Law of the
People's Republic of China on Securities (2005)
(Adopted at the 6th Meeting of the Standing Committee of the Ninth
National People’s Congress on December 29, 1998; amended in
accordance with the Decision of the Standing Committee of the Tenth
National People’s Congress on Amending the Securities Law of the
People’s Republic of China adopted at its 11th Meeting on August 28,
2004; and revised by the Standing Committee of the Tenth National
People’s Congress at its 18th Meeting on October 27, 2005)
Contents
Chapter I General Provisions
Chapter II Issuing of Securities
Chapter III Trading of Securities
Chapter IV Acquisition of Listed Companies
Chapter V Stock Exchanges
Chapter VI Securities Companies
Chapter VII Securities Registrar and Clearance Institutions
Chapter VIII Securities Service Institutions
Chapter IX Securities Industry Association
Chapter X Securities Regulatory Authority
Chapter XI Legal Liability
Chapter XII Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is enacted for the purpose of regulating the
issuing and trading of
securities, protecting the lawful rights and interests of investors,
safeguarding the
economic order and public interests of the society, and promoting
the socialist market
economy.
Article 2 Within the territory of the People’s Republic of China,
this Law is applicable to the
issuing and trading of shares, corporate bonds and such other
securities as may be so described
by the State Council pursuant to law; where not stipulated
hereunder, the provisions of the
Companies Law of People’s Republic of China and other laws and
administrative regulations shall
govern.
This Law shall be applicable to the listing and trading of
government bonds and units of
securities investment funds; where otherwise stipulated under other
laws or administrative
regulations, the provisions thereof shall be applicable.
The regulatory measures for the issuing and trading of the
derivative varieties of
securities shall be formulated by the State Council in adherence to
the principles of this
Law.
Article 3 The principles of openness, fairness and justice must be
carried out in issuing and
trading securities.
Article 4 All parties involved in the issuing and trading of
securities shall stand equally in
law and shall observe the principles of free will, compensation and
honesty and
trustworthiness.
Article 5 Securities shall be issued and traded in conformity with
laws and administrative
regulations. Fraud, insider trading and manipulation of the
securities market are
prohibited.
Article 6 The operation and administration of the securities
industry shall be separated from
the operation and administration of the industries of banking, trust
and insurance and
securities companies shall be established individually and
separately from the
institutions of banking, trust and insurance businesses, unless
otherwise stipulated by the
State.
Article 7 The securities regulatory authority under the State
Council shall exercise
centralized and unified regulation over the securities markets
nationwide pursuant to law.
The securities regulatory authority under the State Council may
establish local offices
according to its needs, which shall perform regulatory functions as
authorized.
Article 8 Subject to the centralized and unified regulation of the
State over the issuing and
trading of securities, an association of the securities industry
shall be formed pursuant to
law implementing self-regulatory governance.
Article 9 The State audit authority shall exercise auditing
supervision over the stock
exchanges, securities companies, securities registrar and clearance
institutions and
securities regulatory authorities pursuant to law.
Chapter II Issuing of Securities
Article 10 The conditions set forth by laws or
administrative regulations must be satisfied in
the public issuance of securities, and such
issuance must, pursuant to law, be submitted to
the securities regulatory authority under the
State Council or the departments authorized by
the State Council for examination and approval.
Without such examination and approval pursuant
to law, no entities or individuals shall issue
securities publicly.
Any one of the following circumstances shall
constitute a public issuance:
(1) issuing securities to non-specific persons;
(2) issuing securities to more than 200 specific
persons in the aggregate; and
(3) such other issuing activities as may be so
prescribed by laws or administrative
regulations.
Where securities are issued in non-public
manners, no advertising, public solicitation or
any other covert ways in disguised form shall be
employed.
Article 11 When an application is made for
public issuance of shares or corporate bonds
convertible into shares and such issuance shall
take place by way of underwriting pursuant to
law, or when an application is made for public
issuance of other securities which is subject to
the sponsorship system as prescribed by laws or
administrative regulations, the issuer shall
engage the institution with sponsorship
qualifications to act as a sponsor.
A sponsor shall observe business rules and
industrial norms, act with integrity and good
faith, discharge its responsibilities diligently
and dutifully, scrupulously examine the issuer’s
application documents and disclosure materials,
and supervise and encourage the issuer to
operate properly.
The qualifications of sponsors and the
regulatory measures governing sponsors shall be
formulated by the securities regulatory
authority under the State Council.
Article 12 To establish a company limited by
shares for public issuance of shares, the
conditions set forth by the Companies Law of
People’s Republic of China and such other
conditions as may be so prescribed by the
securities regulatory authority under the State
Council and so approved by the State Council
shall be met, and an application for share
offering and the following documents shall be
submitted to the securities regulatory authority
under the State Council:
（1） the articles of association of the company;
（2） the agreement of promoters;
（3） the personal or business names of the
promoters, the numbers of shares subscribed for
by the promoters, the types of
investment contribution and the verification
documents of the investment;
（4） the prospectus;
（5） the name and address of the agent bank for
the subscription funds; and
（6） the name of underwriting institution and
relevant agreements.
Where a sponsor is engaged in accordance with
the provisions of this Law, the instrument of
sponsorship for issuance produced by such
sponsor shall also be furnished.
Where the establishment of a company is subject
to approval as required by laws or
administrative regulations, the approving
document thereof shall also be submitted
accordingly.
Article 13 Where a company makes a public
issuance of new shares, it shall meet the
following conditions:
(1) having a sound and well-functioning
organizational structure;
(2) having sustainable profitability and being
financially sound;
(3) having had no false entries in its financial
and accounting documents for three years
immediately preceding the application, and no
other major illegal activities attributable to
it; and
(4) such other conditions as may be so
prescribed by the securities regulatory
authority under the State Council and so
approved by the State Council.
Where a listed company is to make a non-public
issuance of new shares, it shall meet the
conditions as prescribed by the securities
regulatory authority under the State Council and
so approved by the State Council and it shall
submit an application therefor to the securities
regulatory authority under the State Council for
examination and approval.
Article 14 Where a company is to make a public
issuance of new shares, it shall submit an
application for share offering and the following
documents to the securities regulatory authority
under the State Council:
(1) the business license of the company;
(2) the articles of association of the company;
(3) the resolution of the shareholders general
assembly;
(4) the prospectus;
(5) the financial statements;
(6) the name and address of the agent bank for
subscription funds; and
(7) the name of underwriting institution and
relevant agreements.
Where a sponsor is engaged in accordance with
the provisions of this Law, the instrument of
sponsorship for issuance produced by such
sponsor shall also be furnished.
Article 15 The funds raised from public issuance
of shares by a company must be used in
conformity with the stated purposes in the
prospectus. Any diversion of the purposes of the
raised funds stated in the prospectus shall be
subject to resolution adopted by the
shareholders general assembly. Where a diversion
is made in the stated purposes without approval,
which is not rectified or is not reconciled by
the shareholders general assembly, the company
shall not be permitted to make any subsequent
public issuance of new shares.
Article 16 Where a company publicly issues
corporate bonds, it shall meet the following
conditions:
(1) In the case of a company limited by shares,
its net asset value is not less than RMB30
million yuan; in the case of a company with
limited liability, its net asset value is not
less than 60 million yuan;
(2) The aggregated outstanding balance of the
company’s corporate bonds does not exceed 40% of
its net asset value;
(3) The average distributable profits of the
company for each of the three years immediately
preceding the application is adequate to pay for
one-year interest on its outstanding corporate
bonds;
(4) The intended use of the funds raised is in
conformity with the industrial policies of the
State;
(5) The interest rates of the bonds do not
exceed the interest-rate levels set by the State
Council; and
(6) Such other conditions as may be so
prescribed by the State Council.
The funds raised from public issuance of
corporate bonds must be used for the purposes
approved, and shall not be used to make up
losses or to cover the costs for non-productive
purposes.
Where a listed company issues corporate bonds
convertible into shares, in addition to the
conditions provided for in the first paragraph
of this Article, it shall also meet the
conditions for the public issuance of shares
under this Law, and it shall submit an
application to the securities regulatory
authority under the State Council for
examination and approval.
Article 17 To apply for public issuance of
corporate bonds, a company shall submit the
following documents to the department authorized
by the State Council or the securities
regulatory authority under the State Council:
(1) the business license of the company;
(2) the articles of association of the company;
(3) the method for raising funds through
issuance of corporate bonds;
(4) the reports of asset valuation and
investment verification; and
(5) such other documents as may be so prescribed
by the department authorized by the State
Council or the securities regulatory authority
under the State Council.
Where a company engages a sponsor in accordance
with the provisions of this Law, it shall also
submit the instrument of sponsorship for
issuance produced by such sponsor.
Article 18 Under any one of the following
circumstances, no subsequent public issuance of
corporate bonds shall be permitted:
(1) The amount of funds to be raised in the
preceding public offering of corporate bonds has
not been fully raised;
(2) There are such situations as defaults or
delayed payments of the principal and interest
on the publicly-issued corporate bonds or other
debts and the situations still exist; and
(3) The stated purposes of use of the funds
raised from public issuance of corporate bonds
are diverted in violation of the provisions of
this Law.
Article 19 The ways of preparing and presenting
the application documentations for issuers
applying for examination and approval of
securities issuance pursuant to law shall be
prescribed by the authorities or departments
responsible for such examination and approval
pursuant to law.
Article 20 The application documents of
securities issuance submitted by an issuer to
the securities regulatory authority under the
State Council or the department authorized by
the State Council must be truthful, accurate and
complete.
