Article 1 The present Law is formulated for the purpose of regulating the issuance and transaction of securities,
protecting the lawful rights and interests of investors, safeguarding the economic order and public interests of the
society and promoting the growth of the socialist market economy.

Article 2 The present Law shall be applied to the issuance and transaction of stocks, corporate bonds as well as any
other securities as lawfully recognized by the State Council within the territory of the People's Republic of China. Where
there is no such provision in the present Law, the provisions of the Corporation Law of the People's Republic of China and
other relevant laws and administrative regulations shall be applied. Any listed trading of government bonds and share of
securities investment funds shall be governed by the present Law. Where there is any special provision in any other law or
administrative regulation, the special provision shall prevail. The measures for the administration of issuance and
transaction of securities derivatives shall be prescribed by the State Council according to the principles of the present
Law.

Article 3 The issuance and transaction of securities shall adhere to the principles of openness, fairness and
impartiality.

Article 4 The parties involved in any issuance or transaction of securities shall have equal legal status and shall persist
in the principles of free will, compensation and integrity and creditworthy.

Article 5 The issuance and transaction of securities shall observe laws and administrative regulations. No fraud, insider
trading or manipulation of the securities market may be permitted.

Article 6 The divided operation and management shall be adopted by the industries of securities, banking, trust as
well as insurance. The securities companies and the business organs of banks, trust and insurance shall be established
separately, unless otherwise provided for by the state.

Article 7 The securities regulatory authority under the State Council shall adopt a centralized and unified supervision and
administration of the national securities market. The
securities regulatory authority under the State Council may,
in light of the relevant requirements, establish dispatched
offices, which shall perform their duties and functions of
supervision and administration upon the authorization.
Article 8 Under the centralized and unified supervision and
administration of the state regarding the issuance and
transaction of securities, a securities industrial association
shall be lawfully established, which shall adopt the
self-regulating administration.
Article 9 The auditing organ of the state shall carry out
auditing supervision of stock exchanges, securities companies,
securities registration and clearing institutions and
securities regulatory bodies.

Chapter II Issuance of Securities
Article 10 A public issuance of securities shall satisfy the
requirements of the relevant laws and administrative
regulations and shall be reported to the securities regulatory
authority under the State Council or a department upon
authorization by the State Council for examination and
approval according to law. Without any examination and
approval according to law, no entity or individual may make a
public issuance of any securities. It shall be deemed as a
public issuance upon the occurrence of any of the following
circumstances:
(1) Making a public issuance of securities to non-specified
objects;
(2) Making a public issuance of securities to accumulatively
more than 200 specified objects; or
(3) Making a public issuance as prescribed by any law or
administrative regulation. For any securities that are not
issued in a public manner, the means of advertising, public
inducement or public issuance in any disguised form may not be
adopted thereto.
Article 11 An issuer that files an application for public
issuance of stocks or convertible corporate bonds by means of
underwriting according to law or for public issuance of any
other securities, to which a recommendation system is applied,
as is prescribed by laws and administrative regulations, shall
employ an institution with the qualification of recommendation
as its recommendation party. A recommendation party shall
abide by operational rules and industrial norms and, on the
basis of the principles of being honesty, creditworthy,
diligent and accountable, carry out a prudent examination of
application documents and information disclosure materials of
its issuers as well as supervise and urge its issuers to
operate in a regulative manner. The qualification of the
recommendation party as well as the relevant measures for
administration shall be formulated by the securities
regulatory authority under the State Council.
Article 12 A public offer of stocks for establishing a
stock-limited company shall satisfy the requirements as
prescribed in the Corporation Law of the People's Republic of
China as well as any other requirements as prescribed by the
securities regulatory authority under the State Council, which
have been approved by the State Council. An application for
public offer of stocks as well as the following documents
shall be reported to the securities regulatory authority under
the State Council:
(1) The constitution of the company;
(2) The promoter's agreement;
(3) The name or title of the promoter, the amount of shares
as subscribed by the promoter, the category of contributed
capital as well as the capital verification certification;
(4) The prospectus;
(5) The name and address of the bank that receives the funds
as generated from the issuance of stocks on the behalf of the
company; and
(6) The name of the underwriting organization as well as the
relevant agreements. In case a recommendation party shall be
employed, as prescribed by the present Law, the Recommendation
Letter of Issuance as produced by the recommendation party
shall be submitted as well. In case the establishment of a
company shall be reported for approval, as prescribed by laws
and administrative regulations, the relevant approval
documents shall be submitted as well.
Article 13 An initial public offer (IPO) of stocks of a
company shall satisfy the following requirements:
(1) Having a complete and well-operated organization;
(2) Having the capability of making profits successively and
a sound financial status;
(3) Having no false record in its financial statements over
the latest 3 years and having no other major irregularity; and
(4) Meeting any other requirements as prescribed by the
securities regulatory authority under the State Council, which
has been approved by the State Council. A listed company that
makes any initial non-public offer of stocks shall satisfy the
requirements as prescribed by the securities regulatory
authority under the State Council, which have been approved by
the State Council and shall be reported to the securities
regulatory authority under the State Council for examination
and approval.
Article 14 A company that makes an IPO of stocks shall apply
for public offer of stocks as well as the following documents
to the securities regulatory authority under the State
Council:
(1) The business license of the company;
(2) The constitution of the company;
(3) The resolution of the general assemble of shareholders;
(4) The prospectus;
(5) The financial statements;
(6) The name and address of the bank that receives the funds
as generated from the public offer of stocks on the behalf of
the company; and
(7) The name of the underwriting institution as well as the
relevant agreements. In case a recommendation party shall be
employed, as prescribed by the present Law, the Recommendation
Letter of Issuance as produced by the recommendation party
shall be submitted as well.
Article 15 The funds as raised through public offer of stocks
as made by a company shall be used according to the purpose as
prescribed in the prospectus. Any alteration of the use of
funds as prescribed in the prospectus shall be subject to a
resolution of the general assembly of shareholders. In case a
company fails to correct any unlawful alteration of its use of
funds or where any alteration of its use of funds fails to be
adopted by the general assembly of shareholders, the relevant
company may not make any IPO of stocks. In the foregoing
circumstance, a listed company may not make any non-public
offer of stocks.
Article 16 A public issuance of corporate bonds shall satisfy
the following requirements:
(1) The net asset of a stock-limited company being no less
than RMB 30 million yuan and the net asset of a
limited-liability company being no less than RMB 60 million
yuan;
(2) The accumulated bond balance constituting no more than 40
% of the net asset of a company;
(3) The average distributable profits over the latest 3 years
being sufficient to pay the 1-year interests of corporate
bonds;
(4) The investment of raised funds complying with the
industrial policies of the state;
(5) The yield rate of bonds not surpassing the level of
interest rate as qualified by the State Council; and
(6) Meeting any other requirements as prescribed by the State
Council. The funds as raised through public issuance of
corporate bonds shall be used for the purpose as verified and
may not be used for covering any deficit or non-production
expenditure. The public issuance of convertible corporate
bonds as made by a listed company may not only meet the
requirements as provided for in paragraph 1 herein but also
meet the requirements of the present Law on public offer of
stocks, and shall be reported to the securities regulatory
authority under the State Council for examination and
approval.
Article 17 With regard to an application for public issuance
of corporate bonds, the following documents shall be reported
to the department as authorized by the State Council or the
securities regulatory authority under the State Council:
(1) The business license of the company;
(2) The constitution of the company;
(3) The procedures for issuing corporate bonds;
(4) An assent appraisal report and an asset verification
report; and
(5) Any other document as prescribed by the department as
authorized by the State Council or by the securities
regulatory authority under the State Council. In case a
recommendation party shall be employed, as prescribed by the
present Law, the Recommendation Letter of Issuance as produced
by the recommendation party shall be submitted as well.
Article 18 In any of the following circumstances, no more
public issuance of corporate bonds may be carried out:
(1) Where the corporate bonds as issued in the previous
public issuance haven't been fully subscribed;
(2) Where a company has any default on corporate bonds as
publicly issued or on any other liabilities, or postpones the
payment of the relevant principal plus interests, and such
situation is still continuing; or
(3) Where a company violates the present Law by altering the
use of funds as raised through public issuance of corporate
bonds.
Article 19 The formats and reporting ways of application
documents as reported by an issuer for examination and
approval of securities issuance according to law shall be
prescribed by the legally competent organ or department in
charge of examination and approval.
Article 20 The application documents for securities issuance
as reported by an issuer to the securities regulatory
authority under the State Council or the department as
authorized by the State Council shall be authentic, accurate
and integrate. A securities trading service institution and
its staff that produces the relevant documents for securities
issuance shall strictly perform its/his statutory duties and
functions and guarantee the authenticity, accuracy and
integrity of the documents as produced thereby.
Article 21 Where an issuer files an application for an IPO of
stocks, it shall, upon submitting the application documents,
disclose the relevant application documents in advance
according to the provisions of the securities regulatory
authority under the State Council.
Article 22 The securities regulatory authority under the
State Council shall establish an issuance examination
committee, which shall examine the applications for stock
issuance according to law. The issuance examination committee
shall be composed of the professionals from the securities
regulatory authority under the State Council and other
relevant experts from outside the said authority, adopt the
means of voting for the determination of applications for
stock issuance and set forth the opinions on examination. The
specific formulation measures, tenure of members as well as
work procedures of the issuance examination committee shall be
formulated by the securities regulatory authority under the
State Council.
Article 23 The securities regulatory authority under the
State Council shall take charge of the examination and
approval of applications for stock issuance in light of the
statutory requirements. The procedures for examination and
approval shall be publicized and shall be subject to
supervision according to law. The personnel participating in
the examination and verification of stock issuance may not
have any interest relationship with an issuance applicant, may
not directly or indirectly accept any present of the issuance
applicant, may not hold any stock as verified for issuance and
may not have any private contact with an issuance applicant.
The department as authorized by the State Council shall
conduct the examination and approval of applications for
issuance of corporate bonds by referring to the preceding 2
paragraphs herein.
Article 24 The securities regulatory authority under the
State Council or the department as authorized by the State
Council shall, within 3 months as of acceptance of an
application for securities issuance, make an decision on
approval or disapproval according to the statutory
requirements and procedures, whereby the time for an issuer to
supplement or correct its application documents for issuance
according to the relevant requirements may not be calculated
within the aforesaid term for examination and approval. In the
event of disapproval, an explanation shall be given in
writing.
Article 25 Where an application for securities issuance has
been approved, the relevant issuer shall, in accordance with
the provisions of the relevant laws and administrative
regulations, announce the relevant financing documents of
public issuance before publicly issuing any securities and
shall make the aforesaid documents available for public
reference in designated places. Before the information of
securities issuance is publicized according to law, no insider
may publicize or indulge the relevant information. An issuer
may not issue any securities before an announcement of the
relevant financial documents of public issuance.
Article 26 The securities regulatory authority under the
State council or the department as authorized by the State
Council shall, where finding any decision on approving
securities issuance fails to comply with the relevant
statutory requirements and procedures and if the relevant
securities haven't been issued, revoke the decision on
approval and terminate the issuance. As to any securities that
have been issued but haven't been listed, the relevant
decision on approval for issuance shall be revoked. The
relevant issuer shall, according to the issuing price plus
interests as calculated at the bank deposit rate for the
corresponding period of time, return the funds to securities
holders. A recommendation party shall bear the joint and
several liabilities together with the relevant issuer, except
for one who is able to prove his exemption of fault. Where any
controlling shareholder or actual controller has any fault, he
shall bear the joint and several liabilities together with the
relevant issuer,
Article 27 After a legal offer of stocks, an issuer shall be
liable for any alteration of its operation or its profits by
itself. The investment risk as incurred therefrom shall be
borne by investors by themselves.
Article 28 Where an issuer issues any securities to any
non-specified object and if the said securities shall be
underwritten by a securities company, as is provided for by
laws and administrative regulations, the issuer shall conclude
an underwriting agreement with a securities company. The forms
of "sale by proxy" and "exclusive sale" shall be adopted for
the underwriting operation of securities. The term "sale by
proxy" refers to an underwriting form, whereby a securities
company sells securities as a proxy of the relevant issuer
and, upon the conclusion of the underwriting period, returns
all the securities unsold to the relevant issuer. The term
"exclusive sale" refers to an underwriting form, whereby a
securities company purchases all of the securities of an
issuer according to the agreement there between or purchases
all of the residing unsold securities by itself upon the
conclusion of the underwriting period.
Article 29 An issuer that makes public issuance of securities
has the right to select a securities company for underwriting
according to law at its own will. A securities company may not
canvass any securities underwriting business by any unjust
competition means.
Article 30 Where a securities company underwrites any
securities, it shall reach an agreement with the relevant
issuer on sale by proxy or exclusive sale, which shall
indicate the following items:
(1) The name, domicile as well as the name of the legal
representative of the parties concerned;
(2) The classes, quantity, amount as well as issuing prices
of the securities under sale by proxy or exclusive sale;
(3) The term of sale by proxy or exclusive sale as well as
the start-stop date;
(4) The means and date of payment for sale by proxy or
exclusive sale;
(5) The expenses for and settlement methods of sale by proxy
or exclusive sale;
(6) The liabilities of breach; and
(7) Any other matter as prescribed by the securities
regulatory authority under the State Council.
Article 31 A securities company that is engaged in the
underwriting of securities shall carry out verification on the
authenticity, accuracy and integrity of the financing
documents of public issuance. Where any false record,
misleading statement or major omission is found, no sales
activity may be carried out. Where any securities have been
sold out under the foregoing circumstances, the relevant sales
activity shall be immediately terminated and measures for
correction shall be taken.
Article 32 Where the total face value of securities as issued
to non-specified objects is beyond RMB 50 million yuan, the
said securities shall be underwritten by an underwriting
syndicate. An underwriting syndicate shall be composed of
securities companies acting as principal underwriters and
participant underwriters.
Article 33 The term for sale by proxy or exclusive sale may
not exceed 90 days at the most. A securities company shall,
within the term of sale by proxy or exclusive sale, guarantee
the priority of the relevant subscribers in purchasing
securities under sale by proxy or exclusive sale. A securities
company may not reserve in advance any securities under sale
by proxy thereby or purchase in advance and sustain any
securities under exclusive sale thereby.
Article 34 Where any stock is issued at a premium, the
issuing price thereof shall be agreed on through negotiation
of the relevant issuer and the securities company that is
engaged in underwriting.
Article 35 As to a public offer of stocks through sale by
proxy, when the term of sale by proxy expires and if the
quantity of stocks fails to reach 70 % of the planned quantity
in a public offer, it shall be deemed as a failure. The
relevant issuer shall return the issuing price plus interests
as calculated at the bank deposit rate for the contemporary
period of time to the subscribers of stocks.
Article 36 In a public offer of stocks, when the term for
sale by proxy or exclusive sale expires, an issuer shall
report the information on stock issuance to the securities
regulatory authority under the State Council for archival
purpose within the prescribed time.

