be truthful, accurate
and complete; they may not contain any falsehoods, misleading statements
or major omissions.
¡¡¡¡Article 60¡¡¡¡Companies whose shares or bonds are listed for trading
shall, within two months following the end of the first half of
each fiscal year, submit to the securities regulatory authority
under the State Council and the stock exchange an interim report
with the following contents and announce the same:
¡¡¡¡(1) the company's financial and accounting reports and business
situation;
¡¡¡¡(2) major litigation involving the company;
¡¡¡¡(3) the particulars of any changes in the shares or corporate
bonds already issued;
¡¡¡¡(4) any important matters submitted to the shareholders' general
meeting for consideration; and
¡¡¡¡(5) other matters specified by the securities regulatory authority
under the State Council.
¡¡¡¡Article 61 ¡¡¡¡Companies whose shares or bonds are listed for trading
shall, within four months following the end of each fiscal year,
submit to the securities regulatory authority under the State Council
and the stock exchange an annual report with the following contents
and announce the same:
¡¡¡¡(1) a brief account of the company's general situation;
¡¡¡¡(2) the company's financial and accounting reports and business
situation;
¡¡¡¡(3) a brief introduction to the directors, supervisors, managers
and the senior management persons and information with respect to
their shareholdings;
¡¡¡¡(4) the details of shares and corporate bonds already issued,
including the name list of the 10 shareholders who hold the largest
numbers of the shares in the company and the number of shares held
by each of them; and
¡¡¡¡(5) other matters specified by the securities regulatory authority
under the State Council.
¡¡¡¡Article 62 ¡¡¡¡When a major event occurs that may considerably
affect the price at which a listed company's shares are traded and
that is not yet known to the investors, the listed company shall
immediately submit an ad hoc report on the details of such major
event to the securities regulatory authority under the State Council
and to the stock exchange and make the same known to the general
public. In the report the essence of the event shall be stated clearly.
¡¡¡¡For purposes of the preceding paragraph, the term" major
event" means:
¡¡¡¡(1) a major change in the company's business guidelines or scope
of business;
¡¡¡¡(2) a decision made by the company concerning a major investment
or major asset purchase;
¡¡¡¡(3) conclusion by the company of an important contract which may
have an important effect on the company's assets, liabilities, rights,
interests or business results;
¡¡¡¡(4) incurrence by the company of a major debt or default on an
overdue major debt;
¡¡¡¡(5) incurrence by the company of a major deficit or incurrence
of a major loss exceeding 10 percent of the company's net assets;
¡¡¡¡(6) a major change in the external conditions of the company's
production or business;
¡¡¡¡(7) a change in the chairman of the board of direction, not less
than one - third of the directors or the manager of the company;
¡¡¡¡(8) a considerable change in the holdings of shareholders who
each hold not less than 5 percent of the company's shares;
¡¡¡¡(9) a decision made by the company to reduce its capital, to merge,
to divide, to dissolve, or to apply for bankruptcy;
¡¡¡¡(10)major litigation involving the company, or lawful cancellation
by a court of a resolution adopted by the shareholders' general
meeting or the board of directors; or
¡¡¡¡(11) other events specified in laws or administrative regulations.
¡¡¡¡Article 63 ¡¡¡¡If the share prospectus, measures for offer of corporate
bonds, financial or accounting report, listing report document,
annual report, interim report or ad hoc report announced by an issuer
or securities underwriting company contain or contains any falsehood,
misleading statement or major omission, thus causing losses to investors
in the course of securities trading, the issuer or the company shall
be liable for the losses and the responsible director(s), supervisor(s)
and/or the manager of the issuer or the company shall be jointly
and severally liable for such losses.
¡¡¡¡Article 64 ¡¡¡¡Announcements to be made in accordance with laws
or administrative regulations shall be published in the newspapers,
periodicals or the dedicated gazette specified by the relevant department
of the State. In addition, such announcements shall be made available
at the company's domicile and the stock exchange for the public
to consult.
¡¡¡¡Article 65 ¡¡¡¡The securities regulatory authority under the State
Council shall supervise the annual reports, interim reports, ad
hoc reports and announcements of listed companies, as well as the
distribution or rationing of new shares of such companies.
¡¡¡¡Before company announcements are made as required by laws or
administrative regulations, the securities regulatory authority,
the stock exchanges, the securities underwriting companies and the
individuals concerned may not divulge the contents of such announcements.
¡¡¡¡Article 66 ¡¡¡¡When the securities regulatory authority under the
State Council disqualifies for listing a listed company that commits
a major illegal act or does not meet other listing conditions, it
shall announce the same without delay.
¡¡¡¡When a stock exchange, pursuant to its authorization, makes a
decision as specified in the preceding paragraph, it shall, without
delay, announce the decision and submit it to the securities regulatory
authority under the State Council for the record.
Section 4 Prohibited Trading Activities
¡¡¡¡Article 67 ¡¡¡¡Persons with knowledge of inside information on
securities trading are prohibited to take advantage of such inside
information to engage in securities trading.
¡¡¡¡Article 68 ¡¡¡¡The following persons are persons with knowledge
of inside information on securities trading:
¡¡¡¡(1) directors, supervisors, managers, deputy managers and other
senior management persons concerned of companies that issue shares
or corporate bonds;
¡¡¡¡(2) shareholders who hold not less than 5 percent of the shares
in a company;
¡¡¡¡(3) the senior management persons of the holding company of a
company that issues shares;
¡¡¡¡(4) persons who are able to obtain company information concerning
the trading of its securities by virtue of the positions they hold
in the company;
¡¡¡¡(5) staff members of the securities regulatory authority, and
other persons who administer securities trading pursuant to their
statutory duties;
¡¡¡¡(6) the relevant staff members of public intermediary organizations
who participate in securities trading pursuant to their statutory
duties and the relevant staff members of securities registration
and clearing institutions and securities trading service organizations;
and
¡¡¡¡(7) other persons specified by the securities regulatory authority
under the State Council.
¡¡¡¡Article 69 ¡¡¡¡Inside information is information that is not made
public because, in the course of securities trading, it concerns
the company's business or financial affairs or may have a major
effect on the market price of the company's securities.
¡¡¡¡The following information belongs to inside information:
¡¡¡¡(1) the major events listed in the second paragraph of Article
62 of this Law;
¡¡¡¡(2) company plans concerning distribution of dividends or increase
of capital;
¡¡¡¡(3) major changes in the company's equity structure;
¡¡¡¡(4) major changes in security for the company's debts;
¡¡¡¡(5) any single mortgage, sale or write-off of a major asset used
in the business of the company that exceeds 30 percent of the said
asset;
¡¡¡¡(6) potential liability for major losses to be assumed in accordance
with law as a result of an act committed by a company's director(s),
supervisor(s), manager, deputy manager(s) or other senior management
person(s);
¡¡¡¡(7) plans concerning the takeover of listed companies; and
¡¡¡¡(8) other important information determined by the securities regulatory
authority under the State Council to have a marked effect on the
trading prices of securities.
¡¡¡¡Article 70 ¡¡¡¡No person with knowledge of inside information on
securities trading of a company or other person who has illegally
obtained such inside information may purchase the securities of
the company or sell such securities he is holding, divulge such
information or counsel another person to purchase or sell such securities.
¡¡¡¡Where there are other provisions in this Law that govern the
purchase of shares of a listed company by a shareholder who holds
not less than 5 percent of the company's shares, such provisions
shall apply.
¡¡¡¡Article 71 ¡¡¡¡It is prohibited for anyone to obtain illegitimate
benefits or to shift risks to others by any of the following means:
¡¡¡¡(1) whether independently or in collusion with others, carrying
out combined or successive purchases or sales by building up an
advantage in terms of funds or shareholdings or using one's advantage
in terms of information, thereby manipulating the trading prices
of securities.