The securities service institutions and their
staff members that certify relevant instruments
to endorse securities issuance must strictly
perform their statutory duties and guarantee the
truthfulness, accuracy and completeness of the
instruments so certified.
Article 21 Where an issuer applies for public
issuance of shares for the first time, it shall
make a preliminary disclosure of the relevant
documents pursuant to the rules of the
securities regulatory authority under the State
Council after submitting its application
documents.
Article 22 The securities regulatory authority
under the State Council shall establish an
issuance examination commission which shall,
pursuant to law, examine the applications for
share issuance.
The issuance examination commission shall be
composed of professionals from the securities
regulatory authority under the State Council and
specialists engaged from outside, who shall
decide by vote on an application for share
issuance and offer their opinions after
examination.
The specific measures for the formation of the
issuance examination commission, the term of
office of its members and its operational
procedures shall be prescribed by the securities
regulatory authority under the State Council.
Article 23 The securities regulatory authority
under the State Council shall be in charge of
the examination and approval process in respect
of the applications for share issuance in
accordance with the statutory conditions. The
procedures for examination and approval shall be
made public and supervised pursuant to law.
The persons involved in the examination and
approval process in respect of share issuance
applications shall not have any interests to
share with the applicants, shall not directly or
indirectly accept any gifts from the applicants,
shall not hold any shares issued by the
applicants whose applications have been examined
and approved by them, and shall not have any
contact with the applicants in private.
The department authorized by the State Council
shall examine and grant the applications for
issuance of corporate bonds on the basis of the
provisions of the two preceding paragraphs.
Article 24 The securities regulatory authority
under the State Council or the department
authorized by the State Council shall, within
three months from the date of acceptance of
application documents for securities issuance,
decide in accordance with the statutory
conditions and procedures whether to grant or
not to grant approval. The time used by an
issuer to supplement or to revise the
application documents in compliance with the
requirements shall not be calculated into the
aforementioned three-month period; where it
decides not to grant approval, it shall state
the reasons.
Article 25 Once an application for securities
issuance is approved, the issuer shall, in
accordance with the provisions of laws or
administrative regulations, release the
documents of public offering and solicitation
prior to effecting the public issuance of the
securities, and place such documents at
designated places for public information.
Before the information of a securities issuance
is made known to the public pursuant to law, no
one who possesses such information shall make
public or disclose such information.
No issuer shall issue its securities before the
documents of public offering and solicitation
are released.
Article 26 Where the securities regulatory
authority under the State Council or the
department authorized by the State Council finds
that the decision it has made on granting
approval to the issuance of securities is not in
conformity with the statutory conditions or
procedures, if the issuance in question has not
been effected, it shall revoke the approval and
call off the issuance; if the issuance in
question has been effected but the listing has
not, it shall revoke the decision on approval,
and the issuer shall return the proceeds to the
holders of the securities at the offering price
plus the interest at the equivalent bank deposit
rate for the corresponding period; the sponsor
shall be jointly and severally liable together
with the issuer, unless the former can establish
a lack of fault on its part; and the controlling
shareholders or the persons in practical control
of the issuer at fault shall be jointly and
severally liable together with the issuer.
Article 27 After completion of share issuance
pursuant to law, any changes in the business and
earnings of the issuer shall be taken care of by
the issuer itself, whereas the investment risks
resulting from such changes shall be borne by
the investors themselves.
Article 28 Where an issuer is to issue
securities to non-specific persons, which
according to laws or administrative regulations
should be underwritten by a securities company,
the issuer shall enter into an underwriting
agreement with the securities company.
Securities underwriting business may be
conducted on an agency basis or a principal
basis.
A securities underwriting on an agency basis
refers to such a situation where the
underwriting securities company sells the
securities for account of the issuer and returns
all the unsold securities to the issuer at the
end of the underwriting period.
A securities underwriting on a principal basis
refers to such a situation where the securities
company, according to the underwriting
agreement, purchases all of the securities to be
offered by the issuer, or purchases all of the
unsold securities of the issuer at the end of
the underwriting period.
Article 29 An issuer that is to issue securities
publicly shall have the right to make its own
decision in selecting securities companies for
underwriting pursuant to law. Securities
companies shall not employ any means of
illegitimate competition in soliciting
securities underwriting business.
Article 30 To underwrite securities, a
securities company shall enter into to an
agreement of underwriting on an agency basis or
an agreement of underwriting on a principal
basis with the issuer, specifying the following
matters:
(1) the names and domiciles of the parties and
the names of their legal representatives;
(2) the types, quantities, amounts of money and
offering prices of the securities underwritten
on an agency basis and on a principal basis
respectively;
(3) the period of underwriting on an agency
basis or a principal basis and the starting and
ending dates thereof;
(4) the methods of payment of subscription money
for underwriting on an agency basis or on a
principal basis and the dates thereof;
(5) the fees for underwriting on an agency basis
or on a principal basis and the settlement
methods thereof;
(6) the liabilities for breach of agreement; and
(7) such other matters as may be so prescribed
by the securities regulatory authority under the
State Council.
Article 31 For underwriting securities, a
securities company shall check the offering and
solicitation documents for public issuance as to
their truthfulness, accuracy and completeness;
it shall not carry out any sales activities if
it finds any false entries, misleading
statements or major omissions therein; and in
the event that the sales activities thereof have
already begun, such activities must be suspended
immediately and remedial measures must be taken
accordingly.
Article 32 Where the overall face vale of
securities to be issued to non-specific persons
exceeds 50 million yuan, the underwriting
thereof shall be conducted by an underwriting
syndicate. An underwriting syndicate shall be
composed of the securities companies acting as
lead-underwriters and the others as
participating underwriters.
Article 33 The longest allowable duration for
underwriting securities on an agency basis or on
a principal basis shall not exceed 90 days.
During the periods of underwriting on an agency
basis or on a principal basis, a securities
company shall ensure that the securities so
underwritten first go to the subscribers and
shall not pre-allot the securities underwritten
on an agency basis to itself, or purchase in
advance and retain the securities underwritten
on a principal basis itself.
Article 34 Where an issuer offers shares at a
premium, the offering price thereof shall be
determined through negotiation between the
issuer and the securities underwriting
companies.
Article 35 Where shares are offered through
underwriting on an agency basis, if the shares
actually sold to investors are less than 70% of
the shares intended to be publicly issued by the
end of the underwriting period, the offering
shall be deemed a failure. The issuer shall
return the proceeds to the subscribers of the
shares at the offering price plus interest at
the equivalent bank deposit rate for the
corresponding period.
Article 36 At the expiration of the period of
time for publicly offered shares underwritten on
an agency basis or on a principal basis, the
issuers shall, within the prescribed time limit,
submit a report accounting for the share
issuance to the securities regulatory authority
under the State Council for the record.
Chapter III Trading of Securities
Section 1 General Regulations
Article 37 Securities purchased and sold
pursuant to law by the parties to a securities
transaction must be securities issued and
delivered pursuant to law.
Securities not issued pursuant to law shall not
be purchased and sold.
Article 38 No shares, corporate bonds or other
securities issued pursuant to law, restrictive
provisions on the periods of transfer of which
have been stipulated by law, shall be purchased
or sold within such periods.
Article 39 Shares, corporate bonds and other
securities publicly issued pursuant to law shall
be listed for trading on lawfully established
stock exchanges, or transferred at other
securities trading sites approved by the State
Council.
Article 40 The trading of securities listed on
the stock exchanges shall be carried out in an
open and centralized manner or in such other
manners as may be so approved by the securities
regulatory authority under the State Council.
Article 41 Securities purchased and sold by the
parties to a securities transaction may take the
form of scrip or such other forms as may be so
prescribed by the securities regulatory
authority under the State Council.
Article 42 Securities shall be traded in spot
transaction or such other ways as may be so
prescribed by the State Council.
Article 43 The business persons of the stock
exchanges, securities companies and securities
registrar and clearance institutions, the staff
members of the securities regulatory
authorities, and other persons prohibited by
laws or administrative regulations from
participating in share trading shall not, while
in office or within the statutory periods of
time, hold, purchase or sell any shares directly
or under assumed names or names of other
persons, nor shall they receive or accept any
shares given by others.
At the time of becoming a person as described in
the preceding paragraph, one must have his
previously held shares transferred pursuant to
law.
Article 44 The stock exchanges, securities
companies and securities registrar and clearance
institutions shall keep their clients’ accounts
confidential pursuant to law.
Article 45 Securities service institutions and
their staff members that produce such documents
as auditing reports, asset valuation reports and
legal opinions for share issuance shall not
purchase or sell such shares during the period
of underwriting and within six months
thereafter.
In addition to the provisions in the preceding
paragraph, securities service institutions and
their staff members that produce such documents
as auditing reports, asset valuation reports and
legal opinions for listed companies shall not
purchase or sell the shares concerned from the
date of accepting the entrustment of the listed
companies until five days after such documents
are made known to the public.
Article 46 The fees charged for securities
transactions must be reasonable and the items
for which fees are charged, the rates of the
fees and methods of fee collection must be made
known to the public.
The uniformed charging items, standards and
measures for securities trading shall be
prescribed by the relevant departments in charge
under the State Council.
Article 47 Where a director, supervisor or
senior manager of a listed company, or a
shareholder who holds 5% or more of the shares
of a listed company sells the shares of the
company within six months of purchasing such
shares, or repurchases the shares within six
months of selling such shares, the gains
therefrom, if any, shall belong to the company,
and the board of directors of the company shall
recover such gains. However, if a securities
company comes to hold 5% or more of the shares
as a result of absorbing the unsold shares under
the terms of an underwriting on a principal
basis, it shall not be subject to the
restriction of the six-month period when selling
such shares.
