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Chapter V Stock Exchanges
Article 95 A stock exchange is a non-profit legal person that provides a place for the centralized trading of securities at competing prices.
A stock exchange shall be established or dissolved upon decision by the State Council.
Article 96 To establish a stock exchange, articles of association shall be formulated.
The formulation and amendment of the articles of association of a stock exchange shall be subject to approval by the securities regulatory authority under the State Council.
Article 97 A stock exchange shall include the words "stock exchange" in its name. No other units or individuals may use the name "stock exchange" or a similar name.
Article 98 The income from various charges that is at the discretion of a stock exchange shall first be used to ensure the normal operation and gradual improvement of the premises and facilities of the stock exchange.
The gains accumulated by a stock exchange shall belong to its members, and its rights and interests shall be shared by the members. The accumulated gains may not be distributed to the members while the stock exchange is in existence.
Article 99 A stock exchange shall have a board of governors.
Article 100 A stock exchange shall have a general manager, who shall be appointed and removed by the securities regulatory authority under the State Council.
Article 101 None of the persons described in Article 57 of the Company Law or in the following may hold a responsible position of a stock exchange:
(1) responsible persons of stock exchanges or securities registration and clearing institutions and directors, supervisors and managers of securities firms who, due to a violation of the law or rules of discipline, are removed from office, where not more than five years have elapsed since the date of their removal; and
(2) lawyers, certified public accountants and professionals of statutory asset appraisal organizations or verification organizations who, due to a violation of the law or rules of discipline, are disqualified as such, where not more than five years have elapsed since the date of their disqualification.
Article 102 Employees of stock exchanges, securities registration and clearing institutions or securities firms and functionaries of State organs who are discharged for violating the law or rules of discipline may not be engaged by stock exchanges.
Article 103 Only securities firms that are qualified as members of a stock exchange may enter that stock exchange to participate in centralized trading at competing prices.
Article 104 An investor shall open a securities trading account with a securities firm and shall instruct, in writing, by telephone or otherwise, the said company to purchase or sell securities on his behalf.
An investor who purchases or sells securities through the securities firm where he has opened an account shall adopt the method of instruction to buy or sell at market prices or instruction to buy or sell subject to price limits.
Article 105 A securities firm shall, in accordance with the investors' instructions and the rule of time precedence, declare orders and participate in centralized trading at competing prices at the stock exchange. A securities registration and clearing institution shall, on the basis of the transactions concluded and in accordance with the rules for clearing and settlement, effect the clearing and settlement of securities and funds and handle the procedures for registration of the change in ownership of the securities.
Article 106 Securities purchased by securities firms upon instruction or on their own account may not be sold on the same day.
Article 107 Stock exchanges shall ensure fair centralized trading at competing prices, promptly announce quotations concerning the securities trading, compile securities market quotation tables for each day of trading, and announce the same.
Article 108 Stock exchanges shall, in accordance with laws and administrative regulations, handle matters relating to the suspension, resumption or termination of listings of shares or corporate bonds. The specific measures shall be formulated by the securities regulatory authority under the State Council.
Article 109 When a sudden event affecting the normal trading of securities occurs, stock exchanges may effect a technical suspension of trading. They may decide to temporarily suspend the market when a sudden event of force majeure occurs or in order to protect the normal order of securities trading.
When Stock exchanges effect a technical suspension of trading or decide to temporarily suspend the market, they shall, without delay, report the same to the securities regulatory authority under the State Council.
Article 110 A stock exchange shall carry out real -- time monitoring of securities trading conducted on the exchange and shall report any unusual trading, as required by the securities regulatory authority under the State Council.
A stock exchange shall supervise disclosure of information by listed companies by causing such companies to disclose information promptly and accurately according to law.
Article 111 A stock exchange shall derive a certain proportion from its transaction fees, membership dues and seat fees to establish a risk fund. The risk fund shall be controlled by the board of governors of the stock exchange.
The specific proportion derived for the risk fund and measures for its use shall be prescribed by the securities regulatory authority under the State Council in conjunction with the finance department under the State Council.
Article 112 A stock exchange shall deposit the trading guarantee fees collected by it and the risk fund in dedicated accounts with its bank and may not use the same without authorization.
Article 113 A stock exchange shall, pursuant to laws and administrative regulations governing securities, formulate specific rules for centralized securities trading at competing prices, administrative regulations for its members and operational rules for its employees, and submit the same to the securities regulatory authority under the State Council for approval.