¡¡¡¡(2) collaborating with another person to mutually trade securities
or to mutually buy or sell securities not held by them, at a prearranged
time and price and by prearranged means, thereby affecting the price
or volume of the securities traded;
¡¡¡¡(3) buying or selling securities from or to oneself without transfer
of ownership of the securities by means of making oneself the other
party to the transaction, thereby affecting the price or volume
of the securities traded; or
¡¡¡¡(4) manipulating the trading prices of securities by other means.
¡¡¡¡Article 72 ¡¡¡¡It is prohibited for state functionaries, employees
of the news media and other persons concerned to fabricate and disseminate
false information, thereby seriously affecting securities trading.
¡¡¡¡It is prohibited for stock exchanges, securities firms, securities
registration and clearing institutions, securities trading service
organizations and public intermediary organizations and their employees,
as well as the Securities Industry Association and the securities
regulatory authority and their staff members, to make false statements
or give misleading information in the course of securities trading.
¡¡¡¡Securities trading information disseminated by any mass medium
shall be truthful and objective. Disseminating of misleading information
is prohibited.
¡¡¡¡Article 73 ¡¡¡¡It is prohibited for securities firms and their
employees to commit any of the following fraudulent acts in the
course of securities trading that is detrimental to the interests
of their clients:
¡¡¡¡(1) purchasing or selling securities on behalf of a client contrary
to the client's instructions;
¡¡¡¡(2) failing to provide a client with written confirmation of a
transaction within the prescribed period of time;
¡¡¡¡(3) misappropriating the securities entrusted by a client for
purchase or sale or the funds in a client's account;
¡¡¡¡(4) purchasing or selling securities in a client's account without
the client's authorization, or purchasing or selling securities
under the name of a client;
¡¡¡¡(5) inveigling a client into making an unnecessary purchase or
sale of securities in order to obtain a commission; or
¡¡¡¡(6) any other act contrary to a client's authentic declaration
of intention and detrimental to the client's interests.
¡¡¡¡Article 74 ¡¡¡¡In the course of securities trading, it is prohibited
for a legal person to open an account and purchase or sell securities
in the name of an individual.
¡¡¡¡Article 75 ¡¡¡¡In the course of securities trading, it is prohibited
for anyone to misappropriate public funds to trade in securities.
¡¡¡¡Article 76 ¡¡¡¡State - owned enterprises and enterprises where
State - owned assets constitute a controlling interest may not speculate
in listed shares.
¡¡¡¡Article 77 ¡¡¡¡When stock exchanges, securities firms, securities
registration and clearing institutions, securities trading service
organizations, public intermediary organizations and their employees
discover any prohibited trading activities in the course of securities
trading, they shall immediately report such activities to the securities
regulation authority.
Chapter IV¡¡Takeover of Listed Companies
¡¡¡¡Article 78 ¡¡¡¡A listed company may be taken over by offer or by
agreement.
¡¡¡¡Article 79 ¡¡¡¡When, through securities trading at a stock exchange,
an investor comes to hold 5 percent of the shares issued by a listed
company, the investor shall, within three days from the date on
which such shareholding becomes a fact, submit a written report
to the securities regulatory authority under the State Council and
the stock exchange, notify the listed company and make the fact
known to the general public. During the period specified above,
the investor may not continue to purchase or sell shares of the
listed company.
¡¡¡¡Once an investor holds 5 percent of the shares issued by a listed
company, he shall, pursuant to the provisions of the preceding paragraph,
report and make announcement of each 5 percent increase or decrease
in the proportion of the issued shares he holds of the said company
through securities trading on a stock exchange. During the reporting
period, and for two days after the report and announcement are made,
the investor may not continue to purchase or sell shares of the
listed company.
¡¡¡¡Article 80 ¡¡¡¡The written report and announcement made in accordance
with the provisions in the preceding Article shall include the following:
¡¡¡¡(1) the name and domicile of the shareholder;
¡¡¡¡(2) the description and quantity of the shares held; and
¡¡¡¡(3) the date on which the shareholding or the increase or decrease
in the shareholding reaches the statutory percentage.
¡¡¡¡Article 81 ¡¡¡¡When, through securities trading on a stock exchange,
an investor comes to hold 30 percent of the issued shares of a listed
company and continues to buy such shares, the investor shall, in
accordance with law, issue a takeover offer to all the shareholders
of the listed company, unless he is exempted by the securities regulation
authority under the State Council from issuing such an offer.
¡¡¡¡Article 82 ¡¡¡¡Before issuing a takeover offer pursuant to the
provisions in the preceding Article, the purchaser shall submit
a report on the takeover of the listed company to the securities
regulatory authority under the State Council. The following particulars
shall be clearly stated in the report:
¡¡¡¡(1) the name and domicile of the purchaser;
¡¡¡¡(2) the decision of the purchaser concerning the takeover;
¡¡¡¡(3) the name of the listed company to be taken over;
¡¡¡¡(4) the purpose of the takeover;
¡¡¡¡(5) a detailed description of the shares to be bought up and the
number of shares scheduled to buy up;
¡¡¡¡(6) the term and price of the takeover;
¡¡¡¡(7) the amount and guaranteed availability of the funds required
for the takeover; and
¡¡¡¡(8) the ratio between the total number of the issued shares of
the company to be taken over and the number of such shares held
at the time the takeover report is submitted.
¡¡¡¡The purchaser shall simultaneously submit to the stock exchange
a copy of the report on the takeover of the company, as specified
in the preceding paragraph.
¡¡¡¡Article 83 ¡¡¡¡The purchaser shall announce his takeover offer
15 days after the date on which, pursuant to the provisions in the
preceding Article, he submits the report regarding the takeover
of the listed company.
¡¡¡¡The term of a takeover offer shall be not less than 30 days but
not more than 60 days.
¡¡¡¡Article 84 ¡¡¡¡During the effective term of a takeover offer, the
purchaser may not withdraw his takeover offer.
¡¡¡¡If, during the effective term of a takeover offer, the purchaser
needs to alter any item in the takeover offer, he shall submit a
report to the securities regulatory authority under the State Council
and the stock exchange in advance and, upon approval thereof, he
shall make an announcement with respect thereto.
¡¡¡¡Article 85 ¡¡¡¡All the terms proposed in the takeover offer shall
apply to all the shareholders of the company to be taken over.
¡¡¡¡Article 86 ¡¡¡¡Where, upon the expiration of the term of the takeover
offer, the number of shares of the company under takeover held by
the purchaser accounts for not less than 75 percent of the total
number of the shares issued by the company, the listing and trading
of the shares of the said company shall be terminated on the stock
exchange.
¡¡¡¡Article 87 ¡¡¡¡Where, upon the expiration of the term of the takeover
offer, the number of shares of the company under takeover held by
the purchaser accounts for not less than 90 percent of the total
number of the shares issued by the company, the remaining holders
of the shares of the said company shall have the right to sell their
shares on the same terms as those in the takeover offer, and the
purchaser, on his part, shall buy up the same.
¡¡¡¡Where, upon completion of the takeover, the company that is taken
over no longer meets the conditions prescribed in the Company Law,
it shall change its enterprise form according to law.
¡¡¡¡Article 88 ¡¡¡¡In the case of takeover by offer, the purchaser,
during the term of the takeover offer, may not buy or sell shares
of the company under takeover in a way different from, or on terms
in excess of, those as prescribed in the offer.