Where the board of directors of the company
fails to take action in accordance with the
provisions of the preceding paragraph, the
shareholders of the company shall have the right
to demand it to act within 30 days. Where the
board of directors of the company fails to take
action within the said time limit, the
shareholders shall have the right to initiate,
in their own name, a lawsuit directly in a
people’s court for the benefit of the company.
Where the board of directors of the company
fails to take action in accordance with the
provision of the first paragraph, the directors
who are accountable thereto shall be held
jointly and severally liable pursuant to law.
Section 2 Listing of Securities
Article 48 To apply for the listing and trading
of securities, the applicant shall submit an
application to a stock exchange, which shall,
pursuant to law, examine and the application
before giving consent, both sides shall enter
into a listing agreement.
Stock exchanges shall arrange the listing and
trading of government bonds according to the
decision of the department authorized by the
State Council.
Article 49 For applying for the listing and
trading of shares, corporate bonds convertible
into shares or such other securities which are
subject to the sponsorship system as prescribed
by laws or administrative regulations, it is
necessary to engage the institutions with
sponsorship qualifications to act as sponsors
thereof.
The provisions of the second and third paragraph
of Article 11 of this Law are applicable to
sponsors for listing.
Article 50 To apply for the listing of shares, a
company limited by shares shall meet the
following conditions:
(1) Its shares have been issued publicly with
the approval of the securities regulatory
authority under the State Council;
(2) The total share capital of the company is
not less than 30 million yuan;
(3) Its publicly-offered shares amount to 25% or
more of the total shares of the company; where
the total share capital of the company exceeds
400 million yuan, the percentage of the
publicly-offered shares is 10% or more; and
(4) The company has not committed any major
violations of law and has made no false entries
in its financial statements in the three years
immediately preceding the application.
Stock exchanges may set higher conditions for
listing than the ones provided under the
preceding paragraph, and submit them to the
securities regulatory authority under the State
Council for approval.
Article 51 The State encourages the companies
that conform to the industrial policies and meet
the conditions for listing to have their shares
listed for trading.
Article 52 To apply for the listing and trading
of shares, a company shall submit the following
documents to a stock exchange:
(1) the listing submission;
(2) the resolution of the shareholders general
assembly on applying for the listing of shares;
(3) the articles of association of the company;
(4) the business license of the company;
(5) the financial statements of the company
covering the three years immediately preceding
the application which are audited by an
accounting office pursuant to law;
(6) the legal opinions and instrument of
sponsorship for listing;
(7) the most recent prospectus; and
(8) such other documents as may be so prescribed
in the listing rules of the stock exchange.
Article 53 Once an application for the listing
and trading of shares is examined and granted by
the stock exchange, the company that has entered
into a listing agreement shall, within the
specified time limit, release the relevant
documents for share listing and place such
documents at the designated places for public
information.
Article 54 In addition to the release of the
documents provided under the preceding Article,
a company that has entered into a listing
agreement shall also make the following matters
known to the public:
(1) the designated commencing date for the
shares to be traded on the stock exchange;
(2) the name list of the top 10 shareholders of
the company and their respective shareholdings;
(3) the persons in practical control of the
company; and
(4) the names of the directors, supervisors and
senior managers and their respective holdings of
the shares and bonds of the company.
Article 55 Where a listed company is under any
one of the following circumstances, the stock
exchange shall decide to suspend the listing for
trading of its shares:
(1) It no longer meets the conditions for
listing due to the changes in the total share
capital, shareholding distribution, etc. of the
company;
(2) It fails to follow the rules to disclose its
financial position, or makes false entries in
its financial statements, which may mislead
investors;
(3) It has committed major violations of law;
(4) It has recorded losses for each of the three
immediately preceding years; and
(5) Such other circumstances as may be so
prescribed in the listing rules of the stock
exchange.
Article 56 Where a listed company is under any
one of the following circumstances, the stock
exchange shall decide to terminate the listing
for trading of its shares:
(1) It no longer meets the conditions for
listing due to the changes in the total share
capital, shareholding distribution, etc. of the
company and has failed to meet such conditions
within the specified time limit set by the stock
exchange;
(2) It fails to follow the rules to disclose its
financial position, or makes false entries in
its financial statements and refuses to make
corrections thereto;
(3) It has recorded losses for each of the three
immediately preceding years and has failed to
generate profit in the fiscal year thereafter;
(4) It has been dissolved or declared bankrupt;
and
(5) Such other circumstances as may be so
prescribed in the listing rules of the stock
exchange.
Article 57 To apply for the listing and trading
of corporate bonds, a company shall meet the
following conditions:
(1) The maturity of the corporate bonds is not
less than one year;
(2) The actually issued amount of the corporate
bonds is not less than 50 million yuan; and
(3) It continues to meet the statutory
conditions for issuing corporate bonds at the
time of applying for listing.
Article 58 To apply for the listing and trading
of corporate bonds, a company shall submit the
following documents to a stock exchange:
(1) the listing submission;
(2) the resolution of the board of directors on
applying for the listing of corporate bonds;
(3) the articles of association of the company;
(4) the business license of the company;
(5) the method for raising funds through
issuance of corporate bonds;
(6) the amount of the corporate bonds actually
issued; and
(8) such other documents as may be so prescribed
in the listing rules of the stock exchange.
To apply for the listing and trading of
corporate bonds convertible into shares, a
company shall also furnish an instrument of
sponsorship for listing produced by a sponsor.
Article 59 Once an application for the listing
and trading of corporate bonds is examined and
granted by the stock exchange, the company that
has entered into a listing agreement shall,
within the specified time limit, release the
documents for the listing of corporate bonds and
other relevant documents and place its
application documents at the designated places
for public information.
Article 60 Where a company is under any one of
the following circumstances after the listing
and trading of its corporate bonds, the stock
exchange shall decide to suspend the listing and
trading of the company’s corporate bonds:
(1) It has committed major violations of law;
(2) It no longer meets the conditions for
listing of corporate bonds due to a drastic
change in the company’s situation;
(3) The funds raised from the issuance of the
corporate bonds are not used in accordance with
the examined and approved purposes;
(4) It fails to perform its duties in conformity
with the method for raising funds through
issuance of corporate bonds; and
(5) It has recorded losses for each of the two
immediately preceding years.
Article 61 Where a company is under any one of
the circumstances specified in Subparagraphs (1)
and (4) of the preceding Article and the
seriousness of the consequences thereof has been
established, or where a company is under any one
of the circumstances specified in Subparagraph
(2), (3) and (5) of the preceding Article and
such circumstances have not been dispelled
within the specified time limit, the stock
exchange shall decide to terminate the listing
and trading of the company’s corporate bonds.
Where a company is dissolved or declared
bankrupt, the stock exchange shall terminate the
listing and trading of the company’s corporate
bonds.
Article 62 Where a company is not satisfied with
the decision made by a stack exchange on denial,
suspension or termination of listing, it may
apply for reconsideration to the review body
established under the stock exchange.
Section 3 Continuous Disclosure of Information
Article 63 The information disclosed by an
issuer or a listed company pursuant to law must
be truthful, accurate and complete and shall not
contain any false entries, misleading statements
or major omissions.
Article 64 Once public issuance of shares
pursuant to law is examined and approved by the
securities regulatory authority under the State
Council, or public issuance of corporate bonds
pursuant to laws is examined and approved by the
department authorized by the State Council, the
prospectus of share offering or the method for
raising funds through issuance of corporate
bonds shall be released. Where new shares or
corporate bonds are to be issued publicly
pursuant to laws, the financial statements of
the issuer shall also be released.
Article 65 A listed company and a company whose
corporate bonds are listed for trading shall,
within two months immediately following the end
of the first half of each fiscal year, submit to
the securities regulatory authority under the
State Council and the stock exchange its interim
report containing the following contents and
release the same:
(1) the financial statements and state of
business of the company;
(2) any major litigation involving the company;
(3) any changes in the shares or corporate bonds
issued by the company;
(4) any important matters presented for
consideration to the shareholders general
assembly of the company; and
(5) such other matters as may be so prescribed
by the securities regulatory authority under the
State Council.
Article 66 A listed company and a company whose
corporate bonds are listed for trading shall,
within four months immediately following the end
of each fiscal year, submit to the securities
regulatory authority under the State Council and
the stock exchange its annual report containing
the following contents and release the same:
(1) the general situation of the company;
(2) the financial statements and state of
business of the company;
(3) a brief introduction to the directors,
supervisors and senior managers of the company
and their respective shareholdings in the
company;
(4) the shares or corporate bonds already issued
by the company, including the name list of the
top 10 shareholders of the company and their
respective shareholdings;
(5) the persons in practical control of the
company; and
(6) such other matters as may be so prescribed
by the securities regulatory authority under the
State Council.
Article 67 If a major event occurs that may have
a considerable effect on the share trading price
of a listed company and such event has not
become known to investors, the listed company
shall immediately submit a provisional report
about the situation of such event to the
securities regulatory authority under the State
Council and the stock exchange and release the
same, explaining the causes, current status and
possible legal consequences of such event.