Article 114 In performing their duties related to securities trading, the responsible persons and employees of stock exchanges shall withdraw where they themselves or any of their relatives have an interest.
Article 115 The transaction results of trading conducted in accordance with the trading rules formulated according to law may not be changed. Traders who violate the rules during trading may not be exempted from civil liability. Gains obtained from trading against the rules shall be dealt with pursuant to relevant regulations.
Article 116 If persons engaged in securities trading inside a stock exchange violate the trading rules of the stock exchange, the stock exchange shall impose disciplinary sanctions on them. If the circumstances are serious, the offenders' qualifications shall be revoked and the offenders shall be barred from entering the exchange to trade securities.
Chapter ♪ Securities Firms
Article 117 The establishment of a securities firm shall be subject to examination and approval by the securities regulatory authority under the State Council. No one may engage in securities business without approval of the said authority.
Article 118 For purposes of this Law, "a securities firm" means a limited liability company or a company limited by shares which, pursuant to the provisions of the Company Law and the preceding Article, is established with approval to engage in securities business.
Article 119 The State administers securities firms by dividing them into categories -- comprehensive securities firms and brokerage securities firms. The securities regulatory authority under the State Council shall, on the basis of the these categories, issue business permits to them.
Article 120 A securities firm shall include the words "limited liability securities firm" or "securities firm limited by shares" in its name.
A brokerage securities firm shall include the word "brokerage" in its name.
Article 121 The following conditions shall be satisfied for the establishment of a comprehensive securities firm:
(1) to have a minimum registered capital of RMB500m;
(2) to have chief administrators and business persons who are qualified to engage in securities business;
(3) to have a fixed place of business and up -to- standard trading facilities; and
(4) to have a sound management system and a standardized system for the separate administration of business on its own account and brokerage business.
Article 122 The minimum registered capital of a brokerage securities firm is RMB50m, the chief administrators and business persons of such a company shall be qualified to engage in securities business, and it shall have a fixed place of business, up-to-standard trading facilities and a sound management system.
Article 123 The establishment or closure of branches of a securities firm, change in its scope of business, registered capital or articles of association, and merger, division, change in its corporate form, and its dissolution shall be subject to approval by the securities regulatory authority under the State Council.
Article 124 The total amount of external liabilities of a securities firm may not exceed the prescribed multiple of its net assets, and the total amount of its current liabilities may not exceed a certain proportion of its total current assets. The specific multiple, proportion and administrative measures shall be prescribed by the securities regulatory authority under the State Council.
Article 125 None of the persons described in Article 57 of the Company Law or in the following may serve as director, supervisor or manager of a securities firm:
(1) responsible persons of stock exchanges or securities registration and clearing institutions and directors, supervisors and managers of securities firms, who are removed from office due to a violation of the law or rules of discipline, where not more than five years have elapsed since the date of their removal; and
(2) lawyers, certified public accountants, and professionals of statutory asset appraisal organizations or verification organizations, who are disqualified as such due to a violation of the law or rules of discipline, where not more than five years have elapsed since the date of their disqualification.
Article 126 Employees of stock exchanges, securities registration and clearing institutions or securities firms and functionaries of State organs who are discharged for violating the law or rules of discipline may not be engaged by securities firms.
Article 127 No functionaries of State organs, or other persons prohibited by laws or administrative regulations from concurrently holding positions in companies, may concurrently hold positions in securities firms.
No director, supervisor, manager or business person of a securities firm may concurrently hold a post in another securities firm.
Article 128 A securities firm shall derive for a trading risk reserve from its annual after -tax profits to make up losses from securities trading. The specific percentage for such derivation shall be prescribed by the securities regulatory authority under the State Council.
Article 129 Comprehensive securities firms may engage in the following securities business:
(1) brokerage business;
(2) securities business on its own account;
(3) securities underwriting business; and
(4) other business verified by the securities regulatory authority under the State Council.
Article 130 Brokerage securities firms are permitted only to engage in securities brokerage business.
Article 131 A securities firm shall, on the basis of the lines of business specified in the preceding two Articles, submit an application for its scope of business to the securities regulatory authority under the State Council for verification.
No securities firm may engage in securities business or other business beyond the scope of business verified.
Article 132 Comprehensive securities firms shall conduct their brokerage business separately from business operated on their own account. The business persons and financial accounts for one type of business shall be kept separate from those for the other type. The same business persons may not operate both types of business and the same accountants may not keep the financial accounts for both types of business.
