Standing Committee of the National People’s Congress
Order of the President of the People’s Republic of China
No. 43
The Securities Law of the People’s Republic of China, which was revised and adopted at the 18th Meeting of the Standing Committee
of the 10th National People’s Congress of the People’s Republic of China on October 27, 2005 are hereby promulgate and shall be implemented
as of January 1, 2006.
President of the People’s Republic of China, Hu Jintao
October 27, 2005
Securities Law of the People’s Republic of China (revised in 2005)
(Adopted at the 6th Meeting of the Standing Committee of the 9th National People’s Congress on December 29, 1998, revised at the 18th
Meeting of the Standing Committee of the Tenth National People’s Congress of the People’s Republic of China on October 27, 2005 according
to the Decision on Revising the Securities Law of the People’s Republic of China as made at the 11th meeting of the Standing Committee
of the 10th People’s Congress on August 28, 2004)
ContentsChapter I General Provisions
Chapter II Issuance of Securities
Chapter III Transaction of Securities
Section I General Provisions
Section II Listing of Securities
Section III On-going Disclosure of Information
Section IV Prohibited Trading Acts
Chapter IV Acquisition of Listed Companies
Chapter V Stock Exchanges
Chapter VI Securities Companies
Chapter VII Securities Registration and Clearing Institutions
Chapter VIII Securities Trading Service Institutions
Chapter IX Securities Industrial Association
Chapter X Security Regulatory Bodies
Chapter XI Legal Liabilities
Chapter XII Supplementary Articles
Chapter I General Provisions
Article 1
The present Law is formulated for the purpose of regulating the issuance and transaction of securities, protecting the lawful rights
and interests of investors, safeguarding the economic order and public interests of the society and promoting the growth of the socialist
market economy.
Article 2
The present Law shall be applied to the issuance and transaction of stocks, corporate bonds as well as any other securities as lawfully
recognized by the State Council within the territory of the People’s Republic of China. Where there is no such provision in the present
Law, the provisions of the Corporation Law of the People’s Republic of China and other relevant laws and administrative regulations
shall be applied. Any listed trading of government bonds and share of securities investment funds shall be governed by the present
Law. Where there is any special provision in any other law or administrative regulation, the special provision shall prevail.The
measures for the administration of issuance and transaction of securities derivatives shall be prescribed by the State Council according
to the principles of the present Law.
Article 3
The issuance and transaction of securities shall adhere to the principles of openness, fairness and impartiality.
Article 4
The parties involved in any issuance or transaction of securities shall have equal legal status and shall persist in the principles
of free will, compensation and integrity and creditworthy.
Article 5
The issuance and transaction of securities shall observe laws and administrative regulations. No fraud, insider trading or manipulation
of the securities market may be permitted.
Article 6
The divided operation and management shall be adopted by the industries of securities, banking, trust as well as insurance. The securities
companies and the business organs of banks, trust and insurance shall be established separately, unless otherwise provided for by
the state.
Article 7
The securities regulatory authority under the State Council shall adopt a centralized and unified supervision and administration of
the national securities market.The securities regulatory authority under the State Council may, in light of the relevant requirements,
establish dispatched offices, which shall perform their duties and functions of supervision and administration upon the authorization.
Article 8
Under the centralized and unified supervision and administration of the state regarding the issuance and transaction of securities,
a securities industrial association shall be lawfully established, which shall adopt the self-regulating administration.
Article 9
The auditing organ of the state shall carry out auditing supervision of stock exchanges, securities companies, securities registration
and clearing institutions and securities regulatory bodies.
Chapter II Issuance of Securities
Article 10
A public issuance of securities shall satisfy the requirements of the relevant laws and administrative regulations and shall be reported
to the securities regulatory authority under the State Council or a department upon authorization by the State Council for examination
and approval according to law. Without any examination and approval according to law, no entity or individual may make a public issuance
of any securities.It shall be deemed as a public issuance upon the occurrence of any of the following circumstances:
(1)
Making a public issuance of securities to non-specified objects;
(2)
Making a public issuance of securities to accumulatively more than 200 specified objects; or
(3)
Making a public issuance as prescribed by any law or administrative regulation.For any securities that are not issued in a public
manner, the means of advertising, public inducement or public issuance in any disguised form may not be adopted thereto.