¡¡¡¡Article 89 ¡¡¡¡In the case of takeover by agreement, the purchaser
may effect the equity transfer by entering into an agreement with
the shareholders of the company under takeover, as prescribed in
laws and administrative regulations.
¡¡¡¡When a listed company is to be taken over by agreement, the purchaser
shall, within three days after the agreement is reached, submit
a written report on the takeover agreement to the securities regulatory
authority under the State Council and the stock exchange and make
the same known to the general public.
¡¡¡¡The takeover agreement may not be performed until the announcement
is made.
¡¡¡¡Article 90 ¡¡¡¡In the case of takeover by agreement, the parties
to the agreement may, on an ad hoc basis, entrust a securities registration
and clearing institution with custody of the shares to be transferred
pursuant to the agreement and with deposit of the funds with the
designated bank.
¡¡¡¡Article 91 ¡¡¡¡During the takeover of a listed company, the shares
in such company which are held by the purchaser of the listed company
may not be transferred for six months following completion of the
takeover.
¡¡¡¡Article 92 ¡¡¡¡Where a person acquires the shares of a company
through a takeover offer or takeover agreement and closes down the
company so taken over, it is a case of merger, and the purchaser
shall have the existing shares of the closed - down company replaced
according to law.
¡¡¡¡Article 93 ¡¡¡¡After conclusion of the takeover of a listed company
the purchaser shall, within 15 days, report the particulars of the
takeover to the securities regulatory authority under the State
Council and the stock exchange and make the same known to the general
public.
¡¡¡¡Article 94¡¡¡¡Where the takeover of a listed company involves shares
held by an investment organization authorized by the State, the
matter shall be subject to approval by the relevant department in
charge in accordance with the regulations of the State Council.
Chapter V¡¡Stock Exchanges
¡¡¡¡Article 95 ¡¡¡¡A stock exchange is a non-profit legal person that
provides a place for the centralized trading of securities at competing
prices.
¡¡¡¡A stock exchange shall be established or dissolved upon decision
by the State Council.
¡¡¡¡Article 96 ¡¡¡¡To establish a stock exchange, articles of association
shall be formulated.
¡¡¡¡The formulation and amendment of the articles of association of
a stock exchange shall be subject to approval by the securities
regulatory authority under the State Council.
¡¡¡¡Article 97 ¡¡¡¡A stock exchange shall include the words "stock
exchange" in its name. No other units or individuals may use
the name "stock exchange" or a similar name.
¡¡¡¡Article 98 ¡¡¡¡The income from various charges that is at the discretion
of a stock exchange shall first be used to ensure the normal operation
and gradual improvement of the premises and facilities of the stock
exchange.
¡¡¡¡The gains accumulated by a stock exchange shall belong to its
members, and its rights and interests shall be shared by the members.
The accumulated gains may not be distributed to the members while
the stock exchange is in existence.
¡¡¡¡Article 99 ¡¡¡¡A stock exchange shall have a board of governors.
¡¡¡¡Article 100 ¡¡¡¡A stock exchange shall have a general manager,
who shall be appointed and removed by the securities regulatory
authority under the State Council.
¡¡¡¡Article 101 ¡¡¡¡None of the persons described in Article 57 of
the Company Law or in the following may hold a responsible position
of a stock exchange:
¡¡¡¡(1) responsible persons of stock exchanges or securities registration
and clearing institutions and directors, supervisors and managers
of securities firms who, due to a violation of the law or rules
of discipline, are removed from office, where not more than five
years have elapsed since the date of their removal; and
¡¡¡¡(2) lawyers, certified public accountants and professionals of
statutory asset appraisal organizations or verification organizations
who, due to a violation of the law or rules of discipline, are disqualified
as such, where not more than five years have elapsed since the date
of their disqualification.
¡¡¡¡Article 102 ¡¡¡¡Employees of stock exchanges, securities registration
and clearing institutions or securities firms and functionaries
of State organs who are discharged for violating the law or rules
of discipline may not be engaged by stock exchanges.
¡¡¡¡Article 103 ¡¡¡¡Only securities firms that are qualified as members
of a stock exchange may enter that stock exchange to participate
in centralized trading at competing prices.
¡¡¡¡Article 104 ¡¡¡¡An investor shall open a securities trading account
with a securities firm and shall instruct, in writing, by telephone
or otherwise, the said company to purchase or sell securities on
his behalf.
¡¡¡¡An investor who purchases or sells securities through the securities
firm where he has opened an account shall adopt the method of instruction
to buy or sell at market prices or instruction to buy or sell subject
to price limits.
¡¡¡¡Article 105 ¡¡¡¡A securities firm shall, in accordance with the
investors' instructions and the rule of time precedence, declare
orders and participate in centralized trading at competing prices
at the stock exchange. A securities registration and clearing institution
shall, on the basis of the transactions concluded and in accordance
with the rules for clearing and settlement, effect the clearing
and settlement of securities and funds and handle the procedures
for registration of the change in ownership of the securities.
¡¡¡¡Article 106 ¡¡¡¡Securities purchased by securities firms upon instruction
or on their own account may not be sold on the same day.
¡¡¡¡Article 107 ¡¡¡¡Stock exchanges shall ensure fair centralized trading
at competing prices, promptly announce quotations concerning the
securities trading, compile securities market quotation tables for
each day of trading, and announce the same.
¡¡¡¡Article 108 ¡¡¡¡Stock exchanges shall, in accordance with laws
and administrative regulations, handle matters relating to the suspension,
resumption or termination of listings of shares or corporate bonds.
The specific measures shall be formulated by the securities regulatory
authority under the State Council.
¡¡¡¡Article 109 ¡¡¡¡When a sudden event affecting the normal trading
of securities occurs, stock exchanges may effect a technical suspension
of trading. They may decide to temporarily suspend the market when
a sudden event of force majeure occurs or in order to protect the
normal order of securities trading.
¡¡¡¡When Stock exchanges effect a technical suspension of trading
or decide to temporarily suspend the market, they shall, without
delay, report the same to the securities regulatory authority under
the State Council.
¡¡¡¡Article 110 ¡¡¡¡A stock exchange shall carry out real -- time monitoring
of securities trading conducted on the exchange and shall report
any unusual trading, as required by the securities regulatory authority
under the State Council.
¡¡¡¡A stock exchange shall supervise disclosure of information by
listed companies by causing such companies to disclose information
promptly and accurately according to law.
¡¡¡¡Article 111 ¡¡¡¡A stock exchange shall derive a certain proportion
from its transaction fees, membership dues and seat fees to establish
a risk fund. The risk fund shall be controlled by the board of governors
of the stock exchange.
¡¡¡¡The specific proportion derived for the risk fund and measures
for its use shall be prescribed by the securities regulatory authority
under the State Council in conjunction with the finance department
under the State Council.
¡¡¡¡Article 112 ¡¡¡¡A stock exchange shall deposit the trading guarantee
fees collected by it and the risk fund in dedicated accounts with
its bank and may not use the same without authorization.
¡¡¡¡Article 113¡¡¡¡A stock exchange shall, pursuant to laws and administrative
regulations governing securities, formulate specific rules for centralized
securities trading at competing prices, administrative regulations
for its members and operational rules for its employees, and submit
the same to the securities regulatory authority under the State
Council for approval.
¡¡¡¡Article 114 ¡¡¡¡In performing their duties related to securities
trading, the responsible persons and employees of stock exchanges
shall withdraw where they themselves or any of their relatives have
an interest.
¡¡¡¡Article 115 ¡¡¡¡The transaction results of trading conducted in
accordance with the trading rules formulated according to law may
not be changed. Traders who violate the rules during trading may
not be exempted from civil liability. Gains obtained from trading
against the rules shall be dealt with pursuant to relevant regulations.
