| Category | SECURITIES | Organ of Promulgation | The Standing Committee of the National People’s Congress | Status of Effect | In Force |
| Date of Promulgation | 1998-12-29 | Effective Date | 1999-07-01 |
|
Securities Law of the People’s Republic of China |
|---|
Contents
Chapter I General Provisions
Chapter II Securities Issuance
Chapter III Securities Trading
Chapter IV Listed Company Acquisition
Chapter V Securities Exchanges
Chapter VI Security Companies
Chapter VII Securities Registration and Settlement Agencies
Chapter VIII Securities Trading Services Agencies
Chapter IX Securites Industry Associations
Chapter X Securities Supervision and Administration Institution
Chapter XI Legal Liability
Chapter XII Supplementary Provisions
(Adopted at the 6th Meeting of the Standing Committee of the 9th
National People’s Congress on December 29, 1998 and promulgated by
Order No. 12 of the President of the People’s Republic of China on
December 29, 1998)
Contents
Chapter I General Provisions
Chapter II Securities Issuance
Chapter III Securities Trading
Section 1 General Rules
Section 2 Securities Listing
Section 3 Sustained Open Information
Section 4 Prohibited Trading Acts
Chapter IV Listed Company Acquisition
Chapter V Securities Exchanges
Chapter VI Security Companies
Chapter VII Securities Registration and Settlement Agencies
Chapter VIII Securities Trading Services Agencies
Chapter IX Securiities Industy Associations
Chapter X Securities Supervision and Administration Institutions
Chapter XI Legal Liabiliby
Chapter XII Supplementary Provisions
Chapter I General Provisions
Article 1 This Law is enacted for purposes of standardizing acts of securities issuance and trading, protecting the legitimate
rights and
interests of investors, maintaining socioeconomic order and public interest
of society and promoting the development of the socialist market economy.
Article 2 This Law shall be applicable to the issuance and trading of stocks, corporate bonds and other securities confirmed by
the State Council
according to law within the territory of China. Where there are no provisions
in this Law, provisions of the Company Law, and other laws and regulations
shall be applicable.
Issuance and trading of government bonds shall be prescribed by law
or administrative regulations separately.
Article 3 The principle of openness, fairness and justice must be
practised in operations of securities issuance and trading.
Article 4 Parties interested in operations of securities issuance
and trading have equal legal status and should abide by the principle
of voluntariness, compensation, honesty and trustworthiness.
Article 5 Operations of securities issuance and trading must abide by
laws and administrative regulations; acts of fraud, inside trading and
manipulation of securities trading markets shall be prohibited.
Article 6 The securities industry and banking industry, trust business
and insurance industry shall be put under separate industry-wise management
and separate industry-wise administration. Security companies and banking,
trust and insurance business instituions shall be established separately.
Artilce 7 The securities supervision and administration institution
under the State Council practises centralized and unified supervision and
administration of securities markets nationwide.
The securities supervision and administration institution under the
State Council may establish representative offices which shall fulfil
the duties and responsibilities authorized.
Article 8 Securities industry associations established according to law
shall practise self-policing administration under the prerequisite of the
exercise by the state of centralized and unified supervision and
administration over operations of securities issuance and trading.
Artilce 9 State audit organs shall conduct audit suspervision
according to law over securities exchanges, security companies, securities
registration and settlement agencies and securities supervision and
administration institutions.
Chapter II Securities Issuance
Article 10 Public issuance of securities must conform to the criteria
prescribed by laws and administrative regulations, and be submitted to the
securities supervision and administration institution under the State Council
or the deparments authorized by the State Council according to law for
verification and approval or examination and approval; no unit or individual
shall, without verification and approval or examination and approval according
to law, publicly issue securities in society.
Article 11 Public issuance of stocks must, pursuant to the conditions
prescribed in the Company Law, be submitted to the securities supervision
and administration institution under the State Council for verification and
approval. The issuer must present the application document prescribed by the
Company Law and the relevant documents prescribed by the securities
supervision and administration institution under the State Council to
the securities supervision and administration institution under the State
Council.
Issuance of corporate bonds must, pursuant to the criteria prescribed in
the Company Law, be submitted to the department authorized by the State
Council for examination and approval. The issuer must present the applicatiion
document prescribed by the Company Law and other documents prescribed by the
department authorized by the State Council to the department authorized by
the State Council.
Article 12 The format and ways of submission of the application
document to be presented by the issuer for application for public issuance
of securities according to law shall be prescribed by the institution or
department resposnsible for verification and approval or examination and
approval accordindg to law.
Article 13 The application document for securities issuance to be
presented by the issuer to the securities supervision and administration
institution under the State Council or the department authorized by the
State Council must be truthful, accurate and complete.