Article 11
An issuer that files an application for public issuance of stocks or convertible corporate bonds by means of underwriting according
to law or for public issuance of any other securities, to which a recommendation system is applied, as is prescribed by laws and
administrative regulations, shall employ an institution with the qualification of recommendation as its recommendation party.A recommendation
party shall abide by operational rules and industrial norms and, on the basis of the principles of being honesty, creditworthy, diligent
and accountable, carry out a prudent examination of application documents and information disclosure materials of its issuers as
well as supervise and urge its issuers to operate in a regulative manner.The qualification of the recommendation party as well as
the relevant measures for administration shall be formulated by the securities regulatory authority under the State Council.
Article 12
A public offer of stocks for establishing a stock-limited company shall satisfy the requirements as prescribed in the Corporation
Law of the People’s Republic of China as well as any other requirements as prescribed by the securities regulatory authority under
the State Council, which have been approved by the State Council. An application for public offer of stocks as well as the following
documents shall be reported to the securities regulatory authority under the State Council:
(1)
The constitution of the company;
(2)
The promoter’s agreement;
(3)
The name or post_title of the promoter, the amount of shares as subscribed by the promoter, the category of contributed capital as well
as the capital verification certification;
(4)
The prospectus;
(5)
The name and address of the bank that receives the funds as generated from the issuance of stocks on the behalf of the company; and
(6)
The name of the underwriting organization as well as the relevant agreements.In case a recommendation party shall be employed, as
prescribed by the present Law, the Recommendation Letter of Issuance as produced by the recommendation party shall be submitted as
well.In case the establishment of a company shall be reported for approval, as prescribed by laws and administrative regulations,
the relevant approval documents shall be submitted as well.
Article 13
An initial public offer (IPO) of stocks of a company shall satisfy the following requirements:
(1)
Having a complete and well-operated organization;
(2)
Having the capability of making profits successively and a sound financial status;
(3)
Having no false record in its financial statements over the latest 3 years and having no other major irregularity; and
(4)
Meeting any other requirements as prescribed by the securities regulatory authority under the State Council, which has been approved
by the State Council.A listed company that makes any initial non-public offer of stocks shall satisfy the requirements as prescribed
by the securities regulatory authority under the State Council, which have been approved by the State Council and shall be reported
to the securities regulatory authority under the State Council for examination and approval.
Article 14
A company that makes an IPO of stocks shall apply for public offer of stocks as well as the following documents to the securities
regulatory authority under the State Council:
(1)
The business license of the company;
(2)
The constitution of the company;
(3)
The resolution of the general assemble of shareholders;
(4)
The prospectus;
(5)
The financial statements;
(6)
The name and address of the bank that receives the funds as generated from the public offer of stocks on the behalf of the company;
and
(7)
The name of the underwriting institution as well as the relevant agreements.In case a recommendation party shall be employed, as prescribed
by the present Law, the Recommendation Letter of Issuance as produced by the recommendation party shall be submitted as well.
Article 15
The funds as raised through public offer of stocks as made by a company shall be used according to the purpose as prescribed in the
prospectus. Any alteration of the use of funds as prescribed in the prospectus shall be subject to a resolution of the general assembly
of shareholders. In case a company fails to correct any unlawful alteration of its use of funds or where any alteration of its use
of funds fails to be adopted by the general assembly of shareholders, the relevant company may not make any IPO of stocks. In the
foregoing circumstance, a listed company may not make any non-public offer of stocks.
Article 16
A public issuance of corporate bonds shall satisfy the following requirements:
(1)
The net asset of a stock-limited company being no less than RMB 30 million yuan and the net asset of a limited-liability company being
no less than RMB 60 million yuan;
(2)
The accumulated bond balance constituting no more than 40 % of the net asset of a company;
(3)
The average distributable profits over the latest 3 years being sufficient to pay the 1-year interests of corporate bonds;
(4)
The investment of raised funds complying with the industrial policies of the state;
(5)
The yield rate of bonds not surpassing the level of interest rate as qualified by the State Council; and
(6)
Meeting any other requirements as prescribed by the State Council.The funds as raised through public issuance of corporate bonds shall
be used for the purpose as verified and may not be used for covering any deficit or non-production expenditure.The public issuance
of convertible corporate bonds as made by a listed company may not only meet the requirements as provided for in paragraph 1 herein
but also meet the requirements of the present Law on public offer of stocks, and shall be reported to the securities regulatory authority
under the State Council for examination and approval.
Article 17
With regard to an application for public issuance of corporate bonds, the following documents shall be reported to the department
as authorized by the State Council or the securities regulatory authority under the State Council:
(1)
The business license of the company;
(2)
The constitution of the company;
(3)
The procedures for issuing corporate bonds;
(4)
An assent appraisal report and an asset verification report; and
(5)
Any other document as prescribed by the department as authorized by the State Council or by the securities regulatory authority under
the State Council.In case a recommendation party shall be employed, as prescribed by the present Law, the Recommendation Letter of
Issuance as produced by the recommendation party shall be submitted as well.