Chapter III Transaction of Securities

Section I General Provisions
Article 37 The securities as purchased and sold by any party
who is involved in any securities transaction shall be the
securities that have been legally issued and delivered. No
securities that have been illegally issued may be purchased or
sold.
Article 38 All stocks, corporate bonds or any other
securities that have been legally issued, where there are any
restrictive provisions of laws on the term of transfer
thereof, may not be purchased or sold within the restrictive
term.
Article 39 All stocks, corporate bonds or any other
securities that have been publicly issued according to law
shall be listed in a stock exchange as legally established or
in any other places for securities transaction as approved by
the State Council.
Article 40 The means of public and centralized transaction or
any other means as approval by the securities regulatory
authority under the State Council shall be adopted for listed
trading of securities in stock exchanges.
Article 41 The securities as purchased or sold by the parties
involved in securities transaction may be in paper form or in
any other form as approved by the securities regulatory
authority under the State Council.
Article 42 The securities transaction shall be carried out in
the form of spot goods as well as any other form as prescribed
by the State Council.
Article 43 The practitioners in stock exchanges, securities
companies as well as securities registration and clearing
institutions, the functionary of securities regulatory bodies
as well as any other personnel who have been prohibited by
laws and administrative regulations from engaging in any stock
transaction shall, within their tenures or the relevant
statutory term, not hold or purchase or sold any stock
directly or in any assumed name or in a name of any other
person, nor may they accept any stocks from any other person
as a present. Anyone, when becoming any person as prescribed
in the preceding paragraph herein, shall transfer the stocks
he has held according to law.
Article 44 The stock exchanges, securities companies as well
as securities registration and clearing institutions shall
keep secret for the accounts as opened for their clients
according to law.
Article 45 A securities trading service institution and the
relevant personnel that produce such documents as auditing
reports, asset appraisal reports or legal opinions for stock
issuance may not purchase or sell any of the aforesaid stocks
within the underwriting term of stocks or within 6 months as
of the expiration of the underwriting term of stocks.
Except for the provisions as prescribed in the preceding
paragraph herein, a securities trading service institutions
and the relevant personnel that produce such documents as
auditing reports, asset appraisal reports or legal opinions
for listed companies may not purchase or sell any of the
aforesaid stocks within the period from the day when an
entrustment of a listed company is accepted to the day when
the aforesaid documents are publicized.
Article 46 The charge for securities transaction shall be
reasonable. The charging items, standards as well as methods
shall be publicized. The charging items, standards and
administrative measures of securities transaction shall be
uniformly formulated by the relevant administrative department
under the State Council.
Article 47 Where any director, supervisor and senior manager
of a listed company or any shareholder who holds more than 5%
of the shares of a listed company, sells the stocks of the
company as held within 6 months after purchase, or purchases
any stock as sold within 6 months thereafter, the proceeds
generated therefrom shall be incorporated into the profits of
the relevant company. The board of directors of the company
shall withdraw the proceeds. However, where a securities
company holds more than 5% of the shares of a listed company,
which are the residing stocks after sale by proxy as purchased
thereby, the sale of the foregoing stocks may not be limited
by a term of 6 months. Where the board of directors of a
company fails to implement the provisions as prescribed in the
preceding paragraph herein, the shareholders concerned have
the right to require the board of directors to implement them
within 30 days. Where the board of directors of a company
fails to implement them within the aforesaid term, the
shareholders have the right to directly file a litigation with
the people's court in their own names for the interests of the
company. Where the board of directors of a company fail to
implement the provisions as prescribed in paragraph 1herein,
the directors in charge shall bear the joint and several
liabilities according to law.