Transaction clearing funds of a client shall be deposited in full with a designated commercial bank and a separate account shall be opened and managed as such. Misappropriation of a client's transaction clearing funds is strictly prohibited.
Article 133 The flow of bank funds into the stock market against regulations is prohibited.
When carrying out business on its own account, a securities firm shall use its self-owned funds and funds raised according to law.
Article 134 Business on the account of a securities firm itself shall be conducted in its own name, and may not be conducted in the name of another or in the name of an individual.
No securities firm may lend its own business account to another for use.
Article 135 Securities firms shall have the lawful right to operate independently, and their lawful operations shall be subjected to no interference.
Article 136 Where the registered capital of a securities firm falls below the amount required to engage in the relevant business as prescribed in this Law, the securities regulatory authority under the State Council shall revoke its verification of the relevant scope of business.
Article l37 A securities firm that, in securities trading, buys or sells securities on behalf of its clients or operates as an intermediary is a securities broker with the status of a legal person.
Article l38 When handling brokerage business, a securities firm shall separately open a securities account and a funds account for a client, and shall manage the securities and funds delivered by the client under separate accounts and truthfully record transactions. It may not make sham entries.
To open an account, the client shall present lawful papers to show that he is a Chinese citizen or a Chinese legal person.
Article 139 To handle brokerage business, a securities firm shall provide uniform letters of instruction for the trading of securities for use by instructing parties. If instructions are given in other ways, a record shall be kept thereof.
Whether or not any transactions are concluded, the records of clients' instructions for trading of securities shall be kept at the securities firm for the prescribed period of time.
Article 140 Upon accepting an instruction to purchase or sell securities, a securities firm shall purchase or sell securities as an agent in accordance with the trading rules and on the basis of the description of the securities, the purchase or sale quantity, the method of bidding, the price range, etc. set forth in the instruction form. After a transaction is concluded, it shall, according to regulations, prepare a transaction report and deliver it to the client.
Reconciliation statements confirming trading acts and their transaction results in securities trading shall be truthful. Such statements shall be audited on a transaction--by-- transaction basis by an auditor other than the person handling the transactions, who shall see that the securities book balance is the same as the number of securities actually held.
Article 141 Securities sold by a securities firm upon acceptance of an instruction shall be securities actually held in the client's securities account. A securities firm may not finance its clients' transactions by providing securities.
Securities purchased by a securities firm upon acceptance of an instruction shall be paid with funds actually deposited in the client's funds account. A securities firm may not finance its clients' transactions by providing funds.
Article 142 When handling brokerage business, a securities firm may not accept a client's unlimited authorization to decide on the purchase or sale of securities, choose the types of securities or decide on the quantities to be purchased or sold or the purchase or sales price.
Article 143 A securities firm many not give any form of commitment with respect to its clients' profits from the purchase or sale of securities or compensation for losses from the purchase or sale of securities.
Article 144 A securities firm and its employees may not, in private and not through the company's place of business established according to law, accept instructions from a client to purchase or sell securities.
Article 145 If, in the course of securities trading, an employee of a securities firm violates trading rules under the instructions of the company or by taking advantage of his position, the securities firm to which he belongs shall bear full liability therefor.
Chapter † Securities Registration and Clearing Institutions
Article 146 A securities registration and clearing institution is a non-profit legal person that provides centralized registration, custody and clearing services for securities trading.
The establishment of a securities registration and clearing institution shall be subject to approval by the securities regulatory authority under the State Council.
Article 147 To be established, a securities registration and clearing institution shall meet the following conditions:
(1) it has self-owned funds of not less than RMB200m;
(2) it has the place and facilities necessary for providing securities registration, custody and clearing services;
(3) its chief administrators and business persons are qualified to engage in securities business; and
(4) other conditions prescribed by the securities regulatory authority under the State Council.
The name of a securities registration and clearing institution shall include the words "securities registration and clearing."
Article 148 A securities registration and clearing institution shall perform the following functions:
(1) establishment of securities accounts and clearing accounts;
(2) custody and transfer of ownership of securities;
(3) registration of the names of the holders of securities;
(4) clearing and delivery of listed securities traded on the stock exchange;
(5) allotment of securities rights and interests upon entrustment by the issuer;
(6) handling of inquiries concerning the above - mentioned business; and
(7) other business approved by the securities regulatory authority under the State Council.
Article 149 A centralized and unified method of operation shall be used for registration and clearing of securities nationwide.