Article 18
In any of the following circumstances, no more public issuance of corporate bonds may be carried out:
(1)
Where the corporate bonds as issued in the previous public issuance haven’t been fully subscribed;
(2)
Where a company has any default on corporate bonds as publicly issued or on any other liabilities, or postpones the payment of the
relevant principal plus interests, and such situation is still continuing; or
(3)
Where a company violates the present Law by altering the use of funds as raised through public issuance of corporate bonds.
Article 19
The formats and reporting ways of application documents as reported by an issuer for examination and approval of securities issuance
according to law shall be prescribed by the legally competent organ or department in charge of examination and approval.
Article 20
The application documents for securities issuance as reported by an issuer to the securities regulatory authority under the State
Council or the department as authorized by the State Council shall be authentic, accurate and integrate.A securities trading service
institution and its staff that produces the relevant documents for securities issuance shall strictly perform its/his statutory duties
and functions and guarantee the authenticity, accuracy and integrity of the documents as produced thereby.
Article 21
Where an issuer files an application for an IPO of stocks, it shall, upon submitting the application documents, disclose the relevant
application documents in advance according to the provisions of the securities regulatory authority under the State Council.
Article 22
The securities regulatory authority under the State Council shall establish an issuance examination committee, which shall examine
the applications for stock issuance according to law.The issuance examination committee shall be composed of the professionals from
the securities regulatory authority under the State Council and other relevant experts from outside the said authority, adopt the
means of voting for the determination of applications for stock issuance and set forth the opinions on examination.The specific formulation
measures, tenure of members as well as work procedures of the issuance examination committee shall be formulated by the securities
regulatory authority under the State Council.
Article 23
The securities regulatory authority under the State Council shall take charge of the examination and approval of applications for
stock issuance in light of the statutory requirements. The procedures for examination and approval shall be publicized and shall
be subject to supervision according to law.The personnel participating in the examination and verification of stock issuance may
not have any interest relationship with an issuance applicant, may not directly or indirectly accept any present of the issuance
applicant, may not hold any stock as verified for issuance and may not have any private contact with an issuance applicant.The department
as authorized by the State Council shall conduct the examination and approval of applications for issuance of corporate bonds by
referring to the preceding 2 paragraphs herein.
Article 24
The securities regulatory authority under the State Council or the department as authorized by the State Council shall, within 3 months
as of acceptance of an application for securities issuance, make an decision on approval or disapproval according to the statutory
requirements and procedures, whereby the time for an issuer to supplement or correct its application documents for issuance according
to the relevant requirements may not be calculated within the aforesaid term for examination and approval. In the event of disapproval,
an explanation shall be given in writing.
Article 25
Where an application for securities issuance has been approved, the relevant issuer shall, in accordance with the provisions of the
relevant laws and administrative regulations, announce the relevant financing documents of public issuance before publicly issuing
any securities and shall make the aforesaid documents available for public reference in designated places.Before the information
of securities issuance is publicized according to law, no insider may publicize or indulge the relevant information.An issuer may
not issue any securities before an announcement of the relevant financial documents of public issuance.
Article 26
The securities regulatory authority under the State council or the department as authorized by the State Council shall, where finding
any decision on approving securities issuance fails to comply with the relevant statutory requirements and procedures and if the
relevant securities haven’t been issued, revoke the decision on approval and terminate the issuance. As to any securities that have
been issued but haven’t been listed, the relevant decision on approval for issuance shall be revoked. The relevant issuer shall,
according to the issuing price plus interests as calculated at the bank deposit rate for the corresponding period of time, return
the funds to securities holders. A recommendation party shall bear the joint and several liabilities together with the relevant issuer,
except for one who is able to prove his exemption of fault. Where any controlling shareholder or actual controller has any fault,
he shall bear the joint and several liabilities together with the relevant issuer,
Article 27
After a legal offer of stocks, an issuer shall be liable for any alteration of its operation or its profits by itself. The investment
risk as incurred therefrom shall be borne by investors by themselves.