¡¡¡¡Article 116 ¡¡¡¡If persons engaged in securities trading inside
a stock exchange violate the trading rules of the stock exchange,
the stock exchange shall impose disciplinary sanctions on them.
If the circumstances are serious, the offenders' qualifications
shall be revoked and the offenders shall be barred from entering
the exchange to trade securities.
Chapter ¢ö¡¡Securities Firms
¡¡¡¡Article 117 ¡¡The establishment of a securities firm shall be
subject to examination and approval by the securities regulatory
authority under the State Council. No one may engage in securities
business without approval of the said authority.
¡¡¡¡Article 118 ¡¡¡¡For purposes of this Law, "a securities firm"
means a limited liability company or a company limited by shares
which, pursuant to the provisions of the Company Law and the preceding
Article, is established with approval to engage in securities business.
¡¡¡¡Article 119 ¡¡¡¡The State administers securities firms by dividing
them into categories -- comprehensive securities firms and brokerage
securities firms. The securities regulatory authority under the
State Council shall, on the basis of the these categories, issue
business permits to them.
¡¡¡¡Article 120 ¡¡¡¡A securities firm shall include the words "limited
liability securities firm" or "securities firm limited
by shares" in its name.
¡¡¡¡A brokerage securities firm shall include the word "brokerage"
in its name.
¡¡¡¡Article 121 ¡¡¡¡The following conditions shall be satisfied for
the establishment of a comprehensive securities firm:
¡¡¡¡(1) to have a minimum registered capital of RMB500m;
¡¡¡¡(2) to have chief administrators and business persons who are
qualified to engage in securities business;
¡¡¡¡(3) to have a fixed place of business and up -to- standard trading
facilities; and
¡¡¡¡(4) to have a sound management system and a standardized system
for the separate administration of business on its own account and
brokerage business.
¡¡¡¡Article 122 ¡¡¡¡The minimum registered capital of a brokerage securities
firm is RMB50m, the chief administrators and business persons of
such a company shall be qualified to engage in securities business,
and it shall have a fixed place of business, up-to-standard trading
facilities and a sound management system.
¡¡¡¡Article 123 ¡¡¡¡The establishment or closure of branches of a securities
firm, change in its scope of business, registered capital or articles
of association, and merger, division, change in its corporate form,
and its dissolution shall be subject to approval by the securities
regulatory authority under the State Council.
¡¡¡¡Article 124 ¡¡¡¡The total amount of external liabilities of a securities
firm may not exceed the prescribed multiple of its net assets, and
the total amount of its current liabilities may not exceed a certain
proportion of its total current assets. The specific multiple, proportion
and administrative measures shall be prescribed by the securities
regulatory authority under the State Council.
¡¡¡¡Article 125 ¡¡¡¡None of the persons described in Article 57 of
the Company Law or in the following may serve as director, supervisor
or manager of a securities firm:
¡¡¡¡(1) responsible persons of stock exchanges or securities registration
and clearing institutions and directors, supervisors and managers
of securities firms, who are removed from office due to a violation
of the law or rules of discipline, where not more than five years
have elapsed since the date of their removal; and
¡¡¡¡(2) lawyers, certified public accountants, and professionals of
statutory asset appraisal organizations or verification organizations,
who are disqualified as such due to a violation of the law or rules
of discipline, where not more than five years have elapsed since
the date of their disqualification.
¡¡¡¡Article 126¡¡¡¡Employees of stock exchanges, securities registration
and clearing institutions or securities firms and functionaries
of State organs who are discharged for violating the law or rules
of discipline may not be engaged by securities firms.
¡¡¡¡Article 127 ¡¡¡¡No functionaries of State organs, or other persons
prohibited by laws or administrative regulations from concurrently
holding positions in companies, may concurrently hold positions
in securities firms.
¡¡¡¡No director, supervisor, manager or business person of a securities
firm may concurrently hold a post in another securities firm.
¡¡¡¡Article 128 ¡¡¡¡A securities firm shall derive for a trading risk
reserve from its annual after -tax profits to make up losses from
securities trading. The specific percentage for such derivation
shall be prescribed by the securities regulatory authority under
the State Council.
¡¡¡¡Article 129 ¡¡¡¡Comprehensive securities firms may engage in the
following securities business:
¡¡¡¡(1) brokerage business;
¡¡¡¡(2) securities business on its own account;
¡¡¡¡(3) securities underwriting business; and
¡¡¡¡(4) other business verified by the securities regulatory authority
under the State Council.
¡¡¡¡Article 130 ¡¡¡¡Brokerage securities firms are permitted only to
engage in securities brokerage business.
¡¡¡¡Article 131 ¡¡¡¡A securities firm shall, on the basis of the lines
of business specified in the preceding two Articles, submit an application
for its scope of business to the securities regulatory authority
under the State Council for verification.
¡¡¡¡No securities firm may engage in securities business or other
business beyond the scope of business verified.
¡¡¡¡Article 132 ¡¡¡¡Comprehensive securities firms shall conduct their
brokerage business separately from business operated on their own
account. The business persons and financial accounts for one type
of business shall be kept separate from those for the other type.
The same business persons may not operate both types of business
and the same accountants may not keep the financial accounts for
both types of business.
¡¡¡¡Transaction clearing funds of a client shall be deposited in
full with a designated commercial bank and a separate account shall
be opened and managed as such. Misappropriation of a client's transaction
clearing funds is strictly prohibited.
¡¡¡¡Article 133¡¡¡¡The flow of bank funds into the stock market against
regulations is prohibited.
¡¡¡¡When carrying out business on its own account, a securities firm
shall use its self-owned funds and funds raised according to law.
¡¡¡¡Article 134 ¡¡¡¡Business on the account of a securities firm itself
shall be conducted in its own name, and may not be conducted in
the name of another or in the name of an individual.
¡¡¡¡No securities firm may lend its own business account to another
for use.
¡¡¡¡Article 135 ¡¡¡¡Securities firms shall have the lawful right to
operate independently, and their lawful operations shall be subjected
to no interference.
¡¡¡¡Article 136 ¡¡¡¡Where the registered capital of a securities firm
falls below the amount required to engage in the relevant business
as prescribed in this Law, the securities regulatory authority under
the State Council shall revoke its verification of the relevant
scope of business.
¡¡¡¡Article l37 ¡¡¡¡A securities firm that, in securities trading,
buys or sells securities on behalf of its clients or operates as
an intermediary is a securities broker with the status of a legal
person.
¡¡¡¡Article l38 ¡¡¡¡When handling brokerage business, a securities
firm shall separately open a securities account and a funds account
for a client, and shall manage the securities and funds delivered
by the client under separate accounts and truthfully record transactions.
It may not make sham entries.
¡¡¡¡To open an account, the client shall present lawful papers to
show that he is a Chinese citizen or a Chinese legal person.
¡¡¡¡Article 139 ¡¡¡¡To handle brokerage business, a securities firm
shall provide uniform letters of instruction for the trading of
securities for use by instructing parties. If instructions are given
in other ways, a record shall be kept thereof.
¡¡¡¡Whether or not any transactions are concluded, the records of
clients' instructions for trading of securities shall be kept at
the securities firm for the prescribed period of time.
¡¡¡¡Article 140 ¡¡¡¡Upon accepting an instruction to purchase or sell
securities, a securities firm shall purchase or sell securities
as an agent in accordance with the trading rules and on the basis
of the description of the securities, the purchase or sale quantity,
the method of bidding, the price range, etc. set forth in the instruction
form. After a transaction is concluded, it shall, according to regulations,
prepare a transaction report and deliver it to the client.