The specialized agencies and personnel for drawing up relevant documents
for securities issuance must strictly fulfil the legal duties and
responsibilities to ensure the truthfulness, accuracy and completeness
of the documents drawn up by them.
Article 14 An issuance examination and verification commission shall
be established under the securities supervision and administration
institution under the State Council for examination and verification
of applications for issuance of stocks in accordance with law.
The issuance examination and verification commission shall be composed of specialized personnel of the securities
supervision and administration
institution under the State Council and specialists concerned employed
from outside the said institution and come up with views on examination
and verification and decide by vote on applications for stock issuance
in the form of ballot.
Specific measures for the composition, tenure of office for its members
and the working procedures of the issuance examination and verification
commission shall be formulated by the securities supervision and
administration institution under the State Council and submitted to the
State Council for approval.
Article 15 The securities supervision and administration institution
under the State Council shall, pursuant to legal conditions, be responsible
for the verification and approval of applications for stock issuance.
The procedures for verification and approval shall be open and be
subject to supervision in accordance with law.
Personnel participating in the verification and approval of applications
for stock issuance shall not have relations of interests with issuance
application units; shall not accept present(s) of issuance application
unit(s); shall not hold stocks the issuance application of which has been
approved; and shall not come into contact with issuance application unit(s)
in private.
Examination and approval of applications for issuance of corporate bonds
by the departments authorized by the State Council shall be processed by
referring to the provisions of the two preceding paragraphs.
Article 16 The securities supervision and administration instituion
under the State Council or the departments authorized by the State Council
should, within 3 months starting from the date of acceptance of securities
issuance application documents, make a decision; explanations shall be made
for non-approval or non examination and approval.
Article 17 An issuer shall, with the approval or examination and
approval of the securities issuance application, make an announcement of
the document on public issuance and raising and place the said document at
designated site(s) for public reference prior to the public issuance of the securities pursuant to the provisions of laws and administrative
regulations.
Prior to the information on securities issuance being made public
in accordance with law, no insider shall make public or disclose the
said information.
No issuer shall issue securities prior to the announcement of the
document on public issuance and raising.
Article 18 The securities supervision and administration institution
under the State Council or the departments authorized by the State Council
shall, upon discovery of the decision already made on the approval or
examination and approval of securities issuance to be not in conformity
with the provisions of laws and administrative regulations, revoke the
said decision; where issuance of securities has not been initiated, the
issuance shall be suspended; where the securities have already been issued,
the securities holders may, in accordance with the issuing price with
the added calculation of interests for deposit of the corresponding
period, ask the issuer for refund.
Article 19 The issuer shall be responsible for himself/herself for
changes in the management and returns of the issuer after issuance of the
stocks in accordance with law; the investors shall be responsible for
himself/herself for investment risks resulting from the changes.
Article 20 New stocks issued by a listed company should conform to
the conditions governing issuance of new stocks specified in the Company
Law, and may be raised in public in society, or allocated to original
stock-holders.
Funds raised by a listed company from stock issuance must be used
according to the uses of the funds listed in the prospectus. Change
in fund uses listed in the prospectus must be subject to the approval
of the general meeting of shareholders. Where arbitary change in use
without rectification has occurred, or the change has taken place without
affirmation of the general meeting of shareholders, no new stocks shall
be issued.
Article 21 Security companies should, pursuant to the provisions of laws and administrative regulations, sell issuers’ securites
for public
issuance in society. Securities sales business take the form of sale on
a commission basis or exclusive sales.
Sale on a commission basis of securities mean the the form of underwriting
of selling of securities by security companies for issuers and returning all
the unsold securities to issuers at the conclusion of the selling period.
Exclusive sales of securities mean the form of underwriting of total
buying in of issuers’ securities by security companies or total buying in of
the securities left over after sales by security companies themselves at the
conclusion of the selling period in accordance with agreement.
Article 22 An issuer of securities for public issuance has the right to
choose independently an underwriting security company in accordance with law.
No security company shall solicit business of underwriting by means of unfair
competition.
Article 23 A security company shall, in business of underwriting,
conclude an agreement on the sale on a commission basis or exclusive sales
with the issuer carrying the following particulars:
(1)names and residences of the parties interested and names of legal
representatives;
(2)types, quantity, amount and issuing price of the securities for
sale on a commission basis or exclusive sales;
(3)duration for sale on a commission basis or exclusive sales and
dates of commencement and termination;
(4)mode of payment and dates for sale on a commission basis or
exclusive sales;
(5)charges and settlement measures for sale on a commission basis or
exclusive sales;
(6)liability for breach of contract; and
(7)other matters prescribed by the securities supervision and
administration institution under the State Council.