Article 28
Where an issuer issues any securities to any non-specified object and if the said securities shall be underwritten by a securities
company, as is provided for by laws and administrative regulations, the issuer shall conclude an underwriting agreement with a securities
company. The forms of “sale by proxy” and “exclusive sale” shall be adopted for the underwriting operation of securities.The term
“sale by proxy” refers to an underwriting form, whereby a securities company sells securities as a proxy of the relevant issuer and,
upon the conclusion of the underwriting period, returns all the securities unsold to the relevant issuer.The term “exclusive sale”
refers to an underwriting form, whereby a securities company purchases all of the securities of an issuer according to the agreement
there between or purchases all of the residing unsold securities by itself upon the conclusion of the underwriting period.
Article 29
An issuer that makes public issuance of securities has the right to select a securities company for underwriting according to law
at its own will. A securities company may not canvass any securities underwriting business by any unjust competition means.
Article 30
Where a securities company underwrites any securities, it shall reach an agreement with the relevant issuer on sale by proxy or exclusive
sale, which shall indicate the following items:
(1)
The name, domicile as well as the name of the legal representative of the parties concerned;
(2)
The classes, quantity, amount as well as issuing prices of the securities under sale by proxy or exclusive sale;
(3)
The term of sale by proxy or exclusive sale as well as the start-stop date;
(4)
The means and date of payment for sale by proxy or exclusive sale;
(5)
The expenses for and settlement methods of sale by proxy or exclusive sale;
(6)
The liabilities of breach; and
(7)
Any other matter as prescribed by the securities regulatory authority under the State Council.
Article 31
A securities company that is engaged in the underwriting of securities shall carry out verification on the authenticity, accuracy
and integrity of the financing documents of public issuance. Where any false record, misleading statement or major omission is found,
no sales activity may be carried out. Where any securities have been sold out under the foregoing circumstances, the relevant sales
activity shall be immediately terminated and measures for correction shall be taken.
Article 32
Where the total face value of securities as issued to non-specified objects is beyond RMB 50 million yuan, the said securities shall
be underwritten by an underwriting syndicate. An underwriting syndicate shall be composed of securities companies acting as principal
underwriters and participant underwriters.
Article 33
The term for sale by proxy or exclusive sale may not exceed 90 days at the most.A securities company shall, within the term of sale
by proxy or exclusive sale, guarantee the priority of the relevant subscribers in purchasing securities under sale by proxy or exclusive
sale. A securities company may not reserve in advance any securities under sale by proxy thereby or purchase in advance and sustain
any securities under exclusive sale thereby.
Article 34
Where any stock is issued at a premium, the issuing price thereof shall be agreed on through negotiation of the relevant issuer and
the securities company that is engaged in underwriting.
Article 35
As to a public offer of stocks through sale by proxy, when the term of sale by proxy expires and if the quantity of stocks fails to
reach 70 % of the planned quantity in a public offer, it shall be deemed as a failure. The relevant issuer shall return the issuing
price plus interests as calculated at the bank deposit rate for the contemporary period of time to the subscribers of stocks.
Article 36
In a public offer of stocks, when the term for sale by proxy or exclusive sale expires, an issuer shall report the information on
stock issuance to the securities regulatory authority under the State Council for archival purpose within the prescribed time.
Chapter III Transaction of Securities
Section I General Provisions
Article 37
The securities as purchased and sold by any party who is involved in any securities transaction shall be the securities that have
been legally issued and delivered.No securities that have been illegally issued may be purchased or sold.
Article 38
All stocks, corporate bonds or any other securities that have been legally issued, where there are any restrictive provisions of laws
on the term of transfer thereof, may not be purchased or sold within the restrictive term.
Article 39
All stocks, corporate bonds or any other securities that have been publicly issued according to law shall be listed in a stock exchange
as legally established or in any other places for securities transaction as approved by the State Council.
Article 40
The means of public and centralized transaction or any other means as approval by the securities regulatory authority under the State
Council shall be adopted for listed trading of securities in stock exchanges.
Article 41
The securities as purchased or sold by the parties involved in securities transaction may be in paper form or in any other form as
approved by the securities regulatory authority under the State Council.
Article 42
The securities transaction shall be carried out in the form of spot goods as well as any other form as prescribed by the State Council.
Article 43
The practitioners in stock exchanges, securities companies as well as securities registration and clearing institutions, the functionary
of securities regulatory bodies as well as any other personnel who have been prohibited by laws and administrative regulations from
engaging in any stock transaction shall, within their tenures or the relevant statutory term, not hold or purchase or sold any stock
directly or in any assumed name or in a name of any other person, nor may they accept any stocks from any other person as a present.Anyone,
when becoming any person as prescribed in the preceding paragraph herein, shall transfer the stocks he has held according to law.
Article 44
The stock exchanges, securities companies as well as securities registration and clearing institutions shall keep secret for the accounts
as opened for their clients according to law.