Section II Listing of Securities
Article 48 An application for the listing of any securities
shall be filed with a stock exchange and shall be subject to
the examination and approval of the stock exchange according
to law and a listing agreement shall be reached by both
parties. The stock exchanges shall, according to the decision
of the department as authorized by the State Council, arrange
the listing of government bonds.
Article 49 As for an application for the listing of any
stocks, convertible corporate bonds or any other securities,
to which a recommendation system is applied, as prescribed by
laws and administrative regulations, an institution with the
qualification of recommendation shall be employed as the
recommendation party. The provisions of paragraphs 2 and 3 of
Article 11 of the present Law shall be applied to the
recommendation party of listing.
Article 50 A stock-limited company that files an application
for the listing of its stocks shall satisfy the following
requirements:
(1) The stocks shall have been subject to the examination and
approval of the securities regulatory authority under the
State Council and shall have been publicly issued;
(2) The total amount of capital stock shall be no less than
RMB 30 million yuan;
(3) The shares as publicly issued shall reach more than 25 %
of the total amount of corporate shares; where the total
amount of capital stock of a company exceeds RMB 0.4 billion
yuan, the shares as publicly issued shall be no less than 10%
thereof; and
(4) The company may not have any major irregularity over the
latest years and there is no false record in its financial
statements. A stock exchange may prescribe the requirements of
listing that are more strict than those as prescribed in the
preceding paragraph herein, which shall be reported to the
securities regulatory authority under the State Council for
approval.
Article 51 The state encourages the listing of corporate
stocks that comply with the relevant industrial policies and
fulfill the relevant requirements of listing.
Article 52 With regard to an application for the listing of
stocks, the following documents shall be reported to a stock
exchange:
(1) The listing report;
(2) The resolution of the general assembly of shareholders
regarding the application for the listing of stocks;
(3) The constitution of the company;
(4) The business license of the company;
(5) The financial statements of the company for the latest
years as audited by an accounting firm according to law;
(6) The legal opinions as well as the Recommendation Letter
of Listing;
(7) The latest prospectus; and
(8) Any other document as prescribed by the listing rules of
the stock exchange.
Article 53 Where an application for the listing of stocks has
been subject to the examination and approval of a stock
exchange, the relevant company that has reached a listing
agreement thereon shall announce the relevant documents for
stock listing within the prescribed period and shall make the
said documents available for public reference in designated
places.
Article 54 A company that has reached a listing agreement may
not only announce the documents as prescribed in the preceding
Article herein but also announce the following items:
(1) The date when the stocks have been approved to be listed
in a stock exchange;
(2) The name list of the top 10 shareholders who hold the
largest number of shares in the company as well as the amount
of stocks as held thereby;
(3) The actual controller of the company; and
(4) The names of the directors, supervisors and senior
managers of the company as well as the relevant information on
the stocks and bonds of the company as held thereby.
Article 55 Where a listed company is in any of the following
circumstances, the stock exchange shall decide to suspend the
listing of its stocks:
(1) Where the total amount of capital stock or share
distribution of the company changes and thus, fails to meet
the requirements of listing;
(2) Where the company fails to publicize its financial status
according to the relevant provisions or has any false record
in its financial statements, which may mislead the investors;
(3) Where the company has any major irregularity;
(4) Where the company has been operating at a loss for the
latest 3 consecutive year; or
(5) Under any other circumstance as prescribed in the listing
rules of the stock exchange.
Article 56 Where a listed company is in any of the following
circumstances, the stock exchange shall decide to terminate
the listing of its stocks:
(1) Where the total amount of capital stock or share
distribution of the company changes and thus, fails to meet
the requirements of listing, and where the company fails again
to meet the requirements of listing within the period as
prescribed by the stock exchange;
(2) Where the company fails to publicize its financial status
according to the relevant provisions or has any false record
in its financial statements, and refuses to make any
correction;
(3) Where the company has been operating at a loss for the
latest 3 consecutive years and fails to gain profits in the
year thereafter;
(4) Where the company is dissolved or is announce bankruptcy;
or
(5) Under any other circumstance as prescribed in the listing
rules of the stock exchange.
Article 57 A company shall, when applying for the listing of
corporate bonds, fulfill the following requirements:
(1) The term of corporate bonds shall be more than 1 year;
(2) The amount of corporate bonds to be actually issued shall
be no less than RMB 50 million yuan; and
(3) The company shall meet the statutory requirements for the
issuance of corporate bonds when applying for the listing of
its bonds.
Article 58 A company shall, when filing an application for
the listing of its corporate bonds, report the following
documents to a stock exchange:
(1) The listing report;
(2) The resolution as adopted by the board of directors
regarding the application for listing;
(3) The constitution of the company;
(4) The business license of the company;
(5) The measures for financing through the issuance of
corporate bonds;
(6) The amount of corporate bonds to be actually issued; and
(7) Any other document as prescribed in the listing rules of
the stock exchange. With regard to an application for the
listing of convertible corporate bonds, the Recommendation
Letter of Listing as produced by the relevant recommendation
party shall be reported.
Article 59 Where an application for the listing of corporate
bonds has been subject to the examination and approval of the
stock exchange, the company that has reached a listing
agreement thereon shall, within the prescribed period,
announce its report on the listing of its corporate bonds as
well as the relevant documents and make its application
documents available for public reference in designated places.
Article 60 After any corporate bonds are listed, where the
relevant company is in any of the following circumstances, the
stock exchange may decide to suspend the listing of its
corporate bonds:
(1) Where the company has any major irregularity;
(2) Where the company has any major change and thus fails to
meet the requirements for the listing of corporate bonds;
(3) Where the funds as raised through the issuance of
corporate bonds fail to be used according to the purpose as
verified;
(4) Where the company fails to perform its obligations
according to the measures for financing through the issuance
of corporate bonds; or
(5) Where the company has been operating at a loss for the
latest 2 consecutive years.
Article 61 Where a company is in any of the circumstances as
described in item (1) or (4) of the preceding Article herein
and the consequences as incurred therefrom have been verified
to be serious, or where a company is under any of the
circumstances as described in any of item (2), (3), or (5) of
the preceding Article herein and fails to eliminate the
relevant consequence within a specified time limit, the stock
exchange shall decide to terminate the listing of corporate
bonds of the company. In case a company is dissolved or
declared bankrupt, the stock exchange shall terminate the
listing of corporate bonds thereof.
Article 62 Any company, which is dissatisfied with a decision
of a stock exchange on disapproving, suspending or terminating
its listing, may file an application for a review with the
review organ established by the stock exchange.

Section III On-going Information Disclosure
Article 63 The information as disclosed by issuers and listed
companies according to law shall be authentic, accurate and
integrate and may not have any false record, misleading
statement or major omission.
Article 64 As for the stocks that have been publicly issued
upon the verification of the securities regulatory authority
under the State Council or for the corporate bonds that have
been publicly issued upon the verification of the department
as authorized by the State Council according to law, the
prospectus or the measures for financing through the issuance
of corporate bonds shall be announced. In an IPO of stocks or
corporate bonds, the relevant financial statements shall be
announced as well.
Article 65 A company whose shares or bonds have been listed
for trading shall, within two months as of the end of the
first half of each accounting year, submit to the securities
regulatory authority under the State Council and the stock
exchange a midterm report indicating the following contents
and announce it:
(1) The financial statements and business situation of the
company;
(2) The major litigation involving the company;
(3) The particulars of any change concerning the shares or
corporate bonds thereof as already issued;
(4) The important matters as submitted to the general
assembly of shareholders for deliberation; and
(5) Any other matter as prescribed by the securities
regulatory authority under the State Council.
Article 66 A listed company whose shares or bonds have been
listed for trading shall, within four months as of the end of
each accounting year, submit to the securities regulatory
authority under the State Council and the stock exchange an
annual report indicating the following contents, and announce
it:
(1) A brief account of the company's general situation;
(2) The financial statement and business situation of the
company;
(3) A brief introduction to the directors, supervisors, and
senior managers of the company well as the information
regarding their shareholdings;
(4) The information on shares and corporate bonds as already
issued, including the name list of the top 10 shareholders who
hold the largest numbers of shares in the company as well as
the amount of shares as held thereby;
(5) The actual controller of the company; and
(6) Any other matter as prescribed by the securities
regulatory authority under the State Council.
Article 67 In the event of a major event that may
considerably affect the trading price of a listed company's
shares and that is not yet known to the investors, the listed
company shall immediately submit a temporary report regarding
the said major event to the securities regulatory authority
under the State Council and the stock exchange and make an
announcement to the general public as well, in which the
cause, present situation and possible legal consequence of the
event shall be indicated: The term "major event" as mentioned
in the preceding paragraph herein refers to the following
circumstances:
(1) A major change in the business guidelines or business
scope of the company;
(2) A decision of the company on any major investment or
major asset purchase;
(3) An important contract as concluded by the company, which
may have an important effect on the assets, liabilities,
rights, interests or business achievements of the company;
(4) Any incurrence of a major debt in the company or default
on an overdue major debt;
(5) Any incurrence of a major deficit or a major loss in the
company;
(6) A major change in the external conditions for the
business operation of the company;
(7) A change concerning directors, no less than one-third of
supervisors or managers of the company;
(8) A considerable change in the holdings of shareholders or
actual controllers who each hold or control no less than 5% of
the company's shares;
(9) A decision of the company on capital decrease, merger,
division, dissolution, or application for bankruptcy;
(10) Any major litigation involving the company, or where the
resolution of the general assembly of shareholders or the
board of directors have been cancelled or announced invalid;
(11) Where the company is involved in any crime, which has
been filed as a case as well as investigated into by the
judicial organ or where any director, supervisor or senior
manager of the company is subject to compulsory measures as
rendered by the judicial organ; or
(12) Any other matter as prescribed by the securities
regulatory authority under the State Council.
Article 68 The directors and senor managers of a listed
company shall subscribe their opinions for recognition in the
periodic report of their company in written form. The board of
supervisors of a listed company shall carry out an examination
on the periodic report of its company as formulated by the
board of directors and produce the relevant examination
opinions in writing. The directors, supervisors and senior
managers of a listed company shall guarantee the authenticity,
accuracy and integrity of the information as disclosed by
their listed company.
Article 69 Where the prospectus, measures for financing
through issuance of corporate bonds, financial statement,
listing report, annual report, midterm report, temporary
report or any information as disclosed that has been announced
by an issuer or a listed company has any false record,
misleading statement or major omission, and thus incurs losses
to investors in the process of securities trading, the issuer
or the listed company shall be subject to the liabilities of
compensation. Any director, supervisor, senior manager or any
other person of the issuer or the listed company directly
responsible shall be subject to the joint and several
liabilities of compensation, except for anyone who is able to
prove his exemption of any fault. Where any shareholder or
actual controller of an issuer or a listed company has any
fault, he shall be subject to the joint and several
liabilities of compensation together with the relevant issuer
or listed company.
Article 70 The information as prescribed by law to be
disclosed shall be publicized through the media as designated
by the securities regulatory authority under the State Council
and shall, at the same time, be made available for public
reference at the company's domicile and a stock exchange.
Article 71 The securities regulatory authority under the
State Council shall carry out supervision over annual reports,
midterm reports, temporary reports of listed companies as well
as their announcements, over the distribution or rationing of
new shares of such listed companies and over the controlling
shareholders and any other obligor of information disclosure
of listed companies. The securities regulatory body, stock
exchange, recommendation party or securities company involving
in underwriting as well as the relevant personnel thereof
shall, before an announcement is made by a company according
to the provisions of the relevant laws and administrative
regulations, divulge any content concerned before the
announcement.
Article 72 Where a stock exchange decides to suspend or
terminate the listing of any securities, it shall announce the
decision in a timely manner and report it to the securities
regulatory authority under the State Council for archival
purpose.