Article 24 A security company shall, in business of underwriting,
check and verify the truthfulness, accuracy and completeness of the document
for public issuance and raising; no sales operations shall be carried out upon
uncovering of the document containing false recordings, misleading statements
or having major omissions; where sales have been under way, the sales
operations must be suspended forthwith and correction measures shall be
taken.
Article 25 Underwriting of securities for public issuance in society
the total face value of which exceeds RMB 50 million Yuan shall be undertaken
by an underwriting syndicate. The underwriting syndicate shall be composed of the leading underwriting security company and participating
underwriting
security companies.
Article 26 The longest duration for sale on a commission basis or
exclusive sales of securities shall not exceed 90 days.
A security company shall, within the duration of sale on a commission
basis or exclusive sales, ensure that the securities it has undertaken for
sale on a commission basis or exclusive sales are first sold to the
subcribers, and the security company shall not retain in advance the
securities the sale on a commission basis of which has been undertaken by
the company and buy in beforehand and retain the securities undertaken by
the company for exclusive sales.
Article 27 A security company that undertakes exclusive sales of securities shall, within 15 days at the expiration of the duration
for
exclusive sales, submit the information on exclusive sales to the securities
supervision and administration institution under the State Council for the
record.
A security company that undertakes sales of securities on a commission
basis shall, within 15 days at the expiration of the duration for sale on a
commission basis, together with the issuer submit the imformation on the
sales of securities on a commission basis to the securities supervision and
administration institution under the State Council for the record.
Article 28 Where stock issuance takes the form of premium issuance,
its issuing price shall be decided by the issuer and the underwriting
security company through consultation and submitted to the securities
supervision and administration institution under the State Council for
verification and approval.
Article 29 A domestic enterprise that goes in for direct or indirect
issuance of securities overseas or listing for trading of its securities
overseas must be subject to the approval of the securities supervision and
administration institution under the State Council for approval.
Chapter III Securities Trading
Section 1 General Rules
Article 30 Securities bought or sold according to law by parties
interested to securities trading must be securities issued and delivered
in accordance with law.
No securities issued not in accordance with law shall be bought or sold.
Article 31 Stocks, corporate bonds and other securities issued in
accordance with law restrictive provisions have been imposed by law on
their time limit for transfer shall not be bought or sold within the
restricted time limit.
Article 32 Stocks, corporate bonds and other securities the listing
for trading of which has been verified and approved in accordance with law
should be listed for trading at securities exchanges.
Article 33 Listing for trading of securities at securities exchanges
should take the form of open and centralized competitive bidding.
Centralized competitive bidding in securities trading should follow
the principle of price preference and time preference.
Article 34 Securities bought or sold by parties interested to
securities trading may take paper form or other forms laid down by the
securities supervision and administration institution under the State Council.
Article 35 Transactions in securities trading shall be concluded in
spot stocks.
Article 36 Security companies shall not engage in securities trading
operations of financing or securities accomodation from clients.
Article 37 Employees of securities exchanges, security companies and
securities registration and settlement agencies, staff members of securities
supervision and administration institutions and other personnel prohibited
from participating in stocks trading by laws and regulations shall not, within
their tenure of office or the legal time limit, hold, buy or sell stocks
directly or use an assumed name or in the name of others, nor shall they
accept stocks donated by others.
Anyone must, at the time becoming one of the personnel listed in the
preceding paragraph, transfer the stocks originally held by him/her according
to law.
Article 38 Securities exchanges, security companies and securities
registration and settlement agencies must maintain secrecy for the accounts
opened for their clients according to law.
Article 39 The specialized agency and personnel for drawing up such
papers as the audit report, assets assessment report or legal advice for
stock issuance shall not, within the underwriting period of the said stocks
and within 6 months at the expiration of the time period, buy or sell the
said stocks.
In addition to the provisions of the preceding paragraph, the specialized
agency and personnel for drawing up the audit report, assets assessment report
or legal advice for a listed company shall not, starting from the date of acceptance of entrustment of the listed company to within
5 days after the
above-mentioned documents have been made public, buy or sell the said stocks.
Article 40 Collection of fees for securities trading must be reasonable
and items for fee collection, rates for fee collection and methods of fee
collection shall be made public.
Items for fee collection, rates of fee collection and measures for
administration shall be uniformly determined by the departments of administration concerned under the State Council.
Article 41 A stockholder holding 5% of the stocks issued by a
joint-stock company limited should, within 3 days starting from the date of the amount of stocks held by him/her reaching the said
percentage, report
to the company which must report to the securities supervision and
administration institution under the State Council within 3 days starting
from the date of receipt of the report; when it belongs to a listed company,
a report shall be submitted simultaneously to the securities exchanges.
Article 42 The stockholder prescribed in the preceding Article who
sells the stocks of the said company held by him/her within 6 months after
buying in, or again buys in within 6 months of selling, the returns accrued
therefrom shall belong to the said company, and the board of directors of the company should withdraw the returns gained by the said
stockholder.