¡¡¡¡Reconciliation statements confirming trading acts and their transaction
results in securities trading shall be truthful. Such statements
shall be audited on a transaction--by-- transaction basis by an
auditor other than the person handling the transactions, who shall
see that the securities book balance is the same as the number of
securities actually held.
¡¡¡¡Article 141¡¡¡¡Securities sold by a securities firm upon acceptance
of an instruction shall be securities actually held in the client's
securities account. A securities firm may not finance its clients'
transactions by providing securities.
¡¡¡¡Securities purchased by a securities firm upon acceptance of
an instruction shall be paid with funds actually deposited in the
client's funds account. A securities firm may not finance its clients'
transactions by providing funds.
¡¡¡¡Article 142 ¡¡¡¡When handling brokerage business, a securities
firm may not accept a client's unlimited authorization to decide
on the purchase or sale of securities, choose the types of securities
or decide on the quantities to be purchased or sold or the purchase
or sales price.
¡¡¡¡Article 143 ¡¡¡¡A securities firm many not give any form of commitment
with respect to its clients' profits from the purchase or sale of
securities or compensation for losses from the purchase or sale
of securities.
¡¡¡¡Article 144 ¡¡¡¡A securities firm and its employees may not, in
private and not through the company's place of business established
according to law, accept instructions from a client to purchase
or sell securities.
¡¡¡¡Article 145 ¡¡¡¡If, in the course of securities trading, an employee
of a securities firm violates trading rules under the instructions
of the company or by taking advantage of his position, the securities
firm to which he belongs shall bear full liability therefor.
Chapter ¢÷¡¡Securities Registration and Clearing Institutions
¡¡¡¡Article 146 ¡¡¡¡A securities registration and clearing institution
is a non-profit legal person that provides centralized registration,
custody and clearing services for securities trading.
¡¡¡¡The establishment of a securities registration and clearing institution
shall be subject to approval by the securities regulatory authority
under the State Council.
¡¡¡¡Article 147 ¡¡¡¡To be established, a securities registration and
clearing institution shall meet the following conditions:
¡¡¡¡(1) it has self-owned funds of not less than RMB200m;
¡¡¡¡(2) it has the place and facilities necessary for providing securities
registration, custody and clearing services;
¡¡¡¡(3) its chief administrators and business persons are qualified
to engage in securities business; and
¡¡¡¡(4) other conditions prescribed by the securities regulatory authority
under the State Council.
¡¡¡¡The name of a securities registration and clearing institution
shall include the words "securities registration and clearing."
¡¡¡¡Article 148 ¡¡¡¡A securities registration and clearing institution
shall perform the following functions:
¡¡¡¡(1) establishment of securities accounts and clearing accounts;
¡¡¡¡(2) custody and transfer of ownership of securities;
¡¡¡¡(3) registration of the names of the holders of securities;
¡¡¡¡(4) clearing and delivery of listed securities traded on the stock
exchange;
¡¡¡¡(5) allotment of securities rights and interests upon entrustment
by the issuer;
¡¡¡¡(6) handling of inquiries concerning the above - mentioned business;
and
¡¡¡¡(7) other business approved by the securities regulatory authority
under the State Council.
¡¡¡¡Article 149 ¡¡¡¡A centralized and unified method of operation shall
be used for registration and clearing of securities nationwide.
¡¡¡¡The articles of association and business rules of a securities
registration and clearing institution shall be formulated according
to law and be subject to approval by the securities regulatory authority
under the State Council.
¡¡¡¡Article 150 ¡¡¡¡Before trading listed securities, a holder shall
place all such securities in the custody of a securities registration
and clearing institution.
¡¡¡¡A securities registration and clearing institution may not use
its clients' securities as collateral or lend them to others.
¡¡¡¡Article 151 ¡¡¡¡A securities registration and clearing institution
shall furnish the issuer of securities with the register of, and
relevant information concerning, the holders of its securities.
¡¡¡¡On the basis of the results of securities registration and clearing,
a securities registration and clearing institution shall confirm
the fact that particular securities are held by particular holders
and provide registered information on the holders of the securities.
¡¡¡¡A securities registration and clearing institution shall ensure
the truthfulness, accuracy and completeness of the register of the
holders of securities and the records of registration of change
in ownership. It may not forge, alter or destroy such register or
records.
¡¡¡¡Article 152¡¡¡¡A securities registration and clearing institution
shall adopt the following measures to ensure the normal operation
of business:
¡¡¡¡(1) to have the necessary service equipment and sufficient measures
for data security and protection;
¡¡¡¡(2) to have established sound management systems for business,
financial affairs and security; and
¡¡¡¡(3) to have established complete risk control systems.
¡¡¡¡Article 153 ¡¡¡¡A securities registration and clearing institution
shall carefully preserve the original evidence relating to registration,
custody and clearing. Important original evidence shall be kept
for a period of not less than 20 years.
¡¡¡¡Article 154 ¡¡¡¡A securities registration and clearing institution
shall establish a clearing risk fund and deposit the money therein
in a dedicated account at a designated bank. The clearing risk fund
shall be used for any losses suffered by the securities registration
and clearing institution as a result of technical failures, operational
errors or force majeure.
¡¡¡¡The securities clearing risk fund shall be derived from the business
revenue and profits of a securities registration and clearing institution,
and may also be collected from securities firms at a certain percentage
of the volume of their securities traded.
¡¡¡¡The measures for raising and managing securities clearing risk
fund shall be prescribed by the securities regulatory authority
in conjunction with the finance department under the State Council.
¡¡¡¡Article 155 ¡¡¡¡The money in the securities clearing risk fund
shall be controlled as earmarked money.
¡¡¡¡After paying compensation with money from the risk fund, a securities
registration and clearing institution shall have recourse to the
responsible person(s).
¡¡¡¡Article 156 ¡¡¡¡The application of a securities registration and
clearing institution for dissolution shall be subject to approval
by the securities regulatory authority under the State Council.
Chapter ¢ø¡¡Securities Trading Service Organizations
¡¡¡¡Article 157 ¡¡¡¡Professional securities investment consulting organizations
and credit - rating institutions may be established, where they
are needed for securities investment and trading business. The conditions
for establishment of securities investment consulting organizations
and credit - rating institutions, the examination and approval procedures
and the business rules of such organizations and institutions shall
be prescribed by the securities regulatory authority under the State
Council.
¡¡¡¡Article 158 ¡¡¡¡The business persons of professional securities
investment consulting organizations and credit -- rating institutions
shall be persons who are armed with professional knowledge of securities
and have engaged in the securities business for not less than two
years. The criteria and administrative measures for determining
the qualifications of such persons to engage in securities business
shall be formulated by the securities regulatory authority under
the State Council.
¡¡¡¡Article 159 ¡¡¡¡Employees of a securities investment consulting
organization may not engage in the following activities:
¡¡¡¡(1) investing in securities as an agent for an entrusting party;
¡¡¡¡(2) agreeing with an entrusting party to share profits or losses
from securities investment;
¡¡¡¡(3) purchasing or selling the shares of listed companies to which
the consulting organization provides services; or
¡¡¡¡(4) other activities prohibited by laws or administrative regulations.
¡¡¡¡Article 160 ¡¡¡¡Professional securities investment consulting organization
and credit-rating institutions shall charge service fees in accordance
with the rates or measures prescribed by the relevant administrative
department under the State Council.
¡¡¡¡Article 161 ¡¡¡¡Professional institutions and individuals that
produce documents such as audit reports, asset appraisal reports
and legal opinions for the issuance or listing of securities or
for securities trading activities shall do so in accordance with
the working procedures prescribed in the rules of their profession.