The articles of association and business rules of a securities registration and clearing institution shall be formulated according to law and be subject to approval by the securities regulatory authority under the State Council.
Article 150 Before trading listed securities, a holder shall place all such securities in the custody of a securities registration and clearing institution.
A securities registration and clearing institution may not use its clients' securities as collateral or lend them to others.
Article 151 A securities registration and clearing institution shall furnish the issuer of securities with the register of, and relevant information concerning, the holders of its securities.
On the basis of the results of securities registration and clearing, a securities registration and clearing institution shall confirm the fact that particular securities are held by particular holders and provide registered information on the holders of the securities.
A securities registration and clearing institution shall ensure the truthfulness, accuracy and completeness of the register of the holders of securities and the records of registration of change in ownership. It may not forge, alter or destroy such register or records.
Article 152 A securities registration and clearing institution shall adopt the following measures to ensure the normal operation of business:
(1) to have the necessary service equipment and sufficient measures for data security and protection;
(2) to have established sound management systems for business, financial affairs and security; and
(3) to have established complete risk control systems.
Article 153 A securities registration and clearing institution shall carefully preserve the original evidence relating to registration, custody and clearing. Important original evidence shall be kept for a period of not less than 20 years.
Article 154 A securities registration and clearing institution shall establish a clearing risk fund and deposit the money therein in a dedicated account at a designated bank. The clearing risk fund shall be used for any losses suffered by the securities registration and clearing institution as a result of technical failures, operational errors or force majeure.
The securities clearing risk fund shall be derived from the business revenue and profits of a securities registration and clearing institution, and may also be collected from securities firms at a certain percentage of the volume of their securities traded.
The measures for raising and managing securities clearing risk fund shall be prescribed by the securities regulatory authority in conjunction with the finance department under the State Council.
Article 155 The money in the securities clearing risk fund shall be controlled as earmarked money.
After paying compensation with money from the risk fund, a securities registration and clearing institution shall have recourse to the responsible person(s).
Article 156 The application of a securities registration and clearing institution for dissolution shall be subject to approval by the securities regulatory authority under the State Council.
Chapter ‡ Securities Trading Service Organizations
Article 157 Professional securities investment consulting organizations and credit - rating institutions may be established, where they are needed for securities investment and trading business. The conditions for establishment of securities investment consulting organizations and credit - rating institutions, the examination and approval procedures and the business rules of such organizations and institutions shall be prescribed by the securities regulatory authority under the State Council.
Article 158 The business persons of professional securities investment consulting organizations and credit -- rating institutions shall be persons who are armed with professional knowledge of securities and have engaged in the securities business for not less than two years. The criteria and administrative measures for determining the qualifications of such persons to engage in securities business shall be formulated by the securities regulatory authority under the State Council.
Article 159 Employees of a securities investment consulting organization may not engage in the following activities:
(1) investing in securities as an agent for an entrusting party;
(2) agreeing with an entrusting party to share profits or losses from securities investment;
(3) purchasing or selling the shares of listed companies to which the consulting organization provides services; or
(4) other activities prohibited by laws or administrative regulations.
Article 160 Professional securities investment consulting organization and credit-rating institutions shall charge service fees in accordance with the rates or measures prescribed by the relevant administrative department under the State Council.
Article 161 Professional institutions and individuals that produce documents such as audit reports, asset appraisal reports and legal opinions for the issuance or listing of securities or for securities trading activities shall do so in accordance with the working procedures prescribed in the rules of their profession. They shall check and verify the truthfulness, accuracy and completeness of the contents of the reports to be produced by them and shall bear joint and several liability for the parts of such reports for which they are responsible.
Chapter ¶ The Securities Industry Association
Article 162 The Securities Industry Association is a self-regulating organization for the securities industry and is a public organization with the status of a legal person.
Securities firms shall join the Securities Industry Association.
The organ of authority of the Securities Industry Association is the members' general assembly composed of all of the members.
Article 163 The charter of the Securities Industry Association shall be formulated by its members' general assembly and submitted to the securities regulatory authority under the State Council for the record.