Section IV Prohibited Trading Acts
Article 73 Any insider who has access to any insider
information of securities trading or who has unlawfully
obtained any insider information is prohibited from taking
advantage of the insider information as held thereby to engage
in any securities trading.
Article 74 The insiders who have access to insider
information of securities trading include:
(1) Directors, supervisors, and senior managers of an issuer;
(2) Shareholders who hold no less than 5% of the shares in a
company as well as the directors, supervisors, and senior
managers thereof, or the actual controller of a company as
well as the directors, supervisors, and senior managers
thereof;
(3) The holding company of an issuer as well as the
directors, supervisors, and senior managers thereof;
(4) The personnel who may take advantage of their posts in
their company to obtain any insider information of the company
concerning the issuance and transaction of its securities;
(5) The functionary of the securities regulatory body, and
other personnel who administer the issuance and transaction of
securities pursuant to their statutory functions and duties;
(6) The relevant personnel of recommendation institutions,
securities companies engaging in underwriting, stock
exchanges, securities registration and clearing institutions
and securities trading service organizations; and
(7) Any other person as prescribed by the securities
regulatory authority under the State Council.
Article 75 For the purpose of the present Law, the term
"insider information" refers to the information that concerns
the business or finance of a company or may have a major
effect on the market price of the securities thereof and that
hasn't been publicized in securities trading. The following
information all falls into the scope of insider information:
(1) The major events as prescribed in paragraph 2 of Article
62 of the present Law;
(2) The plan of a company concerning any distribution of
dividends or increase of capital;
(3) Any major change in the company's equity structure;
(4) Any major change in guaranty of the company's obligation;
(5) Where the mortgaged, sold or discarded value of a major
asset as involved in the business operation of the company
exceeds 30 % of the said asset in a one-off manner;
(6) Where any act as conducted by any director, supervisor or
senior manager of the company may be rendered liabilities of
major damage and compensation;
(7) The relevant plan of a listed company regarding
acquisition; and
(8) Any other important information that has been recognized
by the securities regulatory authority under the State Council
as having a marked effect on the trading prices of securities.
Article 76 Any insider who has access to insider information
or has unlawfully obtained any insider information on
securities trading may not purchase or sell the securities of
the relevant company, or divulge such information, or advise
any other person to purchase or sell such securities. Where
there is any other provision of the present Law on governing
the purchase of shares of a listed company by a natural
person, legal person or any other organization who holds or
holds with any other person not less than 5% of the company's
shares by means of an agreement or any other arrangement, it
shall prevail. Where any insider trading incurs any loss to
investors, the actor shall be subject to the liabilities of
compensation according to law.
Article 77 Anyone is prohibited from manipulating the
securities market by any of the following means:
(1) Whether anyone, independently or in collusion with
others, manipulates the trading price of securities or trading
quantity of securities by centralizing the advantage in
respect of funds, shareholding advantage or utilizing
information advantage to trade jointly or continuously;
(2) Where anyone collaborates with any other person to trade
securities pursuant to the time, price and method as agreed
upon in advance, thereby affecting the price or quantity of
the securities traded;
(3) Where anyone trades securities between the accounts under
self-control, thereby affecting the price or quantity of the
securities traded; or
(4) Where anyone manipulates the securities market by any
other means. Where anyone incurs any loss to investors by
manipulating the securities market, the actor shall be subject
to the liabilities of compensation according to law.
Article 78 It is prohibited for state functionaries,
practitioners of the news media as well as other relevant
personnel concerned to fabricate or disseminate any false
information, thereby seriously disturbing the securities
market. It is prohibited for stock exchanges, securities
companies, securities registration and clearing institutions,
securities trading service institutions and the practitioners
thereof, as well as the securities industry association, the
securities regulatory body and their functionaries to make any
false statement or give any misleading information in the
activities of securities trading. The securities market
information as disseminated by any media shall be authentic
and objective. Any dissemination of misleading information is
prohibited.
Article 79 It is prohibited for securities companies as well
as their practitioners to commit any of the following
fraudulent acts in the process of securities trading, which
may injure the interests of their clients:
(1) Violating the entrustment of its client by purchasing or
selling any securities on the behalf;
(2) Failing to provide a client with written confirmation of
a transaction within the prescribed period of time;
(3) Misappropriating the securities as entrusted by a client
for purchase or sale, or the funds in a client's account;
(4) Unlawfully purchasing or selling securities for its
client without any authorization, or unlawfully purchasing or
selling any securities in the name of a client;
(5) Inveigling a client into making any unnecessary purchase
or sale of securities in order to obtain commissions;
(6) Making use of mass media or by any other means to provide
or disseminate any false or misleading information to
investors; or
(7) Having any other act that goes against the true intention
as expressed by a client and damages the interests thereof.
Where anyone practices any trickery and thus incurs any loss
to the relevant clients, the actor shall be subject to the
liabilities of compensation according to law.
Article 80 It's prohibited for any legal person to unlawfully
make use of any other person's account to undertake any
securities trading. It's prohibited for any legal person to
lend its or any other's securities account.
Article 81 The channel for capital to go into the stock
market shall be broadened according to law. It's prohibited
for any unqualified capital to go into the stock market.
Article 82 It's prohibited for any person to misappropriate
any public fund to trade securities.
Article 83 The state-owned enterprises and state-holding
enterprises that engage in any transaction of listed stocks
shall observe the relevant provisions of the state.
Article 84 When stock exchanges, securities companies,
securities registration and clearing institutions, securities
trading service organizations as well as their functionaries
discover any prohibited activities in securities trading, they
shall report such activities to the securities regulation body
in time.

Section V Acquisition of Listed Companies
Article 85 An investor may purchase a listed company by means
of tender offer or agreement as well as by any other legal
means.
Article 86 Where an investor, through securities trading at a
stock exchange, comes to hold or holds with any other person 5
% of the shares as issued by a listed company by means of
agreement or any other arrangement, the investor shall, within
three days as of the date when such shareholding becomes a
fact, submit a written report to the securities regulatory
authority under the State Council and the stock exchange,
notify the relevant listed company and announce the fact to
the general public. Within the aforesaid prescribed period,
the investor may not purchase or sell any more shares of the
listed company. In case an investor holds or holds with any
other person 5 % of the shares as issued by a listed company
by means of agreement or any other arrangement, he shall,
pursuant to the provisions of the preceding paragraph herein,
make report and announcement of each 5% increase or decrease
in the proportion of the issued shares of the said company he
holds through securities trading at a stock exchange. Within
the reporting period as well as two days after the relevant
report and announcement are made, the investor may not
purchase or sell any more shares of the listed company.
Article 87 The written report and announcement as made
according to the provisions of the preceding Article herein
shall include the following contents:
(1) The name and domicile of the shareholder;
(2) The description and amount of the shares as held; and
(3) The date on which the shareholding or any increase or
decrease in the shareholding reaches the statutory percentage.
Article 88 Where an investor holds or holds with any other
person 30% of the stocks as issued by a listed company by
means of agreement or any other arrangement through securities
trading at a stock exchange and if the purchase is continued,
he shall issue a tender offer to all the shareholders of the
said listed company to purchase all of or part of the shares
of the listed company. It shall be stipulated in a tender
offer as issued to a listed company that, where the share
amount as promised to be sold by the shareholders of the
target company exceeds the scheduled amount of stocks for
purchase, the purchaser shall carry out the acquisition
according to the relevant percentage.
Article 89 Before any tender offer is issued pursuant to the
provisions in the preceding Article herein, the relevant
purchaser shall submit a report on the acquisition of a listed
company to the securities regulatory authority under the State
Council beforehand, which shall indicate the following items:
(1) The name and domicile of the purchaser;
(2) The decision of the purchaser on acquisition;
(3) The name of the target listed company;
(4) The purpose of acquisition;
(5) The detailed description of the shares to be purchased
and the amount of shares to be purchased in schedule;
(6) The term and price of the acquisition;
(7) The amount and warranty of the funds as required by the
acquisition; and
(8) The proportion of the amount of shares of the target
company as held by the purchaser in the total amount of shares
of the target company as issued, when the report on the
acquisition of the listed company is reported. A purchaser
shall concurrently submit to the stock exchange a report on
the acquisition of the relevant company.
Article 90 A purchaser shall, after 15 days as of the day
when the report on the acquisition of a listed company is
submitted pursuant to the preceding Article herein, announce
its tender offer. Within the aforesaid term, where the
securities regulatory authority under the State Council finds
that any report in the acquisition of a listed company fails
to satisfy the provisions of the relevant laws and
administrative regulations, it shall notify the relevant
purchaser in a timely manner. The relevant purchaser may not
announce its tender offer. The term for acquisition as
stipulated in a tender offer shall be not less than 30 days
but not more than 60 days.
Article 91 Within the acceptance term as prescribed in a
tender offer, no purchaser may revoke its tender offer. Where
a purchaser requests for altering its tender offer, it shall
submit a report to the securities regulatory authority under
the State Council and the stock exchange in advance and
announce the alteration upon the approval thereby.
Article 92 All the terms of acquisition as stipulated in a
tender offer shall apply to all the shareholders of a target
company.
Article 93 In the event of an acquisition by tender offer, a
purchaser shall, within the term for acquisition, not sell any
share of the target company, nor shall it buy any share of the
target company by any other means that hasn't been stipulated
by provisions of its tender offer or that oversteps the terms
as stipulated in its tender offer.
Article 94 In the event of an acquisition by agreement, a
purchaser may carry out share transfer with the shareholders
of the target company by means of agreement according to the
provisions of the relevant laws and administrative
regulations. In the case of an acquisition of a listed company
by agreement, a purchaser shall, within three days after the
acquisition agreement is reached, submit a written report on
the acquisition agreement to the securities regulatory
authority under the State Council and the stock exchange as
well as announce it to the general public. No acquisition
agreement may be performed before the relevant announcement.
Article 95 In the event of an acquisition by agreement, both
parties to the agreement may temporarily entrust a securities
registration and clearing institution to keep the stocks as
transferred and deposit the relevant funds in a designated
bank.
Article 96 In the event of an acquisition by agreement, where
a purchaser has purchased, held or held with any other person
30% of the shares as issued by a listed company through
agreement or any other arrangement and if the acquisition is
continued, the purchaser shall issue an offer to all of the
shareholders of the target listed company for purchasing all
of or part of the company's shares, unless a tender offer is
been exempted from being issued by the securities regulatory
authority under the State Council. A purchaser that purchases
the shares of a listed company by means of tender offer
according to the provisions of the preceding paragraph herein
shall abide by the provisions of Articles 89~93 of the present
Law.
Article 97 Upon the expiration of a term for acquisition,
where the share distribution of an target company fails to
fulfill the requirements of listing, the listing of stocks of
the said listed company shall be terminated by the stock
exchange according to law. The shareholders that still hold
the shares of the target company have the right to sell their
shares pursuant to the equal terms as stipulated in the
relevant tender offer. The purchaser shall make the purchase.
When an acquisition is concluded, if a target company fails to
meet the requirements of being a stock-limited company any
more, its form of enterprise shall be altered according to
law.
Article 98 In an acquisition of a listed company, the stocks
of the target company as held by a purchaser may not be
transferred within 12 months after the acquisition is
concluded.
Article 99 When an acquisition is concluded, if the purchaser
merges with the target company by dissolving the target
company, the original shares of the company as dissolved shall
be changed by the purchaser according to law.
Article 100 Where an acquisition is concluded, a purchaser
shall, within 15 days, report the acquisition to the
securities regulatory authority under the State Council and
the stock exchange as well as announce it.
Article 101 The purchase of the shares of a listed company as
held by an organization that has been authorized by the state
for investment shall be subject to the approval of the
relevant administrative departments according to the
provisions of the State Council. The securities regulatory
authority under the State Council shall formulate the specific
measures for acquisition of listed companies in light of the
principles of the present Law.