One of the following circumstances shall
constitute a major event referred to in the
preceding paragraph:
(1) a major change in the company’s business
policy or scope of business;
(2) a decision made by the company concerning a
major investment or asset purchase;
(3) an important contract concluded by the
company which may have a significant effect on
the assets, liabilities, rights and interests,
or business results of the company;
(4) the incurrence of significant debts by the
company, or its default on significant debts at
maturity through its breach of contract;
(5) the incurrence by the company of a major
deficit or a major loss;
(6) a major change in the external conditions
relating to the production or business operation
of the company;
(7) replacement of the directors, one-third or
more of the supervisors or managers of the
company;
(8) a considerable change relating to the
respective shareholdings of the persons who hold
5% or more of the shares of the company, or to
the control of the company by the persons in
practical control;
(9) a decision made by the company to reduce its
share capital, to merge, to divide, to dissolve
or to apply for bankruptcy;
(10) a major litigation in which the company is
involved, or a resolution made by the
shareholders general assembly or the board of
directors of the company is rescinded or
nullified pursuant to law;
(11) the initiation of an investigation by a
judiciary organ on grounds of a suspected crime
involving the company, or the imposition of a
compulsory measure by a judiciary organ on
grounds of a suspected crime involving a
director, supervisor or senior manager of the
company; and
(12) such other events as may be so prescribed
by the securities regulatory authority under the
State Council.
Article 68 The directors and/or senior managers
of a listed company shall sign off their written
opinions to confirm the periodical reports of
the company.
The board of supervisors of a listed company
shall review the periodical reports of the
company prepared by the boards of directors and
provide its written opinions after review.
The directors, supervisors and senior managers
of a listed company shall ensure the
truthfulness, accuracy and completeness of the
information disclosed by the company.
Article 69 Where there are false entries,
misleading statements or major omissions in the
prospectus of share offering, the method for
raising funds through issuance of corporate
bonds, the financial statements, the listing
submission documents, the annual reports, the
interim reports, the provisional reports and
other materials for information disclosure
released by an issuer or a listed company, thus
causing losses to investors in securities
trading, the issuer or listed company shall be
liable for compensation; the directors,
supervisors, senior managers and other directly
accountable persons of the issuer or listed
company as well as the sponsors and securities
companies engaged for underwriting shall be
jointly and severally liable for compensation
together with the issuer or listed company,
unless one can establish a lack of fault on
one’s part; the controlling shareholders or
persons in practical control of the issuer or
listed company at fault shall be jointly and
severally liable for compensation together with
the issuer or listed company.
Article 70 The information which must be
disclosed pursuant to law shall be released
through the media designated by the securities
regulatory authority under the State Council,
and shall be placed simultaneously at the
domicile of the company and stock exchange for
public information.
Article 71 The securities regulatory authority
under the State Council shall exercise
supervision in respect of the annual reports,
interim reports, provisional reports of listed
companies and the release thereof, in respect of
their allocation or placement of new shares, and
in respect of the activities of the controlling
shareholders of listed companies and the persons
who are obligated to disclose information.
Before release which must be made by a company
in accordance with laws or administrative
regulations, the securities regulatory
authorities, stock exchanges, sponsors,
securities companies engaged for underwriting
and the persons concerned shall not disclose the
contents thereof.
Article 72 Where a stock exchange decides to
suspend or terminate the listing and trading of
a security, it shall make an announcement
thereof in a timely manner and report such
decision to the securities regulatory authority
under the State Council for records.
Section 4 Prohibited Trading Activities
Article 73 Persons possessing inside information
relating to securities trading and persons
obtaining such information unlawfully are
prohibited from making use of such inside
information in securities trading activities.
Article 74 Persons possessing inside information
relating to securities trading include:
(1) the directors, supervisors and senior
managers of an issuer;
(2) the shareholders holding 5% or more of the
shares of a company and the directors,
supervisors and senior managers of such
shareholders, as well as the persons in
practical control of a company and the
directors, supervisors and senior managers of
such persons;
(3) a company held by an issuer and the
directors, supervisors and senior officers of
such company;
(4) the persons with access to the relevant
inside information by virtue of their positions
in a company;
(5) the staff members of the securities
regulatory authorities and other persons who
perform their statutory administrative duties in
respect of the issuance and trading of
securities;
(6) the relevant staff members of the sponsors,
securities companies engaged for underwriting,
stock exchanges, securities registrar and
clearance institutions and securities service
institutions; and
(7) such other persons as may be so prescribed
by the securities regulatory authority under the
State Council.
Article 75 In the course of securities trading,
any unpublished information relating to the
business or financial position of a company, or
carrying significant effect on the market price
of the securities of a company, shall constitute
inside information.
All of the following information falls into the
category of inside information:
(1) the major events specified in the second
paragraph of Article 67 of this Law;
(2) a company’s plan for profit distribution or
capital increase;
(3) a major change in the share capital
structure of a company;
(4) a major change in the surety for debts of a
company;
(5) any pledge, disposition or retirement of a
principal business asset of a company, the value
of a single transaction of which exceeds 30
percent of the total value of such asset;
(6) potential liability for major losses to be
assumed in accordance with law as a result of
the activities of a director, supervisor or
senior manager of a company;
(7) the plans relating to the acquisition of a
listed company; and
(8) such other important information having an
obvious effect on the trading price of
securities as may be so defined by the
securities regulatory authority under the State
Council.
Article 76 Persons possessing inside information
relating to securities trading and persons
obtaining inside information unlawfully shall
not, prior to the publication of such inside
information, purchase or sell the securities of
the company concerned, or disclose such
information, or suggest other persons trade in
such securities.
Where, with respect to the acquisition of the
shares of a listed company by a natural person,
legal person or other organization that holds 5%
or more of the shares of the company
individually or jointly with others through
agreements or other arrangements, there are
other provisions under this Law, such other
provisions shall govern.
Where insider trading causes losses to
investors, the traders shall be held liable for
the losses pursuant to law.
Article 77 No one is allowed to manipulate the
securities markets in the following ways:
(1) conducting allied or incessant purchasing
and selling individually or in conspiracy with
another person by building up an ascendancy of
funds or shareholdings or taking advantage of
information, thus manipulating the price or
volume of securities trading;
(2) conducting bidirectional securities
transactions in collusion with another person by
following previously fixed timing, price and
manner, thus affecting the price or volume of
securities trading;
(3) conducting securities transactions among the
accounts actually controlled by oneself, thus
affecting the price or volume of securities
trading; and
(4) manipulating the securities markets by other
means.
Where manipulation of the securities markets
causes losses to investors, the manipulator
shall be held liable for compensation pursuant
to law.
Article 78 State functionaries and employees and
the relevant persons of the media are prohibited
from fabricating or disseminating false
information so as to disrupt the securities
markets.
In the course of securities trading, stock
exchanges, securities companies, securities
registrar and clearance institutions, securities
service institutions and their employees as well
as the association of securities industry and
the securities regulatory authorities and their
staff members are prohibited from making
misrepresentation or rendering misleading
information.
The media must disseminate information of the
securities markets in a truthful and objective
manner and are prohibited from misleading the
public.
Article 79 Securities companies and their
employees are prohibited from conducting any of
the following fraudulent activities to the
detriment of the interests of clients:
(1) purchasing and selling securities for
clients against their entrustment;
(2) failing to provide, within the specified
period of time, to clients written documents to
confirm transactions;
(3) misappropriating the securities entrusted by
clients for trading, or the funds in the
accounts of clients;
(4) purchasing or selling securities for clients
without their entrustment, or purchasing and
selling securities by making use of the names of
clients;
(5) inveigling clients into pursuing unwarranted
securities transactions in order to charge
commissions;
(6) via the media or other means, giving or
spreading false information or information that
misleads investors; and
(7) other activities against the clients’
expression of their true intention to the
detriment of the interests of clients.
Where defrauding of a client causes losses to
the client, the wrongdoer shall be held liable
for the losses pursuant to law.
Article 80 Legal persons are prohibited from
making illegal use of the accounts of other
persons’ to conduct securities transactions, and
are prohibited from lending the securities
accounts of their own or other persons’.
Article 81 The channels for funds to flow into
the markets shall be broadened pursuant to law,
and funds are prohibited from flowing into the
stock markets unlawfully.
Article 82 No one is allowed to misappropriate
public funds for securities trading.
Article 83 Where enterprises owned by the State
or controlled by State assets purchase and sell
the shares listed for trading, they must observe
the relevant provisions of the State.
Article 84 Where stock exchanges, securities
companies, securities registrar and clearance
institutions, securities service institutions
and their employees find any prohibited trading
activities in securities trading, they shall
report such activities to the securities
regulatory authorities without delay.
Chapter IV Acquisition of Listed Companies
Article 85 An investor may acquire a listed
company through a tender offer, a negotiated
acquisition, or other lawful means.
Article 86 When, through securities trading on a
stock exchange, the shareholding of an investor,
or the deemed joint-shareholding of an investor
and others in virtue of agreements or other
arrangements, has reached 5% of the issued
shares of a listed company, the investor shall,
within three days from the date on which such
shareholding becomes a fact, report in writing
to the securities regulatory authority under the
State Council and the stock exchange, inform the
said listed company of the fact and make an
announcement thereof. The investor shall not
continue to purchase or sell the share of the
said listed company during the period of time
mentioned above.
When the shareholding of an investor, or the
deemed joint-shareholding of an investor and
others in virtue of agreements or other
arrangements, has reached 5% of the issued
shares of a listed company, every 5% increase or
decrease in such shareholdings thereafter shall
be reported and announced in accordance with the
provisions of the preceding paragraph. During
the period of report and within two days after
the report and announcement, the investor shall
not further purchase or sell the shares of the
listed company.
Article 87 The written report and announcement
made in accordance with the provisions in the
preceding Article shall include the following
contents:
(1) the names and domiciles of the shareholders;
(2) the description and quantity of the shares
held; and
(3) the date on which shareholding or the
increase or decrease in shareholdings has
reached the statutory percentage.