Article l64 The Securities Industry Association shall perform the following functions:
(1) to assist the securities regulatory authority in enabling members to understand and implement the laws and administrative regulations governing securities;
(2) to safeguard the lawful rights and interests of members according to law and to report members' suggestions and requests to the securities regulatory authority;
(3) to collect and process information on securities and provide services to members;
(4) to formulate rules to be observed by members, to arrange for vocational training for the employees of its members and to promote professional exchanges among members;
(5) to mediate in the event of disputes between members or between members and their clients;
(6) to make arrangements for members to research into the development, operation and other matters related to the securities industry;
(7) to supervise and inspect members' conduct and, in accordance with rules, to impose disciplinary sanctions on any member that violates laws, administrative regulations or the charter of the Association; and
(8) other functions delegated to it by the securities regulatory authority under the State Council.
Article 165 The Securities Industry Association shall have a board of governors. The members of the board of governors shall be elected as prescribed in the charter.
Chapter X Securities Regulatory Authority
Article 166 The securities regulatory authority under the State Council shall regulate the securities market according to law, maintain order of the securities market and ensure the lawful operation of the same.
Article 167 The securities regulatory authority under the State Council shall perform the following functions in regulating the securities market:
(1) to formulate, according to law, rules and regulations concerning regulation of the securities market and to lawfully exercise its power of examination and approval or verification;
(2) to regulate, according to law, the offering, trading, registration, custody and clearing of securities;
(3) to regulate, according to law, the securities business activities of the issuers of securities, listed companies, stock exchanges, securities firms, securities registration and clearing institutions, securities investment fund management institutions, securities investment consulting organizations, credit - rating institutions, and those law firms, public accounting firms and asset appraisal organizations that are engaged in securities business;
(4) to formulate, according to law, the qualification criteria and code of conduct for persons engaged in securities business, and to see that these are observed;
(5) to supervise and inspect, according to law, the disclosure of information in connection with securities offering and trading;
(6) to guide and supervise the activities of the Securities Industry Association according to law;
(7) according to law, to investigate and deal with violations of laws and administrative regulations concerning the regulation of the securities market; and
(8) other functions prescribed in laws and administrative regulations.
Article 168 When performing its functions according to law, the securities regulatory authority under the State Council shall have the power to adopt the following measures:
(1) to enter the site where an illegal act is committed to investigate and collect evidence;
(2) to question the party concerned and any unit or individual connected with the event under investigation, and to require them to give explanations concerning matters connected with the event under investigation;
(3) to inspect and make copies of the securities trading records, records of registration of change in ownership, financial and accounting information and other relevant documents and materials of the party concerned and any unit or individual connected with the event under investigation, and to seal up documents or materials likely to be removed or concealed; and
(4) to examine the fund accounts and securities accounts of the party concerned and any unit or individual connected with the event under investigation, and if there is evidence to substantiate signs that illegally obtained funds or securities have been removed or concealed, to apply to a judicial organ to freeze the same.
Article 169 When members of the securities regulatory authority under the State Council conduct supervision, inspection or investigation during the lawful performance of their duties, they shall produce the relevant papers and be obligated to maintain the confidentiality of the commercial secrets of units or individuals which they become aware of .
Article 170 Members of the securities regulatory authority under the State Council shall perform their duties faithfully, do their work according to law and be impartial and honest. They may not take advantage of their positions to seek illegitimate gains.
Article 171 When the securities regulatory authority under the State Council performs its functions according to law, the units and individuals under inspection or investigation shall cooperate and provide truthful relevant documents and materials.Such units and individuals may not refuse to cooperate, obstruct inspection or investigation or conceal relevant documents or materials.
Article 172 The rules and regulations and the regulatory work systems formulated according to law by the securities regulatory authority under the State Council shall be made public.
Decisions made by the securities regulatory authority under the State Council, on the basis of the results of its investigations, to impose penalties on illegal acts involving securities shall be made public.
Article 173 If, during the performance of its functions according to law, the securities regulatory authority under the State Council suspects that an illegal act involving securities discovered by it may constitute a criminal offense, it shall hand the case over to a judicial organ for it to handle.
Article 174 No members of the securities regulatory authority under the State Council may concurrently hold a position in an organization that is under the regulation of the authority.