Chapter V Stock Exchanges
Article 102 For the purpose of the present Law, the term
"stock exchange" refers to a legal person that provides the
relevant place and facilities for concentrated securities
trading, organizes and supervises the securities trading and
applies a self-regulating administration. The establishment
and dissolution of a stock exchange shall be subject to the
decision of the State Council.
Article 103 A constitution shall be formulated for the
establishment of a stock exchange. The formulation and
revision of the constitution of a stock exchange shall be
subject to the approval of the securities regulatory authority
under the State Council.
Article 104 The words "stock exchange" shall be indicated in
the name of a stock exchange. No other entity or individual
may use the name of "stock exchange" or an identical name.
Article 105 The income that is at the discretion of a stock
exchange, as generated from various commissions, shall first
be used to guarantee the normal operation of the place and
facilities of the stock exchange as well as the gradual
improvement thereof. The gains as accumulated by a stock
exchange that adopts a membership system shall belong to its
members. The rights and interests of a stock exchange shall be
jointly shared by its members. No accumulated gains of a stock
exchange may be distributed to any member within the holding
term.
Article 106 A stock exchange shall have a council.
Article 107 There shall be a general manager in a stock
exchange, who shall be subject to the appointment and
dismissal of the securities regulatory authority under the
State Council.
Article 108 Anyone, under the circumstance as prescribed in
Article 147 of the Corporation Law of the People's Republic of
China or under any of the following circumstances, may not
assume the post of person-in-charge of a stock exchange:
(1) Where a person-in-charge of a stock exchange or
securities registration and clearing institution or any
director, supervisor or senior manager of a securities company
who has been removed from his post for his irregularity or
disciplinary breach and if it has been within 5 years as of
the day when he is removed from his post; or
(2) Where a professional of a law firm, accounting firm or
investment consulting organization, financial advising
organization, credit rating institution, asset appraisal
institution or asset verification institution who has been
disqualified for his irregularity or disciplinary breach and
if it' has been within 5 years as of the day when he is
removed from his post.
Article 109 A practitioner of a stock exchange, securities
registration and clearing institution, securities trading
service organization or securities company or any functionary
of the state organ, who has been dismissed for his
irregularity or disciplinary breach, may not be employed as a
practitioner of a stock exchange.
Article 110 Only a member of a stock exchange may enter into
a stock exchange to engage in the centralized trading of
securities.
Article 111 An investor shall conclude an entrustment
agreement with a securities company on securities trading,
open an account of securities trading in a securities company
and entrust the securities company to purchase or sell
securities on the behalf in writing, by telephone or any other
means.
Article 112 A securities company shall, based on the
entrustment of its investors, declare orders and engage in the
centralized trading at a stock exchange according to the rules
of securities trading and shall, based on trading results,
bear the relevant liabilities of settlement and delivery. A
securities registration and clearing institution shall, on the
basis of trading results and according to the rules of
settlement and delivery, conduct settlement and delivery of
securities and capital with the relevant securities company
and handle the formalities of transfer registration of
securities for clients of the relevant securities company.
Article 113 A stock exchange shall guarantee a fair
centralized trading, announce up-to-the-minute quotations of
securities trading, formulate the quotation tables of the
securities market on the basis of trading days as well as
announce it. Without permission of a stock exchange, no entity
or individual may announce any up-to-the-minute quotations of
securities trading.
Article 114 Where any normal trading of securities is
disturbed by an emergency, a stock exchange may take the
measures of a technical suspension of trading. In the event of
an emergency of force majeure or with a view to preserving the
normal order of securities trading, a stock exchange may
decide a temporary speed bump. Where a stock exchange adopts
the measure of a technical suspension of trading or decides a
temporary speed bump, it shall report it to the securities
regulatory authority under the State Council in a timely
manner.
Article 115 A stock exchange shall exercise a real-time
monitoring of securities trading and shall, according to the
requirements of the securities regulatory authority under the
State Council, report any abnormal trading thereto. A stock
exchange shall carry out supervision over the information as
disclosed by a listed company or the relevant obligor of
information disclosure, supervise and urge it/him to disclose
information in a timely and accurate manner according to law.
A stock exchange may, when it requires so, restrict the
trading through a securities account where there is any major
abnormal trading and shall report it to the securities
regulatory authority under the State Council for archival
filing.
Article 116 A stock exchange shall withdraw a certain
proportion of funds from the transaction fees, membership fees
and seat fees as charged thereby to establish a risk fund. The
risk fund shall be subject to the administration of the
council of the stock exchange. The specific withdrawal
proportion and use of risk fund shall be provided for by the
securities regulatory authority under the State Council in
collaboration with the fiscal department of the State Council.
Article 117 A stock exchange shall deposit its risk fund into
a special account of its opening bank and may not unlawfully
misuse it.
Article 118 A stock exchange shall, pursuant to laws and
administrative regulations of securities, formulate the rules
on listing, trading and membership administration as well as
any other relevant rules, and shall report them to the
securities regulatory authority under the State Council for
approval.
Article 119 Any person-in-charge and any other practitioner
of a stock exchange that has any interest relationship or any
of his relatives has any interest relationship with the
performance of his duties relating to securities trading shall
withdraw.
Article 120 Any trading result of a transaction, which has
been conducted in accordance with the trading rules as
formulated according to law, may not be altered. A trader who
has conducted any rule-breaking trading may not be exempted
from civil liabilities. The proceeds as generated from any
rule-breaking trading shall be dealt with pursuant to the
relevant regulations.
Article 121 Where any staff of a stock exchange who is
engaged in securities trading violates any trading rule of the
stock exchange, the stock exchange shall impose him
disciplinary sanctions. Under any serious circumstances, the
qualification thereof shall be revoked and the violator shall
be prohibited from entering into the stock exchange to engage
in any securities trading.