Article 88 Where through securities trading on a
stock exchange, the shareholding of an investor,
or the deemed joint-shareholding of an investor
and others in virtue of agreements or other
arrangements, has reached 30% of the issued
shares of a listed company, if further
acquisition is to be pursued, a tender offer of
acquisition shall be launched pursuant to law to
all of the shareholders of the listed company
for acquiring all or part of the shares of the
listed company.
In the tender offer for acquiring part of the
shares of a listed company shall be stated that
in case the number of the shares committed to
sell by the shareholders of the company to be
acquired exceeds the number of the shares
proposed to acquire, the acquirer shall proceed
on a prorating basis.
Article 89 In order to launch a tender offer of
acquisition in accordance with the provisions in
the preceding Article, the acquirer must submit
a report on acquisition of the listed company in
advance to the securities regulatory authority
under the State Council clearly stating the
following items:
(1) the name and domicile of the acquirer;
(2) the decision of the acquirer concerning the
acquisition;
(3) the name of the listed company intended to
acquire;
(4) the purposes of the acquisition;
(5) the detailed description of the shares under
acquisition and the number of the shares
proposed to acquire;
(6) the period and price of the acquisition;
(7) the funds needed for the acquisition and the
assurance thereof; and
(8) the shareholding percentage of the acquirer
in the total shares of the company to be
acquired at the time of submitting the report on
acquisition of the listed company.
The acquirer shall simultaneously submit the
report on acquisition of the listed company to
the stock exchange.
Article 90 After 15 days from the date of
submitting its report on acquisition of a listed
company in accordance with the provision in the
preceding Article, the acquirer shall announce
its tender offer of acquisition. During the
period of time mentioned above, if the
securities regulatory authority under the State
Council finds that the said report is not in
conformity with the provisions of laws or
administrative regulations, it shall, in a
timely manner, inform the acquirer of the fact,
and the acquirer shall not announce its tender
offer of acquisition.
The period of acquisition stated in a tender
offer of acquisition shall be not less than 30
days but not more than 60 days.
Article 91 An acquirer shall not rescind its
acquisition offer within the committed period of
time stated in the tender offer of acquisition.
In case the acquirer deems it necessary to
modify the terms of its acquisition offer, it
must submit a report in advance to the
securities regulatory authority under the State
Council and the stock exchange, and make the
announcement thereof upon approval.
Article 92 All the terms stated in a tender
offer of acquisition shall be equally applicable
to all the shareholders of the company to be
acquired.
Article 93 Where a tender offer of acquisition
is pursued, the acquirer shall not, within the
period of acquisition, sell the shares of the
company to be acquired, or purchase the shares
of the said company in a manner other than the
one as stipulated in the tender offer of
acquisition, or on terms more favorable than the
ones as stipulated in such offer.
Article 94 Where negotiated acquisition is
pursued, the acquirer and the shareholders of
the company to be acquired may effect an
assignment of shares through negotiation in
accordance with the provisions of laws or
administrative regulations.
When acquiring a listed company by way of
negotiation, the acquirer shall, within three
days upon reaching an agreement, submit a
written report to the securities regulatory
authority under the State Council and the stock
exchange, and make an announcement thereof.
An acquisition agreement shall not be executed
prior to its announcement.
Article 95 Where negotiated acquisition is
pursued, the parties to the agreement may
provisionally entrust a securities registrar and
clearance institution with the safekeeping of
the shares to be assigned under the agreement
and deposit the funds for acquisition with the
designated banks.
Article 96 Where negotiated acquisition is
pursued, when the shareholding of an acquirer,
or the deemed joint-shareholding of an acquirer
and others in virtue of agreements or other
arrangements, has reached 30% of the issued
shares of a listed company and the acquirer
intends to pursue further acquisition, a tender
offer of acquisition shall be launched to all of
the shareholders of the listed company for
acquiring all or part of the shares of the
company, except where exempted by the securities
regulatory authority under the State Council
from launching a tender offer of acquisition.
When acquiring the shares of listed company by
way of a tender offer in accordance with the
provisions in the preceding paragraph, the
acquirer shall observe the provisions of
Articles 89 through 93 of this Law.
Article 97 Where at the expiration of the period
of acquisition, the spread of share ownership of
the acquired company is no longer in conformity
with the conditions for listing, the stock
exchange shall, pursuant to law, terminate the
listing and trading of the shares of the listed
company; and the remaining holders of the shares
of the acquired company shall have the right to
sell their shares to the acquirer on the same
terms as stipulated in the tender offer of
acquisition, and the acquirer shall acquire such
shares accordingly.
Where, after completion of the acquisition, the
acquired company no longer possesses the
qualifications of a company limited by shares,
it shall be transformed into another form of
enterprise pursuant to law.
Article 98 The shares of an acquired listed
company held by the acquirer in the course of
acquisition of a listed company shall not be
assigned within 12 months after completion of
the acquisition.
Article 99 Where, after completion of the
acquisition, the acquired company is to be
merged into the acquirer and is therefore to be
dissolved, the original shares of the dissolved
company shall be replaced by the acquirer
pursuant to law.
Article100 An acquirer shall, within 15 days
after completion of the acquisition, submit a
report on the acquisition to the securities
regulatory authority under the State Council and
the stock exchange, and make an announcement
thereof.
Article 101 With respect to acquisition of the
shares of listed companies which are held by the
investment institutions authorized by the State,
such acquisition shall be pursued in accordance
with the provisions of the State and shall be
subject to approval by the relevant department
in charge.
The securities regulatory authority under the
State Council shall formulate specific measures
for acquisition of listed companies in
accordance with the principles of this Law.
Chapter V Stock Exchanges
Article 102 A stock exchange is a legal person
performing self-regulatory governance which
provides the premises and facilities for
centralized trading of securities, organizes and
supervises such securities trading.
The establishment and dissolution of a stock
exchange shall be subject to decision by the
State Council.
Article 103 The articles of association must be
formulated where a stock exchange is
established.
The formulation and modification of the articles
of association of a stock exchange shall be
subject to approval by the securities regulatory
authority under the State Council.
Article 104 The words “stock exchange” shall be
included in the name of a stock exchange. No
other units or individuals shall use “stock
exchange” or similar words in their names.
Article 105 A stock exchange may allocate
fee-generated revenues at its discretion, and
such revenues shall first be used to ensure the
regular operation and gradual improvement of the
premises and facilities of the stock exchange.
The accumulated property of a stock exchange
applying a membership system shall belong to the
members and the rights and interests embodied in
such property shall be jointly enjoyed by the
members. Such property shall not be distributed
to the members so long as the stock exchange
exists.
Article 106 A stock exchange shall have a board
of governors.
Article 107 A stock exchange shall have a
general manager, to be appointed and removed by
the securities regulatory authority under the
State Council.
Article 108 A person who is in one of the
following circumstances or the circumstances as
described in Article 147 of the Companies Law of
the People’s Republic of China shall not be
appointed a person in charge of a stock
exchange:
(1) being a person in charge of a stock exchange
or securities registrar and clearance
institution or a director, supervisor or senior
manager of a securities company who has been
removed from office due to violations of law or
rules of discipline, and a five-year period has
not elapsed ever since; and
(2) being a lawyer, certified public accountant
or a professional of an investment consultancy
institution, financial advisory institution,
credit rating institution, asset appraisal
institution or verification institution who has
been disqualified as such due to violations of
law or rules of discipline, and a five-year
period has not elapsed ever since.
Article 109 An employee of a stock exchange,
securities registrar and clearance institution,
securities service institution or securities
company or a staff member of a State organ who
has been expelled due to violations of law or
rules of discipline shall not be recruited as an
employee of a stock exchange.
Article 110 A person who enters a stock exchange
for centralized trading of securities must be a
member of the stock exchange.
Article 111 In order to trade securities, an
investor shall enter into an entrustment
agreement of securities trading with a
securities company and open a securities trading
account with the company, and entrust the
company with the purchasing and selling of
securities on his behalf in writing, through
telephone or by other means.
Article 112 Upon entrustment by an investor, a
securities company shall, in accordance with the
rules of securities trading, put forward a
transaction order and participate in the
centralized floor trading at the stock exchange
and shall bear the liabilities of clearance and
settlement corresponding to the transaction
completed; on the basis of the completed
transaction and in accordance with the rules of
clearance and settlement, the securities
registrar and clearance institution shall
process the clearance and settlement of
securities and funds with the securities company
and effect the procedure of securities
registration and transfer for the client of the
securities company.
Article 113 The stock exchanges shall ensure
fairness of the centralized trading of
securities, make available the real-time
quotations and prices of securities trading, and
formulate and publish the daily charts thereof.
No entities or individuals shall publish the
real-time quotations and prices of securities
trading without permission of the stock
exchanges.
Article 114 In the event of an unexpected
incident that prevents securities trading from
operating regularly, the stock exchanges may
take the measure of a technical halt on the
markets; in the event of an unexpected incident
which occurs due to force majeure, or for the
purposes of maintaining the regular order of
securities trading, the stock exchanges may
decide to suspend the markets.
When stock exchanges take the measure of
technical halt or decide to suspend the markets;
they must report to the securities regulatory
authority under the State Council in a timely
manner.
Article 115 Stock exchanges shall excise
real-time monitoring of securities trading and
submit reports on suspicious trading situations
in accordance with the requirements of the
securities regulatory authority under the State
Council.
Stock exchanges shall oversee the information
disclosure by listed companies and by persons
obligated to make such disclosure, and urge them
to disclose information in a timely and accurate
manner in accordance with law.