Chapter XI Legal Liability
Article 175 Any unit that issues securities without verification or examination and approval by the statutory authority or that issues securities by forging issuing documents shall be ordered to cease issuance and refund the funds thus raised, together with bank deposit interest for the same period, and shall also be fined not less than 1 percent but not more than 5 percent of the amount of the illegally raised funds. The persons directly in charge and the other persons directly responsible shall be given a disciplinary warning and also be fined not less than RMB30,000 but not more than RMB300,000. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 176 Where a securities firm underwrites or deals as an agent in securities issued without verification or examination and approval, the securities regulatory authority shall have it closed down, confiscate its illegal gains and impose on it a fine of not less than the amount of but not more than five times the illegal gains. The persons directly in charge and the other persons directly responsible shall be given a disciplinary warning and also be fined not less than RMB30, 000 but not more than RMB300, 000. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 177 Where the issuer of securities listed upon verification pursuant to this Law fails to disclose information in accordance with relevant regulations or the information disclosed contains a falsehood, misleading statement or major omission, the securities regulatory authority shall order the issuer to take remedial measures and impose on it a fine of not less than RMB300,000 but not more than RMB600,000. The persons directly in charge and the other persons directly responsible shall be given a disciplinary warning and also be fined not less than RMB30, 000 but not more than RMB300,000. If the offense constitutes a crime, criminal liability shall be pursued according to law.
If the issuer mentioned in the preceding paragraph fails to announce its listing documents or submit the relevant reports on schedule, the securities regulatory authority shall order it to take remedial measures and impose on it a fine of not less than RMB50,000 but not more than RMBl00,000.
Article 178 If anyone illegally establishes a stock exchange, the securities regulatory authority shall close down the same, confiscate any illegal gains and impose a fine of not less than the amount of but not more than five times the illegal gains. If there are no illegal gains, a fine of not less than RMB100,000 but not more than RMB500,000 shall be imposed. The persons directly in charge and the other persons directly responsible shall be given a disciplinary warning and also be fined not less than RMB30,000 but not more than RMB300,000. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 179 If anyone establishes a securities firm and operates securities business without approval and a business permit, the securities regulatory authority shall have it closed down, confiscate any illegal gains and impose a fine of not less than the amount of but not more than five times the illegal gains. If there are no illegal gains, a fine of not less than RMB30, 000 but not more than RMB100,000 shall be imposed. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 180 If anyone who is prohibited by laws or administrative regulations from participating in share trading holds, purchases or sells shares directly or under an assumed name or in the name of another, he shall be ordered to dispose of the illegally held shares according to law, his illegal gains shall be confiscated and he shall also be imposed a fine of not more than the value of the shares purchased or sold. If the offender is a State functionary, administrative sanctions shall, in addition, be imposed on him according to law.
Article 181 If an employee of a stock exchange, securities firm, securities registration and clearing institution or securities trading service organization, or a staff member of the Securities Industry Association or the securities regulatory authority intentionally provides false information, forges, alters or destroys trading records or inveigle investors into purchasing or selling shares, his professional qualifications shall be revoked and a fine of not less than RMB30, 000 but not more than RMB50, 000 shall be imposed. If the offender is a State functionary, administrative sanctions shall, in addition, be imposed according to law. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 182 If, in violation of the provisions in Article 39 of this Law, a professional institution or individual that produces documents such as audit reports, asset appraisal reports and legal opinions for the issuance or listing of shares purchases or sells shares, it or he shall be ordered to dispose of the illegally obtained shares according to law, the illegal gains shall be confiscated and a fine of not more than the value of the shares purchased or sold shall, in addition, be imposed.
Article 183 If, before information that may affect the issuance or trading of securities or other information that may have a major effect on the price of securities is made public, a person who has knowledge of inside information on securities trading or a person who illegally obtains such information purchases or sells such securities, divulges such information or counsels another to purchase or sell such securities, he shall be ordered to dispose of the illegally obtained securities according to law, his illegal gains shall be confiscated and, in addition, he shall be imposed a fine of not less than the amount of but not more than five times the illegal gains, or a fine of not more than the value of the securities illegally purchased or sold. If the offense constitutes a crime, criminal liability shall be pursued according to law.
If a staff member of the securities regulatory authority engages in insider trading, he shall be given a heavier punishment.
Article 184 If anyone, in violation of the provisions in Article 71 of this Law, obtains illegitimate benefits or shifts risks to others by manipulating securities trading prices or fabricating sham securities trading prices or securities trading volumes, his illegal gains shall be confiscated and he shall be fined not less than the amount of but not more than five times the illegal gains. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 185 If anyone, in violation of the provisions of this Law, purchases or sells securities by misappropriating public funds, his illegal gains shall be confiscated and he shall be fined not less than the amount of but not more than five times the illegal gains. If the offender is a State functionary, administrative sanctions shall, in addition, be imposed according to law. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 186 If a securities firm, in violation of the provisions of this Law, sells for a client securities that are not actually in the client's account or provides funds for a client to purchase securities, its illegal gains therefrom shall be confiscated and a fine equal to the value of the securities illegally purchased or sold shall be imposed on it. The persons directly in charge and the other persons directly responsible shall be given a disciplinary warning and also be fined not less than RMB30, 000 but not more than RMB300, 000. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 187 If a securities firm, in violation of the provisions of this Law, sells the securities purchased on the same day upon a client's instruction or on its own account, its illegal gains shall be confiscated and a fine of not less than 5 percent but not more than 20 percent of the amount of the illegal securities transaction shall be imposed on it.