Chapter VI Securities Companies
Article 122 The establishment of a securities company shall
be subject to the examination and approval of the securities
regulatory under the State Council. No entity or individual
may engage in any securities business without the approval of
the securities regulatory under the State Council.
Article 123 For the purpose of the present Law, the term
"securities company" as mentioned in the present Law refers to
a limited- liability company or stock-limited company that has
been established and engages in business operation of
securities according to the Corporation Law of the People's
Republic of China as well as the provisions of the present
Law.
Article 124 The establishment of a securities company shall
fulfill the following requirements:
(1) Having a corporation constitution that meets the relevant
laws and administrative regulations;
(2) The major shareholders having the ability to make profits
successively, enjoying good credit standing and having no
irregular or rule-breaking record over the latest 3 years, and
its net asset being no less than 0.2 billion yuan.
(3) Having a registered capital that meets the provisions of
the present Law;
(4) The directors, supervisors and senior managers thereof
having the post-holding qualification and its practitioners
having the qualification to engage in securities business;
(5) Having a complete risk management system as well as an
internal control system;
(6) Having a qualified business place and facilities for
operation; and
(7) Meeting any other requirement as prescribed by laws and
administrative regulations as well as the provisions of the
securities regulatory authority under the State Council, which
have been approved by the State Council.
Article 125 A securities company may undertake some of or all
the following business operations upon the approval of the
securities regulatory authority under the State Council:
(1) Securities brokerage;
(2) Securities Investment consulting;
(3) Financial advising relating to activities of securities
trading or securities investment;
(4) Underwriting and recommendation of securities;
(5) Self-operation of securities;
(6) Securities asset management; and
(7) Any other business operation concerning securities.
Article 126 A securities company shall indicate the words
"limited-liability securities company" or "stock-limited
securities company" in its name.
Article 127 Where a securities company engages in the
business operation as prescribed in item (1), (2) or (3) of
Article 125 of the present Law, its registered capital shall
be RMB 50 million yuan at the least. Where a securities
company engages in any of the business operations as
prescribed in item (4), (5), (6) or (7), its registered
capital shall be RMB 100 million yuan at the least; Where a
securities company engages in two or more business operations
as prescribed in item (4), (5), (6) or (7), its registered
capital shall be 500 million yuan at the least. The registered
capital of a securities company shall be the paid-in capital.
The securities regulatory authority under the State Council
may, according to the principals of prudent supervision and in
light of the risk rating of all business operations, adjust
the requirement of minimum amount of registered capital, which
shall be no less than the minimum amount as prescribed in the
preceding paragraph herein.
Article 128 The securities regulatory authority under the
State Council shall, within 6 months as of accepting an
application for establishing a securities company, carry out
an examination according to the statutory requirements and
procedures and on the basis of the principle of prudent
supervision, make a decision on approval or disapproval and
thereafter, notify the relevant applicant. In the case of
disapproval, an explanation shall be given. Where an
application for establishing a securities company has been
approved, an applicant shall, within the prescribed period,
apply for registration of establishment with the organ in
charge of corporation registration and collect its business
license therefrom. A securities company shall, within 15 days
as of collecting its business license, file an application for
the Securities Business Permit with the securities regulatory
authority under the State Council. Without a Securities
Business Permit, a securities company may not engage in any
business operation of securities.
Article 129 Where a securities company establishes, purchases
or cancels a branch, alters its business scope or registered
capital, alters its shareholders or actual controllers who
hold more than 5% of its stock rights, alters any important
article of its constitution, has any merger or spilt-up,
alters its form of corporation, suspends its business, goes
through dissolution or bankruptcy, it shall be subject to the
approval of the securities regulatory authority under the
State Council. Where a securities company establishes,
purchases a securities operation institution abroad or
purchases the shares of any securities operational institution
abroad, it shall be subject to the approval of the securities
regulatory authority under the State Council.
Article 130 The securities regulatory authority under the
State Council shall formulate provisions on the risk control
indicators of a securities company such as net capital, the
ratio between net capital and liabilities, the ratio between
net capital and net assets, the ratio between net capital and
operational scale of self-operation, underwriting and asset
management, the ratio between liabilities and net asset as
well as the ratio between current assets and current
liabilities. A securities company may not provide any
financing or guaranty for its shareholders or any related
person thereof.
Article 131 The directors, supervisors and senior managers of
a securities company shall be honest and integrate, have good
moral grade, be familiar with the laws and administrative
regulations on securities and have the ability of operation
and management as required by the performance of their
functions and duties, and shall have obtained the post-holding
qualification as verified by the securities regulatory
authority under the State Council before assuming his post.
Anyone who is under any circumstance as prescribed in Article
147 of the Corporation Law of the People's Republic of China
or is under any of the following circumstances may not hold
the post of director, supervisor or senior manager of a
securities company:
(1) Where a person-in-charge of a stock exchange or
securities registration and clearing institution or a
director, supervisor or senior manager of a securities company
has been removed from his post for his irregularity or
disciplinary breach and if it has been within 5 years as of
the day when he is removed from his post; and
(2) Where a professional of a law firm, accounting firm or
investment consulting organization, financial advising
organization, credit rating institution, asset appraisal
institution or asset verification institution has been
disqualified for his irregularity or disciplinary breach and
if it has been within 5 years as of the day when he is removed
from his post.
Article 132 A practitioner of a stock exchange, securities
registration and clearing institution, securities trading
service institution or securities company or any functionary
of the state organ, who has been dismissed for his
irregularity or disciplinary breach, may not be employed as a
practitioner of a stock exchange.
Article 133 A functionary of the state organ and any other
personnel as prohibited by laws and administrative regulations
from taking any job in a company on a part-time basis may not
take any job in a securities company on a part-time basis.
Article 134 The state shall establish the securities investor
protection fund. The securities investor protection fund shall
be composed of the capital as paid by securities companies and
any other capital as lawfully raised. The specific measures
for financing, administration and use of the foregoing fund
shall be formulated by the State Council.
Article 135 A securities company shall withdraw a trading
risk reserve from its annual after-tax profits to cover any
loss from securities transaction. The specific proportion for
withdrawal shall be prescribed by the securities regulatory
authority under the State Council.
Article 136 A securities company shall establish and improve
an internal control system, adopt an effective measures of
separation so as to prevent any interest conflict between the
company and its clients or between different clients thereof.
A securities company shall undertake its operations of
securities brokerage, underwriting, self-operation and asset
management in a separate manner but not in a mixed manner.
Article 137 A securities company shall undertake its
self-operation in its own name and may not make use of any
other person's name or in an individual's name. A securities
company shall undertake its self-operation by using its own
capital and funds as lawfully raised. A securities company may
not lend its self-operation account to any other person.
Article 138 A securities company may enjoy its right of
independent management according to law and its legal
operation may not be interfered.
Article 139 The trading settlement funds of the clients of a
securities company shall be deposited in a commercial bank and
be managed through accounts as separately opened in the name
of each client. The specific measures and implementation
procedures shall be formulated by the State Council. A
securities company may not incorporate any trading settlement
funds or securities of its clients into its own assets. Any
entity or individual is prohibited from misusing any trading
settlement funds or securities of its/his clients in any form.
Where a securities company goes bankruptcy or goes through
liquidation. The trading settlement funds or securities of its
client may not be defined as its insolvent assets or
liquidation assets. Under any other circumstance as irrelevant
to the liabilities of its clients or under any other
circumstance as prescribed by law, the trading settlement
funds or securities of its clients may not be sealed-up,
frozen, deducted or enforced compulsorily.
Article 140 Where a securities company engages in any
brokerage business, it shall arrange a uniformly formulated
the power of attorney of securities transactions for the
entrusting party. Where any other means of entrustment is
adopted, the relevant entrustment records shall be made. For
an entrustment of securities transaction as made by a client,
whether the transaction is concluded or not, the entrustment
records shall be kept in the relevant securities company
within the prescribed period.
Article 141 Upon accepting an entrustment of securities
transaction, a securities company shall, on the basis of the
description of the securities, trading volume, method of
bidding, price band, etc. as indicated in the power of
attorney, undertake securities trading as an agent according
to the trading rules and make trading records in a faithful
manner. After a transaction is concluded, a securities company
shall, according to the relevant regulations, formulate a
transaction report and deliver it to the relevant clients. The
statements in a check sheet that confirms trading acts and
results in securities trading shall be authentic. Such
statements shall be subject to the examination of an examiner,
other than the relevant transaction handler, on a
transaction-by-transaction basis, so as to guarantee the
consistency between the balance of securities in book account
and the securities as actually held.
Article 142 Where a securities company provides any service
of securities financing through securities transactions for
its client, it shall meet the provisions of the State Council
and shall be subject to the approval of the securities
regulatory authority under the State Council.
Article 143 A securities company that engages in brokerage
operation may not decide any purchase or sale of securities,
class selection of securities, trading volume or trading price
on the basis of full entrustment of its client.
Article 144 A securities company may not make a promise to
its clients on the proceeds as generated from securities
transactions or on compensating the loss as incurred from
securities transactions by any means.
Article 145 A securities company and the practitioners
thereof may not privately accept any entrustment of its client
for securities transaction beyond its business place as
established according to law.
Article 146 Where any practitioner of a securities company
violates the trading rules by implementing the instructions of
his securities company or taking advantage of his post in any
securities trading, the relevant securities company shall bear
all the liabilities as incurred therefrom.
Article 147 A securities company shall keep the materials of
its clients regarding account opening, entrustment records,
trading records and internal management as well as business
operation in a proper manner. No one may conceal, forge, alter
or damage the aforesaid materials. The term for keeping the
aforesaid materials shall be no less than 20 years.
Article 148 A securities company shall, according to the
relevant provisions, report the information and materials
regarding operation and management such as its business
operation and financial status to the securities regulatory
authority under the State Council. The securities regulatory
authority under the State Council has the right to require a
securities company as well as the shareholders and actual
controllers thereof to provide the relevant information and
materials within a prescribed period. The information and
materials as reported or provided by a securities company and
the shareholders and actual controllers thereof to the
securities regulatory authority under the State Council shall
be authentic, accurate and complete.
Article 149 The securities regulatory authority under the
State Council may, when believing it requires so, entrust an
accounting firm or an asset appraisal institution to carry out
an auditing or appraisal on the financial status, internal
control as well as asset value of a securities company. The
specific measures thereof shall be formulated by the
securities regulatory authority under the State Council in
collaboration with the relevant administrative departments.
Article 150 Where the net capital or any other indicator of
risk control of a securities company fails to satisfy the
relevant provisions, the securities regulatory authority under
the State Council shall order it to correct in a prescribed
period. Where a securities company fails to correct within the
prescribed period or any act thereof has injured the sound
operation of the securities company or has damaged the
legitimate rights and interests of its clients, the securities
regulatory authority under the State Council may take the
following measures in light of different circumstances:
(1) Restricting its business operation, ordering it to
suspend some business operations and stopping the approval of
any new operation thereof;
(2) Stopping the approval for establishing or taking over any
business branch;
(3) Restricting its distribution of dividends, restricting
the payment of remunerations to or provision of welfare for
its directors, supervisors or senior managers;
(4) Restricting any transfer of property or the setting of
any other right to its property;
(5) Ordering it to alter its directors, supervisors and
senior managers or restricting the right thereof;
(6) Ordering the controlling shareholders to transfer their
stock right or restricting its shareholders from exercising
the shareholders' rights; and
(7) Revoking the relevant business license. A securities
company shall, upon rectification, submit a report to the
securities regulatory authority under the State Council. The
securities regulatory authority under the State Council shall
lift the relevant measures as prescribed in the preceding
paragraph herein within 3 days as of concluding the relevant
examination and acceptance of a securities company that has
met the requirements of risk control indicators upon
examination and acceptance.
Article 151 Where a shareholder of a securities company makes
any fake capital contribution or spirits away registered
capital, the securities regulatory authority under the State
Council shall order him to correct within the prescribed
period and may order him to transfer the stock rights of the
securities company as held thereby. Before a shareholder as
prescribed in the preceding paragraph herein corrects his
irregularity and transfers the stock right of the securities
company as held thereby according to the relevant
requirements, the securities regulatory authority under the
State Council may restrict the shareholders' rights thereof.
Article 152 Where any director, supervisor or senior manager
of a securities company fails to fulfill his accountability in
a diligent manner and thus incurs any major irregularity or
rule-breaking act or major risk to his securities company, the
securities regulatory authority under the State Council may
revoke the post-holding qualification thereof and order his
company to remove him from his post for alteration.
Article 153 Where any illegal operation of a securities
company or any major risk thereof seriously disturbs the order
of the securities market or injures the interests of the
relevant investors, the securities regulatory authority under
the State Council may take such supervisory measures as
suspending its business for rectification, designating any
other institution for trusteeship, take-over or cancellation.
Article 154 During a period when a securities company is
ordered to suspend its business for rectification, or is
designated for trusteeship, or is being taken over or
liquidated, or where any major risk occurs, the following
measures may be adopted to any director, supervisor, senior
manager or any other person of the securities company directly
responsible upon the approval of the securities regulatory
authority under the State Council:
(1) Notifying the export administrative organ to prevent him
from exiting the Chinese territory; and
(2) Requesting the judicial organ to prohibit him from
moving, transferring his properties or disposing his
properties by any other means, or setting any other right to
his properties.