They shall check and verify the truthfulness, accuracy and completeness
of the contents of the reports to be produced by them and shall
bear joint and several liability for the parts of such reports for
which they are responsible.
Chapter ¢ù ¡¡The Securities Industry Association
¡¡¡¡Article 162 ¡¡¡¡The Securities Industry Association is a self-regulating
organization for the securities industry and is a public organization
with the status of a legal person.
¡¡¡¡Securities firms shall join the Securities Industry Association.
¡¡¡¡The organ of authority of the Securities Industry Association
is the members' general assembly composed of all of the members.
¡¡¡¡Article 163 ¡¡¡¡The charter of the Securities Industry Association
shall be formulated by its members' general assembly and submitted
to the securities regulatory authority under the State Council for
the record.
¡¡¡¡Article l64 ¡¡¡¡The Securities Industry Association shall perform
the following functions:
¡¡¡¡(1) to assist the securities regulatory authority in enabling
members to understand and implement the laws and administrative
regulations governing securities;
¡¡¡¡(2) to safeguard the lawful rights and interests of members according
to law and to report members' suggestions and requests to the securities
regulatory authority;
¡¡¡¡(3) to collect and process information on securities and provide
services to members;
¡¡¡¡(4) to formulate rules to be observed by members, to arrange for
vocational training for the employees of its members and to promote
professional exchanges among members;
¡¡¡¡(5) to mediate in the event of disputes between members or between
members and their clients;
¡¡¡¡(6) to make arrangements for members to research into the development,
operation and other matters related to the securities industry;
¡¡¡¡(7) to supervise and inspect members' conduct and, in accordance
with rules, to impose disciplinary sanctions on any member that
violates laws, administrative regulations or the charter of the
Association; and
¡¡¡¡(8) other functions delegated to it by the securities regulatory
authority under the State Council.
¡¡¡¡Article 165¡¡¡¡The Securities Industry Association shall have a
board of governors. The members of the board of governors shall
be elected as prescribed in the charter.
Chapter X¡¡Securities Regulatory Authority
¡¡¡¡Article 166 ¡¡¡¡The securities regulatory authority under the State
Council shall regulate the securities market according to law, maintain
order of the securities market and ensure the lawful operation of
the same.
¡¡¡¡Article 167¡¡¡¡The securities regulatory authority under the State
Council shall perform the following functions in regulating the
securities market:
¡¡¡¡(1) to formulate, according to law, rules and regulations concerning
regulation of the securities market and to lawfully exercise its
power of examination and approval or verification;
¡¡¡¡(2) to regulate, according to law, the offering, trading, registration,
custody and clearing of securities;
¡¡¡¡(3) to regulate, according to law, the securities business activities
of the issuers of securities, listed companies, stock exchanges,
securities firms, securities registration and clearing institutions,
securities investment fund management institutions, securities investment
consulting organizations, credit - rating institutions, and those
law firms, public accounting firms and asset appraisal organizations
that are engaged in securities business;
¡¡¡¡(4) to formulate, according to law, the qualification criteria
and code of conduct for persons engaged in securities business,
and to see that these are observed;
¡¡¡¡(5) to supervise and inspect, according to law, the disclosure
of information in connection with securities offering and trading;
¡¡¡¡(6) to guide and supervise the activities of the Securities Industry
Association according to law;
¡¡¡¡(7) according to law, to investigate and deal with violations
of laws and administrative regulations concerning the regulation
of the securities market; and
¡¡¡¡(8) other functions prescribed in laws and administrative regulations.
¡¡¡¡Article 168¡¡¡¡When performing its functions according to law,
the securities regulatory authority under the State Council shall
have the power to adopt the following measures:
¡¡¡¡(1) to enter the site where an illegal act is committed to investigate
and collect evidence;
¡¡¡¡(2) to question the party concerned and any unit or individual
connected with the event under investigation, and to require them
to give explanations concerning matters connected with the event
under investigation;
¡¡¡¡(3) to inspect and make copies of the securities trading records,
records of registration of change in ownership, financial and accounting
information and other relevant documents and materials of the party
concerned and any unit or individual connected with the event under
investigation, and to seal up documents or materials likely to be
removed or concealed; and
¡¡¡¡(4) to examine the fund accounts and securities accounts of the
party concerned and any unit or individual connected with the event
under investigation, and if there is evidence to substantiate signs
that illegally obtained funds or securities have been removed or
concealed, to apply to a judicial organ to freeze the same.
¡¡¡¡Article 169 ¡¡¡¡When members of the securities regulatory authority
under the State Council conduct supervision, inspection or investigation
during the lawful performance of their duties, they shall produce
the relevant papers and be obligated to maintain the confidentiality
of the commercial secrets of units or individuals which they become
aware of .
¡¡¡¡Article 170¡¡¡¡Members of the securities regulatory authority under
the State Council shall perform their duties faithfully, do their
work according to law and be impartial and honest. They may not
take advantage of their positions to seek illegitimate gains.
¡¡¡¡Article 171 ¡¡¡¡When the securities regulatory authority under
the State Council performs its functions according to law, the units
and individuals under inspection or investigation shall cooperate
and provide truthful relevant documents and materials.Such units
and individuals may not refuse to cooperate, obstruct inspection
or investigation or conceal relevant documents or materials.
¡¡¡¡Article 172¡¡¡¡The rules and regulations and the regulatory work
systems formulated according to law by the securities regulatory
authority under the State Council shall be made public.
¡¡¡¡Decisions made by the securities regulatory authority under the
State Council, on the basis of the results of its investigations,
to impose penalties on illegal acts involving securities shall be
made public.
¡¡¡¡Article 173 ¡¡¡¡If, during the performance of its functions according
to law, the securities regulatory authority under the State Council
suspects that an illegal act involving securities discovered by
it may constitute a criminal offense, it shall hand the case over
to a judicial organ for it to handle.
¡¡¡¡Article 174¡¡¡¡No members of the securities regulatory authority
under the State Council may concurrently hold a position in an organization
that is under the regulation of the authority.
Chapter XI¡¡Legal Liability
¡¡¡¡Article 175 ¡¡¡¡Any unit that issues securities without verification
or examination and approval by the statutory authority or that issues
securities by forging issuing documents shall be ordered to cease
issuance and refund the funds thus raised, together with bank deposit
interest for the same period, and shall also be fined not less than
1 percent but not more than 5 percent of the amount of the illegally
raised funds. The persons directly in charge and the other persons
directly responsible shall be given a disciplinary warning and also
be fined not less than RMB30,000 but not more than RMB300,000. If
the offense constitutes a crime, criminal liability shall be pursued
according to law.
¡¡¡¡Article 176¡¡¡¡Where a securities firm underwrites or deals as
an agent in securities issued without verification or examination
and approval, the securities regulatory authority shall have it
closed down, confiscate its illegal gains and impose on it a fine
of not less than the amount of but not more than five times the
illegal gains. The persons directly in charge and the other persons
directly responsible shall be given a disciplinary warning and also
be fined not less than RMB30, 000 but not more than RMB300, 000.
If the offense constitutes a crime, criminal liability shall be
pursued according to law.
¡¡¡¡Article 177¡¡¡¡Where the issuer of securities listed upon verification
pursuant to this Law fails to disclose information in accordance
with relevant regulations or the information disclosed contains
a falsehood, misleading statement or major omission, the securities
regulatory authority shall order the issuer to take remedial measures
and impose on it a fine of not less than RMB300,000 but not more
than RMB600,000. The persons directly in charge and the other persons
directly responsible shall be given a disciplinary warning and also
be fined not less than RMB30, 000 but not more than RMB300,000.