Article 188 Anyone who, by fabricating and disseminating false information that affects securities trading, disrupts the order of the securities trading market shall be fined not less than RMB30, 000 but not more than RMB200, 000. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 189 If a stock exchange, securities firm, securities registration and clearing institution, securities trading service organization or public intermediary organization or one of their employees, or the Securities Industry Association, the securities regulatory authority or one of their staff members makes a false statement or gives misleading information in the course of securities trading, the offender shall be ordered to set it to rights and be fined not less than RMB30, 000 but not more than RMB200, 000. If the offender is a State functionary, he shall, in addition, be given administrative sanctions according to law. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 190 If a legal person, in violation of the provisions of this Law, opens an account to deal in securities in the name of an individual, it shall be ordered to make rectification, the illegal gains shall be confiscated and a fine of not less than the amount of but not more than five times the illegal gains shall be imposed. If the persons directly in charge or the other persons directly responsible are State functionaries, they shall be given administrative sanctions according to law.
Article 191 If a comprehensive securities firm, in violation of the provisions of this Law, engages in business on its own account in the name of another or in the name of an individual, it shall be ordered to make rectification, its illegal gains shall be confiscated, and it shall be fined not less than the amount of but not more than five times the illegal gains. If the circumstances are serious, its business on its own account shall be stopped.
Article 192 If a securities firm deals in securities or handles trading matters contrary to a client's instructions, or handles non-trading matters contrary to the client's authentic declaration of intention, and thus causes losses to the client, it shall be liable for losses according to law and be fined not less than RMBl0, 000 but not more than RMB100, 000.
Article 193 If, without the client's instruction, a securities firm, securities registration and clearing institution or one of their employees purchases, sells, misappropriates or lends securities in the client's account, uses the client's securities as collatoral, or misappropriate the funds in the client's account, it or he shall be ordered to make rectification, the illegal gains shall be confiscated, a fine of not less than the amount of but not more than five times the illegal gains shall be imposed, and the securities firm or securities registration and clearing institution shall be ordered to close down, or the professional qualification certificate of the responsible person shall be revoked. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 194 If, when handling brokerage business, a securities firm accepts unlimited authorization by a client to purchase or sell securities or gives a commitment to a client concerning profits from the purchase or sale of securities or compensation for losses from the purchase or sale of securities, it shall be ordered to make rectification and shall be fined not less than RMB50, 000 but not more than RMB200, 000.
Article 195 If anyone, in violation of the statutory procedures for the takeover of listed companies, gains illegitimate profits by taking advantage of the takeover of a listed company, the offender shall be ordered to make rectification, the illegal gains shall be confiscated and a fine of not less than the amount of but not more than five times the illegal gains shall be imposed.
Article 196 If a securities firm or one of its employees, in violation of the provisions of this Law, privately accepts instructions from a client to purchase or sell securities, the illegal gains shall be confiscated and a fine of not less than the amount of but not more than five times the illegal gains shall be imposed.
Article 197 If a securities firm, in violation of the provisions of this Law, engages, without approval, in the trading of unlisted securities, it shall be ordered to make rectification, its illegal gains shall be confiscated, and it shall be fined not less than the amount of but not more than five times the illegal gains.
Article 198 If, after its establishment, a securities firm fails to commence business without justifiable reason or, after having commenced business, it suspends business on its own for a period of not less than three months running, its corporate business license shall be revoked by the company registration organ.
Article 199 If a securities firm, in violation of the provisions of this Law, engages in securities business beyond the scope of business permitted, it shall be ordered to make rectification, its illegal gains shall be confiscated, and it shall be fined not less than the amount of but not more than five times the illegal gains. If the circumstances are serious, the securities firm shall be ordered to close down.