Chapter VII Securities Registration and Clearing Institutions
Article 155 A securities registration and clearing
institution is a non-profit legal person that provides
centralized registration, custody and settlement services for
securities transactions. The establishment of a securities
registration and clearing institution shall be subject to the
approval of the securities regulatory authority under the
State Council.
Article 156 The establishment of a securities registration
and clearing institution shall fulfill the following
requirements:
(1) Its self-owned capital shall be no less than 0.2 billion
yuan;
(2) It shall have a place and facilities as required by the
services of securities registration, custody and settlement;
(3) Its major managers and practitioners shall have the
securities practice qualification; and
(4) It shall meet any other requirement as prescribed by the
securities regulatory authority under the State Council. The
words "securities registration and clearing" shall be
indicated in the name of a securities registration and
clearing institution.
Article 157 A securities registration and clearing
institution shall perform the following functions:
(1) The establishment of securities accounts and settlement
accounts;
(2) The custody and transfer of securities;
(3) The registration of roster of securities holders;
(4) The settlement and delivery for listed securities trading
of a stock exchange;
(5) The distribution of securities rights and interests on
the basis of the entrustment of issuers;
(6) The handling of any inquiry relating to the aforesaid
business operation; and
(7) Any other business operation as approved by the
securities regulatory authority under the State Council.
Article 158 A national centralized and unified operation
shall be adopted for the registration and settlement of
securities. The constitution and operational rules of a
securities registration and clearing institution shall be
formulated according to law and shall be subject to the
approval of the securities regulatory authority under the
State Council.
Article 159 The securities as held by the relevant holders
shall be all put under the custody of a securities
registration and clearing institution in a listed trading. A
securities registration and clearing institution may not
misuse any securities of its clients.
Article 160 A securities registration and clearing
institution shall provide the roster of securities holders as
well as the relevant materials to a securities issuer. A
securities registration and clearing institution shall,
according to the result of securities registration and
settlement, affirm the fact that a securities holder holds the
relevant securities and provide the relevant registration
materials to a securities holder. A securities registration
and clearing institution shall guarantee the authenticity,
accuracy and integrity of the roster of securities holders as
well as records of transfer registration and may not conceal,
forge, alter or damage any of the aforesaid materials.
Article 161 A securities registration and clearing
institution shall take the following measures to guarantee a
sound operation of its business:
(1) Having the necessary service equipment and complete data
protection measures;
(2) Having established complete management systems concerning
operation, finance and security protection; and
(3) Having established a complete risk management system.
Article 162 A securities registration and clearing
institution shall keep the original voucher of registration,
custody and settlement as well as the relevant documents and
materials in a proper manner. The term for keeping the
aforesaid materials shall be no less than 20 years.
Article 163 A securities registration and clearing
institution shall establish a clearing risk fund so as to pay
in advance or make up any loss of the securities registration
and clearing institution as incurred from default delivery,
technical malfunction, operational fault or force majeure. The
securities clearing risk fund shall be withdrawn from the
business incomes and proceeds of a securities registration and
clearing institution and may be paid by clearing participants
according to a specified percentage of securities trading
volume. The measures for raising and managing the securities
clearing risk fund shall be formulated by the securities
regulatory authority under the State Council in collaboration
with the fiscal department of the State Council.
Article 164 The securities clearing risk fund shall be
deposited into a special account of a designated bank and
shall be subject to special management. Where a securities
registration and clearing institution makes any compensation
by using the securities clearing risk fund, it may recourse
the payment to the relevant person as held responsible.
Article 165 An application for dissolving a securities
registration and clearing institution shall be subject to the
approval of the securities regulatory authority under the
State Council.
Article 166 An investor who entrusts a securities company to
undertake any securities trading shall apply for opening a
securities account. A securities registration and clearing
institution shall, according to the relevant provisions, open
a securities account for an investor in his own name. An
investor who applies for opening an account shall hold the
legitimate certificates certifying his identity of a Chinese
citizen or its qualification of a Chinese legal person, unless
it is otherwise provided for by the state.
Article 167 A securities registration and clearing
institution shall, when providing the netting service for a
stock exchange, require the relevant clearing participant to
deliver securities and funds in full amount and provide the
guaranty of delivery according to the principles of delivery
versus payment (DVP). Before a delivery is concluded, nobody
may use the securities, funds or collaterals as involved in
the delivery. Where a clearing participant fails to perform
the duty of delivery according to the schedule, a securities
registration and clearing institution has the right to dispose
the properties as prescribed in the preceding paragraph herein
according to the operational rules.
Article 168 The clearing funds and securities as collected by
a securities registration and clearing institution according
to the operational rules shall be deposited into a special
account for settlement and delivery. The settlement and
delivery that can only be applied to the securities trading as
concluded according to the operational rules may not be
enforced compulsorily.

Chapter VIII Securities Trading Service Institutions
Article 169 Where an investment consulting institution,
financial advising institution, credit rating institution,
asset appraisal institution or accounting firm engages in any
securities trading service, it shall be subject to the
approval of the securities regulatory authority under the
State Council and the relevant administrative departments. The
measures for the administration of examination and approval of
the practice of securities trading services, in which an
investment consulting institution, financial advising
institution, credit rating institution, asset appraisal
institution or accounting firm engages, shall be formulated by
the securities regulatory authority under the State Council
and the relevant administrative departments.
Article 170 The staff of an investment consulting
institution, financial advising institution or credit rating
institution who engage in securities trading service shall
have the special knowledge of securities as well as work
experience on securities business or securities trading
service for more than 2 years. The standards for recognizing
the securities practice qualification and the measures for
administration thereof shall be formulated by the securities
regulatory authority under the State Council.
Article 171 An investment consulting institution as well as
its practitioners that engage in securities trading services
may not have any of the following acts:
(1) Engaging in any securities investment as an agent on the
behalf of its entrusting party;
(2) Concluding any agreement with an entrusting party on
sharing the gains of securities investment or bearing the loss
of securities investment;
(3) Purchasing or selling any stock of a listed company, for
which the consulting institution provides services;
(4) Providing or disseminating any false or misleading
information to investors through media or by any other means;
or
(5) Having any other act as prohibited by any law or
administrative regulation. Any institution or person that has
any of the acts as prescribed in the preceding paragraph
herein and thus incurs any loss to investors shall be subject
to the liabilities of compensation.
Article 172 An investment consulting institution or credit
rating institution that engages in securities trading services
shall, according to the standards of or measures for charging
as formulated by the relevant administrative department of the
State Council, charge the relevant service commissions.
Article 173 Where a securities trading service institution
formulates and generates any auditing report, asset appraisal
report, financial advising report, credit rating report or
legal opinions for the issuance, listing and trading of
securities, it shall be diligent and responsible by carrying
out examination and verification for the authenticity,
accuracy and integrity of the contents of the documents as
formulated and generated. In the case of any false record,
misleading statement or major omission in the documents as
formulated and generated, which incurs any loss to any other
person, the relevant securities trading service institution
shall bear the joint and several liabilities together with the
relevant issuer and listed company, unless a securities
trading service institution has the ability to prove its
exemption of fault.

Chapter IX Securities Industry Association
Article 174 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. A
securities company shall join the securities industrial
association. The power organ of the securities industrial
association is the general assembly of its members.
Article 175 The constitution of the securities industrial
association shall be formulated by the general assembly of its
members and shall be report to the securities regulatory
authority under the State Council for archival purpose.
Article 176 The securities industrial association shall
perform the following functions and duties:
(1) Educating and organizing its members to observe the laws
and administrative regulations on securities;
(2) Safeguarding the legitimate rights and interests of its
members and reporting the suggestions and requirements of its
members to the securities regulatory body;
(3) Collecting and straightening out the securities
information and providing services for its members;
(4) Formulating the rules that shall be observed by its
members, organizing the vocational training for the
practitioners of its member entities and carrying out
vocational exchange between its members;
(5) Holding mediation over any dispute regarding securities
operation between its members or between its members and
clients;
(6) Organizing its members to make research on the
development, operation and the relevant contents of the
securities industry;
(7) Supervising and examining the acts of its members and,
according to the relevant provisions, giving a disciplinary
sanction to any member that violates any law or administrative
regulation or the constitution of the association; and
(8) Performing any other function and duty as stipulated by
the constitution of the industrial association.
Article 177 A council shall be established within the
securities industrial association. The members of the council
shall be selected through election according to the provisions
of the constitution.

Chapter X Securities Regulatory Bodies
Article 178 The securities regulatory authority under the
State Council shall carry out supervision and administration
of the securities market according to law so as to preserve
the order of the securities market and guarantee the
legitimate operation thereof.
Article 179 The securities regulatory authority under the
State Council shall perform the following functions and duties
regarding the supervision and administration of the securities
market:
(1) Formulating the relevant rules and regulations on the
supervision and administration of the securities market and
exercising the power of examination or verification according
to law;
(2) Carrying out the supervision and administration of the
issuance, listing, trading, registration, custody and
settlement of securities according to law;
(3) Carrying out the supervision and administration of the
securities activities of a securities issuer, listed company,
stock exchange, securities company, securities registration
and clearing institution, securities investment fund
management company or securities trading service institution
according to law;
(4) Formulating the standards for securities practice
qualification and code of conduct and carrying out supervision
and implementation according to law;
(5) Carrying out the supervision and examination of
information disclosure regarding the issuance, listing and
trading of securities;
(6) Offering guidance for and carrying out supervision of the
activities of the securities industrial association according
to law;
(7) Investigating into and punishing any violation of any law
or administrative regulation on the supervision and
administration of the securities market according to law; and
(8) Performing any other functions and duties as prescribed
by any law or administrative regulation. The securities
regulatory authority under the State council may establish a
cooperative mechanism of supervision and administration in
collaboration with the securities regulatory bodies of any
other country or region and apply a trans-border supervision
and administration.
Article 180 Where the securities regulatory authority under
the State Council performs its duties and functions, it has
the right to take the following measures:
(1) Carrying an on-the-spot examination of a securities
issuer, listing company, securities company, securities
investment fund management company, securities trading service
company, stock exchange or securities registration and
clearing institution;
(2) Making investigation and collecting evidence in a place
where any suspected irregularity has happened;
(3) Consulting the parties concerned or any entity or
individual relating to a case under investigation and
requiring the relevant entity or person to give explanations
on the matters relating to a case under investigation;
(4) Referring to and photocopying such materials as the
registration of property right and the communication records
relating to the case under investigation;
(5) Referring to and photocopying the securities trading
records, transfer registration records, financial statements
as well as any other relevant documents and materials of any
entity or individual relating to a case under investigation;
sealing up any document or material that may be transferred,
concealed or damaged;
(6) Consulting the capital account, security account or bank
account of any relevant party concerned in or any entity or
individual relating to a case under investigation; in the case
of any evidence certifying that any property as involved in a
case such as illegal proceeds or securities has been or may be
transferred or concealed or where any important evidence has
been or may be concealed, forged or damaged, freezing or
sealing up the foregoing properties or evidence upon the
approval of the principal of the securities regulatory
authority under the State Council;
(7) When investigating into any major securities irregularity
such as manipulation of the securities market or insider
trading, upon the approval of the principal of the securities
regulatory authority under the State Council, restricting the
securities transactions of the parties concerned in a case
under investigation, whereby the restriction term may not
exceed 15 trading days; under any complicated circumstance,
the restriction term may be extended for another 15 trading
day.
Article 181 Where the securities regulatory authority under
the State Council performs its functions and duties of
supervision or examination or investigation, the personnel in
charge of supervision and examination or investigators shall
be no less than 2 and shall show their legitimate certificates
and the notice of supervision and examination as well as
investigation. Where the personnel in charge of supervision
and examination or investigation are less than 2 or fail to
show their legitimate certificates and the notice of
supervision and examination or investigation, an entity under
examination and investigation has the right to refuse.
Article 182 The functionary of the securities regulatory
authority under the State Council shall be duteous, impartial
and clean, and handle matters according to law, and may not
take advantage of his post to seek any unjust interests or
divulge any commercial secrete of the relevant entity or
individual as accessible in his performance.
Article 183 Where the securities regulatory authority under
the State Council performs its functions and duties according
to law, the entity or individual under examination and
investigation shall coordinate with it, provide the relevant
documents and materials in a faithful manner and may not
refuse any legitimate requirement, obstruct the performance of
duties and functions or conceal any document or material
concerned.
Article 184 The regulations, rules as well as the working
system of supervision and administration as formulated by the
securities regulatory authority under the State Council
according to law shall be publicized to the general public.
The securities regulatory authority under the State Council
shall, according to the results of investigation, decide the
punishment on any securities irregularity, which shall be
publicized to the general public.
Article 185 The securities regulatory authority under the
State Council shall establish an information pooling mechanism
of supervision and administration in collaboration with any
other financial regulatory authority under the State Council.
Where the securities regulatory authority under the State
Council performs its functions and duties of supervision and
examination or investigation according to law, the relevant
departments shall coordinate with it.
Article 186 Where the securities regulatory authority under
the State Council founds any securities irregularity as
involved in a suspected crime when performing its functions
and duties according to law, it shall transfer the case to the
judicial organ for handling.
Article 187 The functionary of the securities regulatory
authority under the State Council may not hold any post in an
organization under its supervision.