If the offense constitutes a crime, criminal liability shall be
pursued according to law.
¡¡¡¡If the issuer mentioned in the preceding paragraph fails to announce
its listing documents or submit the relevant reports on schedule,
the securities regulatory authority shall order it to take remedial
measures and impose on it a fine of not less than RMB50,000 but
not more than RMBl00,000.
¡¡¡¡Article 178 ¡¡¡¡If anyone illegally establishes a stock exchange,
the securities regulatory authority shall close down the same, confiscate
any illegal gains and impose a fine of not less than the amount
of but not more than five times the illegal gains. If there are
no illegal gains, a fine of not less than RMB100,000 but not more
than RMB500,000 shall be imposed. The persons directly in charge
and the other persons directly responsible shall be given a disciplinary
warning and also be fined not less than RMB30,000 but not more than
RMB300,000. If the offense constitutes a crime, criminal liability
shall be pursued according to law.
¡¡¡¡Article 179 ¡¡¡¡If anyone establishes a securities firm and operates
securities business without approval and a business permit, the
securities regulatory authority shall have it closed down, confiscate
any illegal gains and impose a fine of not less than the amount
of but not more than five times the illegal gains. If there are
no illegal gains, a fine of not less than RMB30, 000 but not more
than RMB100,000 shall be imposed. If the offense constitutes a crime,
criminal liability shall be pursued according to law.
¡¡¡¡Article 180 ¡¡¡¡If anyone who is prohibited by laws or administrative
regulations from participating in share trading holds, purchases
or sells shares directly or under an assumed name or in the name
of another, he shall be ordered to dispose of the illegally held
shares according to law, his illegal gains shall be confiscated
and he shall also be imposed a fine of not more than the value of
the shares purchased or sold. If the offender is a State functionary,
administrative sanctions shall, in addition, be imposed on him according
to law.
¡¡¡¡Article 181 ¡¡¡¡If an employee of a stock exchange, securities
firm, securities registration and clearing institution or securities
trading service organization, or a staff member of the Securities
Industry Association or the securities regulatory authority intentionally
provides false information, forges, alters or destroys trading records
or inveigle investors into purchasing or selling shares, his professional
qualifications shall be revoked and a fine of not less than RMB30,
000 but not more than RMB50, 000 shall be imposed. If the offender
is a State functionary, administrative sanctions shall, in addition,
be imposed according to law. If the offense constitutes a crime,
criminal liability shall be pursued according to law.
¡¡¡¡Article 182 ¡¡¡¡If, in violation of the provisions in Article 39
of this Law, a professional institution or individual that produces
documents such as audit reports, asset appraisal reports and legal
opinions for the issuance or listing of shares purchases or sells
shares, it or he shall be ordered to dispose of the illegally obtained
shares according to law, the illegal gains shall be confiscated
and a fine of not more than the value of the shares purchased or
sold shall, in addition, be imposed.
¡¡¡¡Article 183 ¡¡¡¡If, before information that may affect the issuance
or trading of securities or other information that may have a major
effect on the price of securities is made public, a person who has
knowledge of inside information on securities trading or a person
who illegally obtains such information purchases or sells such securities,
divulges such information or counsels another to purchase or sell
such securities, he shall be ordered to dispose of the illegally
obtained securities according to law, his illegal gains shall be
confiscated and, in addition, he shall be imposed a fine of not
less than the amount of but not more than five times the illegal
gains, or a fine of not more than the value of the securities illegally
purchased or sold. If the offense constitutes a crime, criminal
liability shall be pursued according to law.
¡¡¡¡If a staff member of the securities regulatory authority engages
in insider trading, he shall be given a heavier punishment.
¡¡¡¡Article 184¡¡¡¡If anyone, in violation of the provisions in Article
71 of this Law, obtains illegitimate benefits or shifts risks to
others by manipulating securities trading prices or fabricating
sham securities trading prices or securities trading volumes, his
illegal gains shall be confiscated and he shall be fined not less
than the amount of but not more than five times the illegal gains.
If the offense constitutes a crime, criminal liability shall be
pursued according to law.
¡¡¡¡Article 185 ¡¡¡¡If anyone, in violation of the provisions of this
Law, purchases or sells securities by misappropriating public funds,
his illegal gains shall be confiscated and he shall be fined not
less than the amount of but not more than five times the illegal
gains. If the offender is a State functionary, administrative sanctions
shall, in addition, be imposed according to law. If the offense
constitutes a crime, criminal liability shall be pursued according
to law.
¡¡¡¡Article 186 ¡¡¡¡If a securities firm, in violation of the provisions
of this Law, sells for a client securities that are not actually
in the client's account or provides funds for a client to purchase
securities, its illegal gains therefrom shall be confiscated and
a fine equal to the value of the securities illegally purchased
or sold shall be imposed on it. The persons directly in charge and
the other persons directly responsible shall be given a disciplinary
warning and also be fined not less than RMB30, 000 but not more
than RMB300, 000. If the offense constitutes a crime, criminal liability
shall be pursued according to law.
¡¡¡¡Article 187¡¡¡¡If a securities firm, in violation of the provisions
of this Law, sells the securities purchased on the same day upon
a client's instruction or on its own account, its illegal gains
shall be confiscated and a fine of not less than 5 percent but not
more than 20 percent of the amount of the illegal securities transaction
shall be imposed on it.
¡¡¡¡Article 188 ¡¡¡¡Anyone who, by fabricating and disseminating false
information that affects securities trading, disrupts the order
of the securities trading market shall be fined not less than RMB30,
000 but not more than RMB200, 000. If the offense constitutes a
crime, criminal liability shall be pursued according to law.
¡¡¡¡Article 189¡¡¡¡If a stock exchange, securities firm, securities
registration and clearing institution, securities trading service
organization or public intermediary organization or one of their
employees, or the Securities Industry Association, the securities
regulatory authority or one of their staff members makes a false
statement or gives misleading information in the course of securities
trading, the offender shall be ordered to set it to rights and be
fined not less than RMB30, 000 but not more than RMB200, 000. If
the offender is a State functionary, he shall, in addition, be given
administrative sanctions according to law. If the offense constitutes
a crime, criminal liability shall be pursued according to law.
¡¡¡¡Article 190¡¡¡¡If a legal person, in violation of the provisions
of this Law, opens an account to deal in securities in the name
of an individual, it shall be ordered to make rectification, the
illegal gains shall be confiscated and a fine of not less than the
amount of but not more than five times the illegal gains shall be
imposed. If the persons directly in charge or the other persons
directly responsible are State functionaries, they shall be given
administrative sanctions according to law.
¡¡¡¡Article 191¡¡¡¡If a comprehensive securities firm, in violation
of the provisions of this Law, engages in business on its own account
in the name of another or in the name of an individual, it shall
be ordered to make rectification, its illegal gains shall be confiscated,
and it shall be fined not less than the amount of but not more than
five times the illegal gains. If the circumstances are serious,
its business on its own account shall be stopped.
¡¡¡¡Article 192¡¡¡¡If a securities firm deals in securities or handles
trading matters contrary to a client's instructions, or handles
non-trading matters contrary to the client's authentic declaration
of intention, and thus causes losses to the client, it shall be
liable for losses according to law and be fined not less than RMBl0,
000 but not more than RMB100, 000.
¡¡¡¡Article 193 ¡¡¡¡If, without the client's instruction, a securities
firm, securities registration and clearing institution or one of
their employees purchases, sells, misappropriates or lends securities
in the client's account, uses the client's securities as collatoral,
or misappropriate the funds in the client's account, it or he shall
be ordered to make rectification, the illegal gains shall be confiscated,
a fine of not less than the amount of but not more than five times
the illegal gains shall be imposed, and the securities firm or securities
registration and clearing institution shall be ordered to close
down, or the professional qualification certificate of the responsible
person shall be revoked. If the offense constitutes a crime, criminal
liability shall be pursued according to law.