Where securities accounts display significantly
suspicious trading situations, the stock
exchange may, if necessary, impose restrictions
on trading by such accounts and shall report
such restrictions to the securities regulatory
authority under the State Council for the
record.
Article 116 A stock exchange shall allocate
certain proportions of its revenues from
transaction fees, membership dues and access
fees to set up risk funds. The risk funds shall
be administered by the board of governors of the
stock exchange.
The specific proportion for allocation and the
measures for use of the risk funds shall be
prescribed by the securities regulatory
authority under the State Council in conjunction
with the finance department of the State
Council.
Article 117 Stock exchanges shall deposit the
collected and accumulated risk funds into the
designated accounts at their current transaction
banks, and shall not make use of the funds
without authorization.
Article 118 Stock exchanges shall, in accordance
with laws or administrative regulations,
formulate rules for listing, trading, membership
administration and other relevant rules and
submit such rules to the securities regulatory
authority under the State Council for approval.
Article 119 In performing his duties related to
securities trading, the person in charge or the
employee of a stock exchange shall recuse
himself where he himself or one of his relatives
is an interested party.
Article 120 Where trade is conducted in
accordance with the trading rules formulated in
accordance with law, the transaction results
thereof shall not be altered. The civil
liabilities to be borne by the persons who
violate the rules in the course of trading shall
not be exempted; and the gains obtained from
trading in violation of the rules shall be dealt
with according to relevant provisions.
Article 121 The persons conducting securities
transactions inside stock exchanges who violate
the relevant trading rules of the stock
exchanges shall be imposed on disciplinary
sanctions by the stock exchanges; if the
circumstances are serious, they shall be
deprived of their qualifications and banned from
entering the floor for securities trading.
Chapter VI Securities Companies
Article 122 The establishment of a securities
company shall be subject to examination and
approval by the securities regulatory authority
under the State Council. No entities or
individuals shall engage in securities business
without approval by the securities regulatory
authority under the State Council.
Article 123 A securities company referred to
under this Law means a company with limited
liability or a company limited by shares
established in accordance with the provisions of
the Companies Law of the People’s Republic of
China to engage in securities business.
Article 124 The following conditions shall be
met for the establishment of a securities
company:
(1) It has the articles of association which are
in conformity with the provisions of laws or
administrative regulations;
(2) Its major shareholders possess sustainable
profitability and enduring trustworthiness and
have no record of major illegal activities for
the three immediately preceding years, and the
net assets of each of them are not less than 200
million yuan;
(3) Its registered capital is in conformity with
the provisions of this Law;
(4) Its directors, supervisors and senior
managers possess the requisite qualifications
for those posts, and its employees possess the
requisite qualifications for securities
business;
(5) It has sufficient risk management and
internal control mechanism;
(6) It has up-to-standard operating premises and
business facilities; and
(7) Such other conditions as may be so
stipulated by laws or administrative regulations
or by the securities regulatory authority under
the State Council and so approved by the State
Council.
Article 125 Subject to approval by the
securities regulatory authority under the State
Council, a securities company may engage in all
or part of the following businesses:
(1) securities brokerage;
(2) securities investment consultancy;
(3) financial advising relating to securities
trading or investment ;
(4) securities underwriting and sponsorship;
(5) proprietary account transactions;
(6) securities asset management; and
(7) other securities businesses.
Article 126 A securities company must have the
words “securities company with limited
liability” or “securities company limited by
shares” included in its name.
Article 127 A securities company that engages in
one or all of the businesses specified in
Subparagraphs (1) through (3) of Article 125 of
this Law, its registered capital shall be 50
million yuan at the minimum; if it engages in
one of the businesses specified in Subparagraphs
(4) through (7), its registered capital shall be
100 million yuan at the minimum; and if it
engages in two or more of the businesses
specified in Subparagraphs (4) through (7), its
registered capital shall be 500 million yuan at
the minimum. The registered capital of a
securities company is the actual paid-in
capital.
The securities regulatory authority under the
State Council may adjust the minimum amount of
the registered capital on the basis of the
principle of prudent regulation and the varying
degrees of risk of the different securities
businesses, but not less than the limits as
provided for under the preceding paragraph.
Article 128 The securities regulatory authority
under the State Council shall, within six months
from the date it accepts an application for
establishment of a securities company, examine
the application in compliance with the statutory
conditions and procedures and on the basis of
the principle of prudent regulation, make a
decision on whether to grant or not to grant the
application, and notify the applicant of the
decision. Where an application is not granted,
the reasons therefor shall be given.
After obtaining approval for establishment of a
securities company, the applicant shall, within
the specified time limit, submit an application
to the company registration authority for
registration and business license.
A securities company shall, within 15 days from
the date it receives its business license, apply
to the securities regulatory authority under the
State Council for a securities business permit.
The securities company shall not commence its
securities business without obtaining a
securities business permit.
Article 129 To establish, acquire or close a
branch office, to alter its business scope or
registered capital, to replace the shareholders
who hold 5% or more interests therein or the
persons in practical control thereof, to modify
a key clause in the articles of association of
the company, to merge, divide, change the form
of the company, to suspend business, to dissolve
or go bankrupt, a securities company must obtain
approval of the securities regulatory authority
under the State Council.
To establish, acquire or participate in a
securities business institution abroad, a
securities company must apply to the securities
regulatory authority under the State Council for
approval.
Article 130 The securities regulatory authority
under the State Council shall set the norms for
risk control of securities companies with
respect to the net capital, the ratio of net
capital to debt, the ratio of net capital to net
assets, the ratio of net capital to the business
scales of proprietary account transactions,
underwriting and asset management, the ratio of
liabilities to net assets, the ratio of current
assets to current liabilities, etc.
A securities company shall not provide finance
or guarantee to its shareholders or the parties
related to the shareholders.
Article 131 Directors, supervisors and senior
managers of a securities company shall be
persons of integrity and honesty and be of good
conduct, being well-versed in laws and
administrative regulations governing securities,
possessing the abilities of business operation
and management needed for performing their
duties and, before taking office, having
acquired the post qualifications approved by the
securities regulatory authority under the State
Council.
A person who is in one the following
circumstances or the circumstances as prescribed
in Article 147 of the Companies Law of the
People’s Republic of China shall not be
appointed to the position of director,
supervisor or senior manager of a securities
company:
(1) being a person in charge of a stock exchange
or securities registrar and clearance
institution or a director, supervisor or senior
manager of a securities company who has been
removed from office due to violations of law or
rules of discipline, and a five-year period has
not elapsed ever since; and
(2) being a lawyer, certified public accountant
or a professional of an investment consultancy
institution, financial advisory institution,
credit rating institution, asset appraisal
institution or verification institution who has
been disqualified as such due to violations of
law or rules of discipline, and a five-year
period has not elapsed ever since.
Article 132 An employee of a stock exchange,
securities registrar and clearance institution,
securities service institution or securities
company or a staff member of a State organ who
has been expelled due to violations of law or
rules of discipline shall not be recruited as an
employee of a securities company.
Article 133 Staff members of State organs and
other persons who are prohibited by laws or
administrative regulations from holding
concurrent positions in companies shall not
concurrently hold any posts in any securities
companies.
Article 134 The State maintains a fund for
protection of securities investors. The fund for
protection of securities investors shall be
composed of the funds contributed by securities
companies and other funds so raised pursuant to
law. The specific measures for raising, control
and use of the fund shall be formulated by the
State Council.
Article 135 A securities company shall allocate
reserve funds against trading risks from its
annual after-tax profits, which shall be used
for making up the losses in securities trading.
The specific proportion of the allocation
thereof shall be prescribed by the securities
regulatory authority under the State Council.
Article 136 A securities company shall maintain
a comprehensive system of internal control and
adopt effective partitioning measures against
conflict of interests between the company and
clients and among different clients.
A securities company shall conduct brokerage,
underwriting, proprietary account transaction
and securities asset management separately and
shall not mix them up in operation.
Article 137 A securities company must conduct
its proprietary account transactions in its own
name and shall not make use of the name of
another entity or the name of a natural person.
A securities company must use its self-owned
funds or lawfully raised funds to conduct
proprietary account transactions.
A securities company shall not let others use
its accounts for proprietary account
transactions.
Article 138 A securities company enjoys the
right of business autonomy under the law and its
legitimate business operation shall be subject
to no interference.
Article 139 The funds for trade settlement of
the clients of securities companies shall be
deposited with commercial banks, and an
individual account shall be opened in the name
of each client for management of such funds. The
specific measures and implementation thereof
shall be formulated by the State Council.
Securities companies shall not calculate or
include their clients’ funds for trade
settlement and their clients’ securities as part
of their own assets. No entity or individual
shall misappropriate in any manner their
clients’ funds for trade settlement and their
clients’ securities. In case of bankruptcy or
winding-up of a securities company, the clients’
funds for trade settlement and the clients’
securities shall not belong to the bankruptcy
property or property for liquidation. The
clients’ funds for trade settlement and their
securities shall not be sealed up, frozen,
withheld or alienated, or subjected to
compulsory enforcement, except for the purposes
of satisfying the debts of the clients
themselves or under such other circumstances as
provided for by law.
Article 140 To conduct brokerage business, a
securities company shall make available at its
premises the uniformly printed forms of
entrustment for the entrusting parties to
purchase or sell securities. Where other ways of
entrustment are adopted, such entrustment must
be recorded.
With respect to clients’ entrustment for
purchasing or selling securities, no matter
whether a transaction is completed, the records
of entrustment shall be kept at the securities
company for the period of time as specified.