However, a security company that holds more than 5% of the stocks as a
result of the left-over stocks after sales of buying in for exclusive sales,
its sale of the said stocks shall not be subject to the time limit of 6
months.
Where the board of directors of a company fails to implement the
provisions of the preceding paragraph, other stockholders have the right to
demand implementation by the board of directors.
Where the board of directors of a company fails to implement the
provisions of the First Paragraph resulting in damage to the company,
the director(s) held responsible shall bear joint responsibility for
compensation in accordance with law.
Section 2 Securities Listing
Article 43 Application by a joint-stock company limited for listing for
trading of its stocks must be submitted to the securities supervision and
administration institution under the State Council for verification and
approval.
The securities supervision and administration institution under the
State Council may authorize securities exchanges to verify and approve
applications for listing of stocks pursuant to legal terms and legal
procedures.
Article 44 The state encourages the listing for trading of corporate
stocks conforming both to the industrial policy and conditions for listing.
Article 45 The following documents shall be presented at the time of filing an application for listing for trading with the securities
supervision
and administration institution under the State Council:
(1)a report on listing;
(2)the resolution of the general meeting of shareholders for the
application for listing;
(3)articles of association of the company;
(4)business licence of the company;
(5)financial and accounting reports of last three years of the company
or those since the establishment of the company examined and certified by
a legal certification agency;
(6)legal advice and a letter of reference by a security company; and
(7)the latest prospectus.
Article 46 An issuer shall, upon verification and approval of the
application for listing for trading of the stocks by the securities
supervision and administration institution under the State Council,
present the approval document and the relevant documents prescribed in
the preceding paragraph to securities exchanges.
The securities exchanges shall, within 6 months starting from the date
of receipt of the documents prescribed in the preceding paragraph presented
by the issuer of the said stocks, arrange the listing for trading of the
said stocks.
Article 47 The listed company shall, upon the consent of the securities
exchanges on the application for listing for trading of its stocks, announce
the approved relevant documents for the listing of the stocks, and place
the said documents at a designated place for public reference 5 days before
the listing for trading.
Article 48 In addition to announcing the application document for
listing prescribed in the preceding Article, the listed company shall
also announce the following particulars:
(1)the date of approval of trading of its stocks at securities exchanges;
(2)list of the top ten stockholders holding maximum shares of the
company and the number of shares held by them; and
(3)names of directors, commissioners, managers and high-level
administrators concerned and information on the stocks and bonds of the
comapany held by them.
Article 49 For a listed company that has forfeited the listed
requirements prescribed by the Company Law, its stocks shall be suspended
for listing or terminated for listing according to law.
Article 50 An application by a company for listing for trading of the
corporate bonds issued by it must be submitted to the securities supervision
and administration institution under the State Council for verification and
approval.
The securities supervision and administration institution under the State
Council may authorize a securities exchange in the verification and approval
of the application for listing of corporate bonds pursuant to legal terms
and legal procedures.
Article 51 Application by a company for listing for trading for its
corporate bonds must meet the following requirements:
(1)the time limit of the corporate bonds shall be more than one year;
(2)the actual issuance amount of the corporate bonds shall not be
less than RMB 50 million Yuan; and
(3)the company still meets the legal requirements for the issuance of corporate bonds at the time of application
for listing of its bonds.
Article 52 The following documents shall be presented at the time of filing an application for listing of corporate bonds with the
securities
supervision and administration institution under the State Council:
(1)a report on listing;
(2)the resolution of the board of directors on the application for
listing;
(3)articles of association of the company;
(4)business licence of the company;
(5)measures for the raising of corporate bonds; and
(6)the actual amount of issuance of corporate bonds.
Article 53 Upon verification and approval of the application for listing
for trading of corporate bonds, their issuer should present the approval
document and the relevant documents prescribed in the preceding Article
to the securities exchanges.
The securities exchanges should, within 3 months starting from the date
of receipt of the documents prescribed in the preceding Article which have
been presented by the said bonds issuer, arrange the listing for trading
of the said bonds.
Article 54 The issuer should, upon consent of the application for listing
for trading of corporate bonds by the securities exchanges, announce the
report on the listing of corporate bonds, the approval document and relevant
application documents for listing 5 days before the listing for trading of the corporate bonds, and place them at a designated place
for public
reference.
Article 55 Any company that has any of the following circumstances
following the listing for trading of its corporate bonds, the listing for
trading of its corporate bonds shall be temporarily suspended according to
the decision of the securities supervision and administration institution
under the State Council:
(1)the company has committed major illegal acts;
(2)a major change has taken place in the company that does not conform to
the listing requirements for corporate