Article 45
A securities trading service institution and the relevant personnel that produce such documents as auditing reports, asset appraisal
reports or legal opinions for stock issuance may not purchase or sell any of the aforesaid stocks within the underwriting term of
stocks or within 6 months as of the expiration of the underwriting term of stocks.
Except for the provisions as prescribed in the preceding paragraph herein, a securities trading service institutions and the relevant
personnel that produce such documents as auditing reports, asset appraisal reports or legal opinions for listed companies may not
purchase or sell any of the aforesaid stocks within the period from the day when an entrustment of a listed company is accepted to
the day when the aforesaid documents are publicized.
Article 46
The charge for securities transaction shall be reasonable. The charging items, standards as well as methods shall be publicized.The
charging items, standards and administrative measures of securities transaction shall be uniformly formulated by the relevant administrative
department under the State Council.
Article 47
Where any director, supervisor and senior manager of a listed company or any shareholder who holds more than 5% of the shares of a
listed company, sells the stocks of the company as held within 6 months after purchase, or purchases any stock as sold within 6 months
thereafter, the proceeds generated therefrom shall be incorporated into the profits of the relevant company. The board of directors
of the company shall withdraw the proceeds. However, where a securities company holds more than 5% of the shares of a listed company,
which are the residing stocks after sale by proxy as purchased thereby, the sale of the foregoing stocks may not be limited by a
term of 6 months.Where the board of directors of a company fails to implement the provisions as prescribed in the preceding paragraph
herein, the shareholders concerned have the right to require the board of directors to implement them within 30 days. Where the board
of directors of a company fails to implement them within the aforesaid term, the shareholders have the right to directly file a litigation
with the people’s court in their own names for the interests of the company.Where the board of directors of a company fail to implement
the provisions as prescribed in paragraph 1herein, the directors in charge shall bear the joint and several liabilities according
to law.
Section II Listing of Securities
Article 48
An application for the listing of any securities shall be filed with a stock exchange and shall be subject to the examination and
approval of the stock exchange according to law and a listing agreement shall be reached by both parties.The stock exchanges shall,
according to the decision of the department as authorized by the State Council, arrange the listing of government bonds.
Article 49
As for an application for the listing of any stocks, convertible corporate bonds or any other securities, to which a recommendation
system is applied, as prescribed by laws and administrative regulations, an institution with the qualification of recommendation
shall be employed as the recommendation party.The provisions of paragraphs 2 and 3 of Article 11 of the present Law shall be applied
to the recommendation party of listing.
Article 50
A stock-limited company that files an application for the listing of its stocks shall satisfy the following requirements:
(1)
The stocks shall have been subject to the examination and approval of the securities regulatory authority under the State Council
and shall have been publicly issued;
(2)
The total amount of capital stock shall be no less than RMB 30 million yuan;
(3)
The shares as publicly issued shall reach more than 25 % of the total amount of corporate shares; where the total amount of capital
stock of a company exceeds RMB 0.4 billion yuan, the shares as publicly issued shall be no less than 10% thereof; and
(4)
The company may not have any major irregularity over the latest years and there is no false record in its financial statements.A stock
exchange may prescribe the requirements of listing that are more strict than those as prescribed in the preceding paragraph herein,
which shall be reported to the securities regulatory authority under the State Council for approval.
Article 51
The state encourages the listing of corporate stocks that comply with the relevant industrial policies and fulfill the relevant requirements
of listing.
Article 52
With regard to an application for the listing of stocks, the following documents shall be reported to a stock exchange:
(1)
The listing report;
(2)
The resolution of the general assembly of shareholders regarding the application for the listing of stocks;
(3)
The constitution of the company;
(4)
The business license of the company;
(5)
The financial statements of the company for the latest years as audited by an accounting firm according to law;
(6)
The legal opinions as well as the Recommendation Letter of Listing;
(7)
The latest prospectus; and
(8)
Any other document as prescribed by the listing rules of the stock exchange.
Article 53
Where an application for the listing of stocks has been subject to the examination and approval of a stock exchange, the relevant
company that has reached a listing agreement thereon shall announce the relevant documents for stock listing within the prescribed
period and shall make the said documents available for public reference in designated places.
Article 54
A company that has reached a listing agreement may not only announce the documents as prescribed in the preceding Article herein but
also announce the following items:
(1)
The date when the stocks have been approved to be listed in a stock exchange;
(2)
The name list of the top 10 shareholders who hold the largest number of shares in the company as well as the amount of stocks as held
thereby;