Article 141 Upon accepting the entrustment for
purchasing or selling securities, a securities
company shall, following the rules for trading,
process the securities transactions as an agent
according to the specifications, quantities,
bid-ask manners, price ranges of the securities,
etc. as clearly indicated in the forms of
entrustment, and shall record the transactions
accordingly. Upon completion of the
transactions, the securities company shall
produce the confirmation reports of transactions
in accordance with relevant rules and deliver
the same to the clients.
The corresponding slips confirming the
activities and results of securities
transactions must be true and authentic and
reviewed and verified one by one by persons
other than the ones processing the transactions
so as to ensure correspondence between the
balance of the securities on the book and the
securities actually held.
.
Article 142 The services provided by a
securities company to its clients in terms of
funds or securities for securities trading must
be in conformity with the provisions of the
State Council and approved by the securities
regulatory authority under the State Council.
Article 143 When conducting brokerage business,
a securities company shall not accept the
entrustment of discretionary power by a client
to decide on the timings, types, quantities and
prices of securities transactions.
Article 144 A securities company shall not
undertake in any manner to secure gains or make
up losses to its clients of securities trading.
Article 145 A securities company and its
employees shall not in private accept clients’
entrustment to purchase or sell securities
circumventing the legally established business
premises of the company.
Article 146 Where in the course of securities
trading, an employee of a securities company
follows the instructions of the company, or
violates the trading rules by making use of his
position, the company shall be fully responsible
for the consequences thereof.
Article 147 A securities company shall properly
preserve the account data, entrustment and
transaction records of its clients and the
various data relating to its internal procedures
and business operation. No one shall conceal,
forge, distort or destroy those data. The
aforementioned data shall be preserved for a
period of not less than 20 years.
Article 148 Securities companies shall, in
accordance with relevant regulations, submit
information and materials relating to their
business management, including their business
operations and financial affairs, to the
securities regulatory authority under the State
Council. The securities regulatory authority
under the State Council has the power to demand
securities companies, their shareholders or
persons in practical control to provide relevant
information and materials within the designated
period of time.
The information and materials submitted or
provided by a securities company, its
shareholders or persons in practical control to
the securities regulatory authority under the
State Council must be truthful, accurate and
complete.
Article 149 Where the securities regulatory
authority under the State Council considers
necessary, it shall entrust an accounting office
or an asset appraisal institution to audit or
appraise a securities company with respect to
its financial position, internal control and
asset value of the company. The specific
measures thereof shall be formulated by the
securities regulatory authority under the State
Council in conjunction with the relevant
departments in charge.
Article 150 Where the net capital level or other
risk control thresholds of a securities company
is not in conformity with the specified level or
threshholds, the securities regulatory authority
under the State Council shall order the company
to rectify within a specified time limit; if the
company fails to do so at the expiration of the
time limit, or its behavior severely threatens
the steady operation of the company or
jeopardizes the lawful rights and interests of
the clients of the company, the securities
regulatory authority under the State Council may
take the following measures against the company
as the case may be:
(1) to impose restrictions on the business
activities of the company, order it to suspend
part of its businesses, or to withhold approval
with respect to its application for new
businesses;
(2) to withhold approval with respect to its
application for increasing or acquiring business
branches;
(3) to impose restrictions on the profit
distribution of the company, or on the
compensation payments or benefit availabilities
to its directors, supervisors or senior
managers;
(4) to impose restrictions on the alienation of
the property of the company, or the creation of
other rights on its property;
(5) to order the company to replace its
directors, supervisors or senior managers, or to
impose restrictions on their rights;
(6) to order the controlling shareholders to
divest their interests in the company or to
impose restrictions on the exercise of the
shareholder rights of relevant shareholders; or
(7) to revoke the relevant business permits.
Upon completion of rectification, the securities
company shall submit a report to the securities
regulatory authority under the State Council.
The securities regulatory authority under the
State Council shall go through the procedure of
check and acceptance thereupon. Where the risk
control thresholds are met, the relevant
measures taken against the company under the
provisions of the preceding paragraph shall be
removed within three days after completion of
check and acceptance.
Article 151 Where a shareholder of a securities
company makes false capital contribution to or
illegally draws back capital contribution from
the company, the securities regulatory authority
under the State Council shall order him to set
it right within a specified time limit, and may
also order him to divest his interests in the
company.
Before the shareholder mentioned under the
preceding paragraph sets right his illegal
activities or divests his interests in the
company, the securities regulatory authority
under the State Council may impose restrictions
on his shareholder rights.
Article 152 Where a director, supervisor or
senior manager of a securities company fails to
perform his duties diligently, resulting in the
company’s gross violation of laws or rules or
exposing the company to tremendous risks, the
securities regulatory authority under the State
Council may disqualify him for the post and
order the company to replace him.
Article 153 Where a securities company conducts
business against law or incurs tremendous risks,
thus severely undermining the order of the
securities markets or jeopardizing the interests
of investors, the securities regulatory
authority under the State Council may take such
regulatory measures as ordering the company to
suspend business operation for rectification,
putting the company under the trusteeship of, or
having it taken over by, a designated
institution, or terminating the company.
Article 154 During the period when a securities
company is ordered to suspend business operation
for rectification, or is put under trusteeship
or, is to be taken over by, a designated
institution, or is to go into liquidation
pursuant to law, or incurs tremendous risks,
with the approval of the securities regulatory
authority under the State Council, the following
measures may be taken against the directors,
supervisors or senior managers who are directly
accountable to the company and other persons who
are directly responsible:
(1) to notify the boarder control authorities to
prevent them, pursuant to law, from leaving the
country; and
(2) to apply to the judicial organ for banning
them from removing or alienating their property
or disposing of the property by other means, or
creating other rights on their property.
Chapter VII Securities Registrar and Clearance
Institutions
Article 155 A securities registrar and clearance
institution is a not-for-profit legal person
that provides centralized registration,
depository and clearance services for securities
trading.
The establishment of a securities registrar and
clearance institution shall be subject to
approval by the securities regulatory authority
under the State Council.
Article 156 The following conditions shall be
met to establish a securities registrar and
clearance institution:
(1) Its self-owned funds are not less than 200
million yuan;
(2) It has the premises and facilities essential
to services for securities registration,
depository and clearance;
(3) Its principal managers and employees possess
the requisite qualifications for securities
business; and
(4) Such other conditions as may be so
prescribed by the securities regulatory
authority under the State Council.
The name of a securities registrar and clearance
institution shall include the words “securities
registrar and clearance”.
Article 157 A securities registrar and clearance
institution shall perform the following
functions:
(1) to open securities accounts and clearing
accounts;
(2) to process the deposit and transfer of
securities;
(3) to maintain the registers of securities
holders;
(4) to process the clearance and settlement of
securities listed and traded on stock exchanges;
(5) to distribute the gains from securities as
entrusted by an issuer;
(6) to respond to inquiries regarding the
aforementioned businesses; and
(7) such other businesses as may be so approved
by the securities regulatory authority under the
State Council.
Article 158 Registration and clearance of
securities shall be done in a centralized and
unified manner nationwide.
The articles of association and the rules of
business of a securities registrar and clearance
institution shall be formulated in accordance
with law and shall be subject to approval by the
securities regulatory authority under the State
Council.
Article 159 Prior to listing for trading, the
holder of securities shall have all of his
securities deposited with a securities registrar
and clearance institution.
The securities registrar and clearance
institution shall not misappropriate the
securities of its clients’.
Article 160 A securities registrar and clearance
institution shall furnish the issuers of
securities with the register of securities
holders and related materials.
The securities registrar and clearance
institution shall, based on its processed
results of securities registration and
clearance, confirm the fact that an identified
securities holder does own the securities, and
make available the registration materials of
securities holders.
The securities registrar and clearance
institution shall ensure the truthfulness,
accuracy and completeness of the register of
securities holders and the records of
registration and transfer, and shall not
conceal, forge, distort or destroy these
materials.
Article 161 A securities registrar and clearance
institution shall adopt the following measures
to ensure the regular operation of business:
(1) to maintain indispensable service equipment
and sufficient procedures to protect data
safety;
(2) to maintain sufficient management systems
for its business, finance and safety
precautions; and
(3) to maintain a sufficient system for risk
control.
Article 162 A securities registrar and clearance
institution shall properly preserve the original
vouchers of registration, depository and
clearance and the related documents and
materials. The aforementioned materials shall be
preserved for a period of not less than 20
years.
Article 163 A securities registrar and clearance
institution shall establish a fund for
securities clearing risks, which is to be used
to pay for or make up the losses suffered by the
securities registrar and clearance institution
due to settlement breach, technical failures,
operational errors or force majeure.
The fund for securities clearing risks shall be
allocated from the business revenues and gains
of the securities registrar and clearance
institution, and may also be contributed by the
clearing participants on a proportional basis
reflecting their respective volumes of
securities traded.
The measures for raising and controlling the
fund for securities clearing risks shall be
prescribed by the securities regulatory
authority under the State Council in conjunction
with the finance department of the State
Council.
Article 164 The proceeds of the fund for
securities clearing risks shall be deposited in
a special account at a designated bank and
managed under a separate entry.
After settling compensation claims with the
proceeds of the securities clearing fund, the
securities registrar and clearance institution
shall seek recovery from the relevant liable
persons.
Article 165 The application for dissolution
submitted by a securities registrar and
clearance institution shall be subject to
approval by the securities regulatory authority
under the State Council.
Article 166 To entrust a securities company with
the processing of securities trading, an
investor shall apply for opening a securities
account. A securities registrar and clearance
institution shall, in accordance with relevant
regulations, open a securities account for the
investor in the investor’s own name.