¡¡¡¡Article 194 ¡¡¡¡If, when handling brokerage business, a securities
firm accepts unlimited authorization by a client to purchase or
sell securities or gives a commitment to a client concerning profits
from the purchase or sale of securities or compensation for losses
from the purchase or sale of securities, it shall be ordered to
make rectification and shall be fined not less than RMB50, 000 but
not more than RMB200, 000.
¡¡¡¡Article 195 ¡¡¡¡If anyone, in violation of the statutory procedures
for the takeover of listed companies, gains illegitimate profits
by taking advantage of the takeover of a listed company, the offender
shall be ordered to make rectification, the illegal gains shall
be confiscated and a fine of not less than the amount of but not
more than five times the illegal gains shall be imposed.
¡¡¡¡Article 196 ¡¡¡¡If a securities firm or one of its employees, in
violation of the provisions of this Law, privately accepts instructions
from a client to purchase or sell securities, the illegal gains
shall be confiscated and a fine of not less than the amount of but
not more than five times the illegal gains shall be imposed.
¡¡¡¡Article 197 ¡¡¡¡If a securities firm, in violation of the provisions
of this Law, engages, without approval, in the trading of unlisted
securities, it shall be ordered to make rectification, its illegal
gains shall be confiscated, and it shall be fined not less than
the amount of but not more than five times the illegal gains.
¡¡¡¡Article 198 ¡¡¡¡If, after its establishment, a securities firm
fails to commence business without justifiable reason or, after
having commenced business, it suspends business on its own for a
period of not less than three months running, its corporate business
license shall be revoked by the company registration organ.
¡¡¡¡Article 199 ¡¡¡¡If a securities firm, in violation of the provisions
of this Law, engages in securities business beyond the scope of
business permitted, it shall be ordered to make rectification, its
illegal gains shall be confiscated, and it shall be fined not less
than the amount of but not more than five times the illegal gains.
If the circumstances are serious, the securities firm shall be ordered
to close down.
¡¡¡¡Article 200 ¡¡¡¡If a securities firm that operates at the same
time securities brokerage business and securities business on its
own account fails to keep the two types of business separate from
each other according to law and operates them together, it shall
be ordered to make rectification, its illegal gains shall be confiscated,
and it shall be fined not less than the amount of but not more than
five times the illegal gains. If the circumstances are serious,
the securities regulatory authority shall revoke the original verification
of the securities business.
¡¡¡¡Article 201¡¡¡¡If a unit submits sham supporting documents or conceals
major facts by other fraudulent means to and thus obtains a securities
business permit by deception, or if a securities firm commits a
serious illegal act in the course of securities trading so that
it is no longer qualified to operate such business, the securities
regulatory authority shall revoke its securities business permit
and order it to close down.
¡¡¡¡Article 202¡¡¡¡If a professional institution that produces documents
such as audit reports, asset appraisal reports and legal opinions
for the issuance or listing of securities or for securities trading
activities makes false statements in the part of the contents for
which it is responsible, its illegal gains shall be confiscated,
it shall be fined not less than the amount of but not more than
five times the illegal gains, and the relevant authority in charge
shall order the said institution to suspend business and shall revoke
the qualification certificates of the persons directly responsible
therefor. If losses are caused, it shall bear joint and several
liability for the losses. If the offense constitutes a crime, criminal
liability shall be pursued according to law.
¡¡¡¡Article 203¡¡¡¡If a securities registration and clearing institution
or a securities trading service organization is established without
approval of the securities regulatory authority, the securities
regulatory authority shall close down the same, confiscate its illegal
gains and impose on it a fine of not less than the amount of but
not more than five times the illegal gains.
¡¡¡¡If a securities registration and clearing institution or a securities
trading service organization violates the provisions of this Law
or the business rules uniformly formulated by the securities regulatory
authority, the securities regulatory authority shall order it to
make rectification, confiscate its illegal gains and impose on it
a fine of not less than the amount of but not more than five times
the illegal gains. If the circumstances are serious, the securities
regulatory authority shall order the securities registration and
clearing institution or the securities trading service organization
to close down.
¡¡¡¡Article 204¡¡¡¡If the securities regulatory authority approves
an application for offering or listing of securities that does not
conform to the provisions of this Law or approves an application
for establishment of a securities firm, securities registration
and clearing institution or securities trading service organization
that does not meet the conditions prescribed in this Law, where
the circumstances are serious, the persons directly in charge and
the other persons directly responsible shall be given administrative
sanctions according to law.If the offense constitutes a crime, criminal
liability shall be pursued according to law.
¡¡¡¡Article 205¡¡¡¡If a staff member of the securities regulatory authority
or a member of the issuance examination commission fails to perform
his duties prescribed in this Law, engages in malpractices for personal
gain, neglects his duties, or intentionally creates difficulties
for the parties concerned, he shall be given administrative sanctions
according to law. If the offense constitutes a crime, his criminal
liability shall be pursued according to law.
¡¡¡¡Article 206¡¡¡¡If a unit issues or underwrites corporate bonds
in violation of the provisions of this Law, the department authorized
by the State Council shall impose penalties on it in accordance
with the provisions in Articles 175, 176 and 202 of this Law.
¡¡¡¡Article 207 ¡¡¡¡If the property of a person, who violates the provisions
of this Law and who therefore bears civil liability for damages
and is required to pay a fine, is insufficient to pay both the damages
and the fine, such person shall first bear the civil liability for
damages.
¡¡¡¡Article 208¡¡¡¡If a person, by violence or threat, obstructs the
securities regulatory authority in the lawful exercise of its functions
and powers of regulation and inspection, his criminal liability
shall be pursued according to law. If a person, without resorting
to violence or threat, prevents or obstructs the securities regulatory
authority or its staff members from or in lawfully exercising their
functions and powers of regulation and inspection, such person shall
be punished in accordance with the Regulations on Administrative
Penalties for Public Security.
¡¡¡¡Article 209¡¡¡¡All the illegal gains from, and fines for, illegal
offering and trading of securities which are confiscated and imposed
pursuant to this Law shall be turned over to the State treasury.
¡¡¡¡Article 210 ¡¡¡¡If a person concerned is dissatisfied with a punishment
decision of the securities regulatory authority or the department
authorized by the Stated Council, such person may apply for reconsideration
by or directly institute legal proceedings in a People's Court according
to law.
Chapter XII¡¡Supplementary Provisions
¡¡¡¡Article 211 ¡¡¡¡Securities whose listing on a stock exchange was
approved pursuant to administrative regulations before this Law
goes into effect shall continue to be traded according to law.
¡¡¡¡Securities business institutions which were established upon
approval pursuant to administrative regulations and regulations
of the administrative department for finance under the State Council
before this law goes into effect and which do not fully conform
to the provisions of this Law shall meet the requirements prescribed
in this Law within the specified time limit. Specific measures in
this respect shall be formulated separately by the State Council.
¡¡¡¡Article 212¡¡¡¡The measures required to implement the provisions
of this Law concerning the funds for clearing of clients' transactions
shall be prescribed separately by the State Council.
¡¡¡¡Article 213 ¡¡¡¡Specific measures in respect of shares of companies
in China which are to be subscribed and traded in foreign currencies
by persons and organizations outside of China shall be formulated
separately by the State Council.
¡¡¡¡Article 214¡¡¡¡This Law shall come into force as of July 1, 1999.
>>>> Chinese
¡¾Links¡¿ |