On December 28, 2019, the 15th meeting of the Standing Committee of the 13th National People's Congress deliberated and adopted the revised Securities Law of the People's Republic of China (hereinafter referred to as the New Securities Law), which will come into force on March 1, 2020. This revision of the Securities Law, in accordance with the requirements of top-level institutional design, further improves the basic system of the securities market, reflects the direction of marketization, rule of law, and internationalization, and provides strong legal protection for the comprehensive deepening of reform and implementation of the securities market, effectively preventing and controlling market risks, improving the quality of listed companies, effectively safeguarding the legitimate rights and interests of investors, and creating a standardized, transparent, open, dynamic, and resilient capital market. It has very important and far-reaching significance.
This revision of the Securities Law systematically summarizes the practical experience of China's securities market reform and development, regulatory enforcement, and risk prevention and control over the years. While comprehensively implementing the securities issuance registration system and establishing a multi-level capital market system, it focuses on strengthening investor protection and has made a series of new regulations:
One is to significantly increase the cost of securities violations. The new securities law significantly increases the punishment for securities violations. For fraudulent issuance activities, the maximum fine of 5% of the raised funds has been increased to twice the amount raised; The maximum fine for illegal disclosure of information by listed companies has been increased from 600000 yuan to 10 million yuan; For the controlling shareholder or actual controller of the issuer who organizes or instructs to engage in false statements, or conceals relevant matters resulting in false statements, a maximum fine of 10 million yuan is stipulated. At the same time, the new Securities Law has also improved the civil compensation liability for securities violations. If the civil liability for non performance of public commitments by the issuer is stipulated, the fault presumption and joint liability of the controlling shareholder and actual controller of the issuer in fraudulent issuance and illegal information disclosure are clarified.
The second is to improve the investor protection system. The new Securities Law has established a special chapter to regulate the investor protection system and made many outstanding arrangements. Including distinguishing between ordinary investors and professional investors, and making targeted arrangements for protecting investor rights and interests; Establish a solicitation system for the exercise of shareholder rights on behalf of listed companies; Establish a system for bondholders' meetings and bond trustees; Establish a mandatory mediation system for disputes between ordinary investors and securities companies; Improve the cash dividend system of listed companies. Of particular note is that in order to meet the needs of the reform of the securities issuance registration system, the new Securities Law has explored a securities civil litigation system that is suitable for China's national conditions. It stipulates that investor protection agencies can act as litigation representatives and, in accordance with the litigation principles of "explicit withdrawal" and "implicit participation", file civil damage compensation lawsuits for victimized investors in accordance with the law.
The third is to further strengthen the requirements for information disclosure. The new Securities Law has established a special chapter to regulate the information disclosure system, which has systematically improved the information disclosure system. Including expanding the scope of information disclosure obligors; Improve the content of information disclosure; Emphasis should be placed on fully disclosing the information necessary for investors to make value judgments and investment decisions; Standardize the voluntary disclosure behavior of information disclosure obligors; Clarify that the acquirer of a listed company shall disclose the source of funds for the increase in shareholding; Establish an information disclosure system for the issuer and its controlling shareholders, actual controllers, directors, supervisors, and senior management personnel to publicly commit to.
The fourth is to improve the securities trading system. Optimize the regulations on listing conditions and delisting situations; Improve the legal prohibitions on insider trading, market manipulation, and the use of undisclosed information; Strengthen the requirement for real name registration in securities trading, and no unit or individual shall violate regulations by lending securities accounts or borrowing securities accounts of others to engage in securities trading; Improve the shareholder reduction system of listed companies; Establish a system for suspending and resuming securities trading and a procedural trading system; Improve the means and measures of stock exchanges to prevent and control market risks and maintain trading order.
The fifth is to strengthen the legal responsibilities of intermediary institutions as gatekeepers in the market. Securities companies are prohibited from allowing others to directly participate in centralized securities trading in their name; Clarify the presumption of fault and joint liability that the sponsor, underwriting securities company, and their directly responsible personnel should bear for the victimized investors when they fail to fulfill their duties; The punishment range for securities service institutions that fail to fulfill their diligent and responsible obligations has been increased from a maximum fine of five times their business income to ten times. If the circumstances are serious, they may also be suspended or prohibited from engaging in securities service business.
Sixth, strengthen regulatory enforcement and risk prevention and control. Clarified the responsibilities of the China Securities Regulatory Commission in monitoring, preventing, and disposing of securities market risks in accordance with the law; Extended the freezing and sealing period of illegal funds and securities by the China Securities Regulatory Commission in law enforcement; Established a system for the China Securities Regulatory Commission to take regulatory measures to prevent market risks and maintain market order; Added administrative reconciliation system and securities market integrity file system; The system of prohibiting entry into the securities market has been improved, stipulating that entities prohibited from entering the market are not allowed to engage in securities trading for a certain period of time.
Seventh, expand the scope of application of the Securities Law. Clearly define depositary receipts as legal securities; Include asset-backed securities and asset management products in the Securities Law, and authorize the State Council to formulate management measures for the issuance and trading of asset-backed securities and asset management products in accordance with the principles of the Securities Law. At the same time, considering the practical needs of cross-border regulation in the securities industry, it is clarified that securities issuance and trading activities outside of China that disrupt the domestic market order and harm the legitimate rights and interests of domestic investors shall be held legally responsible in accordance with the Securities Law.
The China Securities Regulatory Commission (CSRC) system will conscientiously study and implement the new Securities Law, accelerate the formulation, revision, and improvement of supporting rules and regulations, improve the basic system of the securities market, strictly implement the various provisions of the revised laws, continuously improve the level of regulatory and law enforcement work, and fully play the positive role of the new Securities Law in promoting market reform, maintaining market order, and safeguarding the legitimate rights and interests of investors.
(Taken from Guangdong Securities Regulatory Bureau)
Copyright ? Guangdong DCenti Auto-Parts Stock Limited Company All Rights Reserved.
CN
EN