In applying for opening an account, the investor
must present the legal documentations to
establish his identity as a Chinese citizen or
his qualifications as a Chinese legal person,
except as may otherwise be prescribed by the
State.
Article 167 When providing settlement netting
services for securities trading, a securities
registrar and clearance institution shall
request the participants in clearing to adhere
to the principle of delivery versus payment, to
deliver securities and funds in full and to
pledge performance bonds.
No one shall use the securities, funds or
performance bonds for a settlement prior to
completion of the settlement.
Where a participant in clearing fails to
discharge its settlement obligations, the
securities registrar and clearance institution
shall have the right to dispose of the property,
mentioned in the preceding paragraph, in
accordance with its business rules.
Article 168 The funds and securities collected
for clearance by a securities registrar and
clearance institution in accordance with the
business rules must be deposited in the special
accounts for clearance and settlement, may only
be used in accordance with the business rules
for the clearance and settlement of the
completed securities transactions, and shall not
be subject to compulsory enforcement.
Chapter VIII Securities Service Institutions
Article 169 To engage in securities service
business, investment consultancy institutions,
financial advisory institutions, credit rating
institutions, asset valuation institutions and
accounting offices must obtain approval of the
securities regulatory authority under the State
Council and the relevant departments in charge.
The administrative measures for examination and
approval of investment consultancy institutions,
financial advisory institutions, credit rating
institutions, asset valuation institutions and
accounting offices, which intend to engage in
securities service business, shall be formulated
by the securities regulatory authority under the
State Council and the relevant departments in
charge.
Article 170 Persons from investment consultancy
institutions, financial advisory institutions
and credit rating institutions, who engage in
securities service business, must possess the
professional knowledge of securities and have at
least two years of experience in securities
business or in securities service business. The
standards for determining the qualifications for
securities business and the administrative
measures in this regard shall be formulated by
the securities regulatory authority under the
State Council.
Article 171 When conducting securities service
business, an investment consultancy institution
and its employees shall not engage in the
following activities:
(1) making securities investment as an agent of
entrusting parties;
(2) undertaking to share the gains and losses
from securities investment with the entrusting
parties;
(3) purchasing and selling the shares of the
listed companies to which the consultancy
institution provides services;
(4 via the media or by other means, giving or
spreading false information or information that
misleads investors; and
(5) such other activities as may be so
prohibited by laws or administrative
regulations.
Where the institution causes losses to investors
due to any of the activities mentioned under the
preceding paragraph, it shall be liable for
compensation pursuant to law.
Article 172 Investment consultancy institutions
and credit rating institutions engaged in
securities service business shall charge service
fees in compliance with the rates or the
measures therefor prescribed by the relevant
department in charge under the State Council.
Article 173 When preparing and producing such
documents as audit reports, asset valuation
reports, financial advisory reports, credit
rating reports or legal opinions for such
securities business activities as securities
issuing, listing and trading, a securities
service institution shall perform its duties
diligently in examining and verifying the
truthfulness, accuracy and completeness of the
contents of the documents and materials on which
their report, etc. are based. Where there are
false entries, misleading statements, or major
omission in the documents prepared and produced
by them, which cause losses to others, they
shall be held jointly and severally liable for
compensation together with the issuers or listed
companies, unless they can establish that they
are faultless.
Chapter IX Securities Industry Association
Article 174 The securities industry association
is a self-regulatory organization of the
securities industry and is a public organization
with the status of a legal person.
Securities companies shall join the securities
industry association.
The organ of power of the securities industry
association is the assembly composed of all
members.
Article 175 The charter of the securities
industry association shall be drawn up by the
assembly of the members and submitted to the
securities regulatory authority under the State
Council for the record.
Article 176 The securities industry association
shall perform the following functions:
(1) to enable members to understand and adhere
to the laws and administrative regulations
governing securities;
(2) to safeguard the lawful rights of members
according to laws and to present their
suggestions and requests to the securities
regulatory authority pursuant to law;
(3) to collect and sort out information on
securities in the service of members;
(4) to formulate rules for members to follow, to
organize vocational training among the employees
of member units, and to promote professional
exchange among members ;
(5) to mediate disputes over securities business
that arise among members or between members and
their clients;
(6) to organize members to study the evolution,
operation and related topics of the securities
industry;
(7) to supervise and inspect the behaviors of
members and to impose disciplinary sanctions on
the members for their violation of laws,
administrative regulations or the charter of the
association; and
(8) such other functions as may be so prescribed
in the charter of the securities industry
association.
Article 177 The securities industry association
shall have a board of governors. The members of
the board of governors shall be elected in
accordance with provisions of the charter of the
association.
Chapter X Securities Regulatory Authority
Article 178 The securities regulatory authority
under the State Council shall exercise
regulation over the securities markets, maintain
order of the markets and ensure the lawful
operation of the markets pursuant to law.
Article 179 The securities regulatory authority
under the State Council shall perform the
following functions in exercising regulation
over the securities markets:
(1) to formulate regulations and rules for the
regulation of the securities markets and
exercise the power of examination or approval
pursuant to law;
(2) to exercise the regulation over the
issuance, listing, trading, registration,
depository and clearance of securities pursuant
to law;
(3) to exercise regulation over the securities
business of securities issuers, listed
companies, securities companies, management
companies of securities investment funds,
securities service institutions, stock exchanges
and securities registrar and clearance
institutions pursuant to law;
(4) to formulate the standards for the
qualifications and code of conduct for
professionals in the securities business
pursuant to law, and to supervise the
implementation thereof;
(5) to supervise and inspect, pursuant to law,
the publication of information concerning the
issuance, listing and trading of securities;
(6) to guide and supervise the activities of the
securities industry association pursuant to law;
(7) to investigate and penalize, pursuant to
law, violations of laws or administrative
regulations governing the securities markets;
and
(8) such other functions as may be so prescribed
by laws or administrative regulations.
The securities regulatory authority under the
State Council may establish a mechanism for
cooperative regulation with the securities
regulatory authorities of other countries or
regions, to facilitate cross-boarder regulation.
Article 180 When performing its duties pursuant
to law, the securities regulatory authority
under the State Council shall have the power to
adopt the following measures:
(1) to conduct on-the-spot inspection of a
securities issuer, listed company, securities
company, management company of securities
investment funds, securities service
institution, stock exchange and securities
registrar and clearance institution pursuant to
law;
(2) to enter the site where suspected violations
of law are committed to conduct investigation
and collect evidence;
(3) to inquire the parties concerned, the units
and individuals related to the events under
investigation and require them to give
explanations to the matters related to the
events under investigation;
(4) to check and duplicate such materials as
property registration and communication records
related to the events under investigation;
(5) to check and duplicate the securities
transaction records, registration and transfer
records, financial and accounting materials of
the units and individuals related to the events
under investigation and other related documents
and materials; to seal up for safekeeping the
documents and materials which may be transferred
to another place, concealed or destroyed;
(6) to inquire about the accounts of funds and
securities and bank accounts of the parties
concerned and of the units and individuals
related to the events under investigation; where
there is evidence to substantiate the fact that
the property involved such as illegal funds and
securities has been or is liable to be
transferred to another place or concealed, or
that important evidence has been or is liable to
be concealed, forged or destroyed, to freeze or
seal up the said accounts with the approval of
the chief person in charge of the securities
regulatory authority under the State Council;
and
(7) when investigating serious violations of the
law governing securities, such as manipulation
of securities markets and insider trading, with
the approval of the chief person in charge of
the securities regulatory authority under the
State Council, to impose restrictions on the
purchasing and selling of the securities by the
parties involved in the event under
investigation, provided that the period of
restriction does not exceed 15 trading days; in
complicated cases, such period may be extended
for another 15 trading days.
Article 181 When exercising supervision or
inspection or conducting investigation in
performing the duties of the securities
regulatory authority under the State Council
pursuant to law, the officials sent for the
purpose shall be not less than two persons, and
they shall show their lawful identifications and
the notifications of supervision, inspection or
investigation. Where the officials sent for
supervision, inspection or investigation are
less than two persons, or such officials fail to
show their lawful identifications and the
notifications of supervision, inspection or
investigation, the unit under inspection or
investigation shall have the right to refuse.
Article 182 Staff members of the securities
regulatory authority under the State Council
must be devoted to their duties, act in
accordance with law, and be impartial and
honest. They shall not take advantage of their
positions to seek illegitimate gains, or
disclose the commercial secretes of the relevant
units and individuals they get to know.
Article 183 When the securities regulatory
authority under the State Council performs its
duties pursuant to law, the units and
individuals under inspection or investigation
shall cooperate, provide truthful documents and
materials required, and shall not refuse to
cooperate, place obstacles or conceal such
documents and materials.
Article 184 The rules and regulations
formulated, and the work system for regulation
established, by the securities regulatory
authority under the State Council pursuant to
law shall be made public.
The decisions made by the securities regulatory
authority under the State Council, on the basis
of the results of its investigations, to punish
violations of the law governing securities,
shall be made public.
Article 185 The securities regulatory authority
under the State Council shall, together with
other financial regulatory authorities under the
State Council, establish a mechanism for sharing
regulatory information.
When the securities regulatory authority under
the State Council performs its duties and
conducts supervision, inspection or
investigation pursuant to law, the departments
concerned shall cooperate with it.
Article 186 When in performing its duties
pursuant to law, the securities regulatory
authority under the State Council discovers that
a violation of the law governing securities
constitutes a suspected criminal offense, it
shall transfer the case to a judicial organ for
handling.
Article 187 Staff members of the securities
regulatory authority under the State Council
shall not hold any positions concurrently in any
institutions which are subject to its
regulation.
Chapter XI Legal Liab