Article 200 If a securities firm that operates at the same time securities brokerage business and securities business on its own account fails to keep the two types of business separate from each other according to law and operates them together, it shall be ordered to make rectification, its illegal gains shall be confiscated, and it shall be fined not less than the amount of but not more than five times the illegal gains. If the circumstances are serious, the securities regulatory authority shall revoke the original verification of the securities business.
Article 201 If a unit submits sham supporting documents or conceals major facts by other fraudulent means to and thus obtains a securities business permit by deception, or if a securities firm commits a serious illegal act in the course of securities trading so that it is no longer qualified to operate such business, the securities regulatory authority shall revoke its securities business permit and order it to close down.
Article 202 If a professional institution that produces documents such as audit reports, asset appraisal reports and legal opinions for the issuance or listing of securities or for securities trading activities makes false statements in the part of the contents for which it is responsible, its illegal gains shall be confiscated, it shall be fined not less than the amount of but not more than five times the illegal gains, and the relevant authority in charge shall order the said institution to suspend business and shall revoke the qualification certificates of the persons directly responsible therefor. If losses are caused, it shall bear joint and several liability for the losses. If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 203 If a securities registration and clearing institution or a securities trading service organization is established without approval of the securities regulatory authority, the securities regulatory authority shall close down the same, confiscate its illegal gains and impose on it a fine of not less than the amount of but not more than five times the illegal gains.
If a securities registration and clearing institution or a securities trading service organization violates the provisions of this Law or the business rules uniformly formulated by the securities regulatory authority, the securities regulatory authority shall order it to make rectification, confiscate its illegal gains and impose on it a fine of not less than the amount of but not more than five times the illegal gains. If the circumstances are serious, the securities regulatory authority shall order the securities registration and clearing institution or the securities trading service organization to close down.
Article 204 If the securities regulatory authority approves an application for offering or listing of securities that does not conform to the provisions of this Law or approves an application for establishment of a securities firm, securities registration and clearing institution or securities trading service organization that does not meet the conditions prescribed in this Law, where the circumstances are serious, the persons directly in charge and the other persons directly responsible shall be given administrative sanctions according to law.If the offense constitutes a crime, criminal liability shall be pursued according to law.
Article 205 If a staff member of the securities regulatory authority or a member of the issuance examination commission fails to perform his duties prescribed in this Law, engages in malpractices for personal gain, neglects his duties, or intentionally creates difficulties for the parties concerned, he shall be given administrative sanctions according to law. If the offense constitutes a crime, his criminal liability shall be pursued according to law.
Article 206 If a unit issues or underwrites corporate bonds in violation of the provisions of this Law, the department authorized by the State Council shall impose penalties on it in accordance with the provisions in Articles 175, 176 and 202 of this Law.
Article 207 If the property of a person, who violates the provisions of this Law and who therefore bears civil liability for damages and is required to pay a fine, is insufficient to pay both the damages and the fine, such person shall first bear the civil liability for damages.
Article 208 If a person, by violence or threat, obstructs the securities regulatory authority in the lawful exercise of its functions and powers of regulation and inspection, his criminal liability shall be pursued according to law. If a person, without resorting to violence or threat, prevents or obstructs the securities regulatory authority or its staff members from or in lawfully exercising their functions and powers of regulation and inspection, such person shall be punished in accordance with the Regulations on Administrative Penalties for Public Security.
Article 209 All the illegal gains from, and fines for, illegal offering and trading of securities which are confiscated and imposed pursuant to this Law shall be turned over to the State treasury.
Article 210 If a person concerned is dissatisfied with a punishment decision of the securities regulatory authority or the department authorized by the Stated Council, such person may apply for reconsideration by or directly institute legal proceedings in a People's Court according to law.
Chapter XII Supplementary Provisions
Article 211 Securities whose listing on a stock exchange was approved pursuant to administrative regulations before this Law goes into effect shall continue to be traded according to law.
Securities business institutions which were established upon approval pursuant to administrative regulations and regulations of the administrative department for finance under the State Council before this law goes into effect and which do not fully conform to the provisions of this Law shall meet the requirements prescribed in this Law within the specified time limit. Specific measures in this respect shall be formulated separately by the State Council.
Article 212 The measures required to implement the provisions of this Law concerning the funds for clearing of clients' transactions shall be prescribed separately by the State Council.
Article 213 Specific measures in respect of shares of companies in China which are to be subscribed and traded in foreign currencies by persons and organizations outside of China shall be formulated separately by the State Council.
Article 214 This Law shall come into force as of July 1, 1999. >>>> Chinese
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