Chapter XI Legal Liabilities
Article 188 Where any company unlawfully makes any public
issuance of securities or does so in any disguised form
without any examination and approval of the statutory organ,
it shall be ordered to cease the issuance, return the funds as
raised plus the deposit interests as calculated at the
interest rate of the bank at the corresponding period of time
and be imposed a fine of 1% up to 5% of the funds as illegally
raised. A company that has been established through any
unlawful public issuance of securities or through any unlawful
public issuance of securities in a disguised form shall be
revoked by the organ or department that performs the functions
and duties of supervision and administration in collaboration
with the local people's government at or above the county
level. The person-in-charge or any other person directly
responsible shall be given a warning and imposed a fine of 30,
000 yuan up to 300, 000 yuan.
Article 189 Where an issuer fails to meet the requirements of
issuance and cheats for the verification for issuance by any
fraudulent means, if the relevant securities haven't been
issued, a fine of 300, 000 yuan up to 600, 000 yuan shall be
imposed; if the relevant securities have been issued, a fine
of 1% up to 5% of the illegal proceeds as unlawfully raised
shall be imposed. The person-in-charge and any other person
directly responsible shall be imposed a fine of 30, 000 yuan
up to 300, 000 yuan. Any controlling shareholder or actual
controller of an issuer that instigates any irregularity as
prescribed in the preceding paragraph herein shall be subject
to the punishments as prescribed in the preceding paragraph.
Article 190 Where a securities company underwrites or, as an
agent, purchases or sells any securities, which have been
unlawfully issued in a public manner without any examination
and approval, it shall be ordered to stop its underwriting
operation or purchase or sale on an agency basis. The illegal
proceeds shall be confiscated and a fine of 1~5 times of its
illegal proceeds shall be imposed. Where there is no illegal
proceeds or its illegal proceeds is less than 300, 000 yuan, a
fine of 300, 000 yuan up to 60, 000 yuan shall be imposed.
Where any loss has been incurred to an investor, the
securities company shall bear the joint and several
liabilities of compensation together with the issuer. The
person-in-charge and any other person directly responsible
shall be given a warning and imposed a fine of 30, 000 yuan up
to 300, 000 yuan and the post-holding qualification or
securities practice qualification thereof shall be revoked.
Article 191 Where a securities company that engages in
securities underwriting is under any of the following
circumstances, it shall be ordered to correct and given a
warning. The illegal proceeds shall be confiscated and a fine
of 30, 000 yuan up to 600, 000 yuan may be imposed
concurrently. Under any serious circumstances, the relevant
business licenses shall be suspended or revoked. Where any
loss has been incurred to any other securities underwriting
institution or investor, it shall be subject to the
liabilities of compensation according to law. The
person-in-charge and any other person directly responsible
shall be given a warning and may be concurrently imposed a
fine of 30, 000 yuan up to 300, 000 yuan. Under any serious
circumstances, the post-holding qualification or securities
practice qualification thereof shall be revoked:
(1) Conducting any advertising or any other publicity for
recommendation, which is false or may mislead investors;
(2) Canvassing any underwriting business by any means of
unjust competition; or
(3) Having any other irregularity in violation of the
relevant provisions on securities underwriting.
Article 192 Where a recommendation party produces a
recommendation letter with any false record, misleading
statement or major omission, or fails to perform any other
statutory functions and duties, it shall be ordered to correct
and given a warning. Its business income shall be confiscated
and a fine of 1~5 times of its business income shall be
imposed. Under any serious circumstances, the relevant
business license shall be suspended or revoked. The
person-in-charge and any other person directly responsible
shall be given a warning and imposed a fine of 30, 000 yuan up
to 300, 000 yuan. Under any serious circumstances, the
post-holding qualification or securities practice
qualification thereof shall be revoked.
Article 193 Where an issuer, a listed company or any other
obligor of information disclosure fails to disclose
information according to the relevant provisions or where
there is any false record, misleading or major omission in the
information as disclosed, the securities regulatory body shall
order it to correct, give a warning and impose it a fine of
300, 000 yuan up to 600, 000 yuan. The person-in-charge and
any other person directly responsible shall be given a warning
and imposed a fine of 30,000 yuan up to 300, 000 yuan. Where
an issuer, a listed company or any other obligor of
information disclosure fails to submit the relevant reports or
where there is any false record, misleading or major omission
in any report as submitted, the securities regulatory body
shall order it to correct, give a warning and impose it a fine
of 300, 000 yuan up to 600, 000 yuan. The person-in-charge and
any other person-in-charge directly responsible shall be given
a warning and imposed a fine of 30,000 yuan up to 300, 000
yuan. Any controlling shareholder or actual controller of an
issuer, a listed company or any other obligor of information
disclosure instigates any irregularity as prescribed in the
preceding 2 paragraphs herein shall be subject to the
punishments as prescribed in the preceding 2 paragraphs.
Article 194 Where an issuer or a listed company unlawfully
alters the use of funds as raised through public issuance of
securities, it shall be ordered to correct. The
person-in-charge and any other person directly responsible
shall be given a warning and imposed a fine of 30,000 yuan up
to 300, 000 yuan. Any controlling shareholder or actual
controller of an issuer or a listed company who instigates any
irregularity as prescribed in the preceding paragraph herein
shall be given a warning and imposed a fine of 300, 000 yuan
up to 600, 000 yuan. The person-in-charge and any other person
directly responsible shall be subject to the punishment
according to the provisions of the preceding paragraph.
Article 195 Where a director, supervisor, senior manager of a
listed company or a shareholder who holds more than 5% of the
shares of a listed company violates the provisions of Article
47 of the present Law by buying or purchasing any stock of the
listed company, he shall be given a warning and be
concurrently imposed a fine of 30,000 yuan up to 100, 000
yuan.
Article 196 Any stock exchange as illegally established shall
be banned by the people's government above the county level.
Its illegal proceeds shall be confiscated and a fine of 1~5
times of its illegal proceeds shall be imposed. Where there is
no illegal proceeds or the illegal proceeds is less than 100,
000 yuan, a fine of 100, 000 yuan up to 500, 000 yuan shall be
imposed, The person-in-charge and an other directly
responsible shall be given a warning and imposed a fine of
30,000 yuan up to 300, 000 yuan.
Article 197 Any securities company that is unlawfully
established or that unlawfully undertakes any securities
operation without an approval shall be banned by the
securities regulatory body, the illegal proceeds shall be
confiscated and a fine of 1~5 times of the illegal proceeds
shall be imposed. Where there is no illegal proceeds or the
illegal proceeds is less than 300, 000 yuan, a fine of 300,
000 yuan up to 600, 000 yuan shall be imposed, The
person-in-charge and any other person directly responsible
shall be given a warning and imposed a fine of 30,000 yuan up
to 300, 000 yuan.
Article 198 Where any personnel without a post-holding
qualification or securities practice qualification is
unlawfully employed in violation of the provisions of the
present Law, the securities regulatory body shall order it to
correct, give a warning and impose it a fine of 100, 000 yuan
up to 300, 000 yuan. The person-in-charge and any other person
directly responsible shall be given a warning and imposed a
fine of 30,000 yuan up to 300, 000 yuan.
Article 199 Where any person who is prohibited by laws and
administrative regulations from engaging in securities trading
holds or purchases or sells any stock directly or in an
assumed name or in a name of any other person, he shall be
ordered to dispose the stocks as unlawfully held thereby
according to law. The illegal proceeds shall be confiscated
and a fine of no more than the equivalent value of stocks as
traded shall be imposed. In the case of any functionary of the
state, an administrative sanction shall be given according to
law.
Article 200 Where any practitioner of a stock exchange,
securities company, securities registration and clearing
institution or any functionary of the securities industrial
association provides any false material or conceals, forges,
alters or damages any trading record for the purpose of
inducing investors to purchase or sell securities, the
securities practice qualification thereof shall be revoked and
a fine of 30, 000 yuan up to 100, 000 yuan shall be imposed.
In the case of any functionary of the state, an administrative
sanction shall be given according to law.
Article 201 Where a securities trading service institution
and its staffs that produce any auditing report, asset
appraisal report or legal opinions for the issuance of stocks
violate the provisions of Article 45 of the present Law by
purchasing or selling any stock, it shall be ordered to
dispose the stocks as illegally held thereby according to law.
The illegal proceeds shall be confiscated and a fine of no
more than the equivalent value of the stocks as traded shall
be imposed.
Article 202 Where an insider who has access to insider
information of securities trading or any person who has
obtained any insider information purchases or sells the
securities, divulges the relevant information or advises any
other person to purchase or sell the securities before the
information regarding the issuance or trading of securities or
any other information that may have any big impact on the
price of the securities is publicized, he shall be ordered to
dispose the securities as illegally held thereby according to
law. The illegal proceeds shall be confiscated and a fine of
1~5 times of the illegal proceeds shall be imposed. Where
there is no illegal proceeds or the illegal proceeds is less
than 30, 000 yuan, a fine of 30, 000 yuan up to 600, 000 yuan
shall be imposed. Where an entity