Industry experts explain many highlights of the new securities law

Improve the rule of law and promote the healthy development of the capital market

Our reporter Du Xiao

Our intern Jiang Mengjie

This year's "March 15th" International Consumer Rights Day, the capital market ushered in a round of anti-counterfeiting actions. The three companies, Xiuqiang Co., Yaben Chemicals, and Taihe Technology, were all investigated by the Securities Regulatory Commission for suspected misleading statements and other information disclosure violations. . This is the first batch of listed companies that have been put on file for investigation since the revised securities law came into effect on March 1.

Earlier, the "Notice on Implementing the Relevant Work on the Implementation of the Amended Securities Law" (hereinafter referred to as the "Notice") issued by the General Office of the State Council pointed out that the current revision of the Securities Law systematically summarizes China's capital market reform and development, supervision and enforcement, and risk prevention and control. Practical experience, making system reforms such as the comprehensive implementation of the securities issuance registration system, significantly raising the cost of securities violations, improving investor protection systems, strengthening information disclosure obligations, and compacting intermediary agency responsibilities, etc., in order to create a standardized, transparent, open, energetic, and A resilient capital market provides strong legal guarantees. It is of great significance to deepen financial supply-side structural reforms, improve a highly adaptable, competitive, and inclusive modern financial system, and maintain national economic and financial security.

For a long time, every move of the capital market has attracted much attention. The newly amended securities law can be described as bright and has very positive significance for promoting the long-term and healthy development of the capital market. The reporter of the Legal Daily interviewed this.

Special Section on Securities Law

Protecting small and medium investors

Protecting the legitimate rights and interests of small and medium investors directly affects the vital interests of the masses and the harmony and stability of the capital market. The new securities law uses special chapters to strengthen investor protection.

Professor Liu Jipeng, Dean of the School of Business, China University of Political Science and Law, believes that one of the highlights of the new securities law is the shift from a market that used to be a financier to a market that focused on both investors and financiers. In the past, it has provided more convenience to issuers and funders, and the new securities law has given investors certain policy preferences and interest protection.

Professor Liu Junhai of the School of Law, Renmin University of China believes that the new securities law has passed a large amount of positive energy for investor protection, and that investor protection runs through the entire process of capital market operation. Whether it is upgrading legal liability or strengthening integrity obligations, it reflects Investor-friendly rule of law genes. It can be said that the new securities law will become the cornerstone of the rule of law for the comprehensive construction of an investor-friendly society, and also a ballast stone for the construction of a temperature and bottom-line capital market.

The Securities Law stipulates that an investor protection agency, entrusted by more than 50 investors, can participate in litigation as a representative and register with the people's court as the right holder confirmed by the securities registration and settlement institution in accordance with the provisions of the preceding paragraph. Except those willing to participate in the lawsuit.

Liu Jipeng believes that the securities civil litigation system established by the new securities law is very meaningful. It stipulates that investor protection agencies can act as representatives of litigation and expand the subject of claims. The litigation principles of "expressed withdrawal" and "implicit participation" also make it easier for the victim investor to file a civil damages lawsuit.

"This kind of litigation principle is a class action system with Chinese characteristics, and it is a very big highlight of the new securities law." Said Hu Jichen, a professor at China University of Political Science and Law.

The securities law stipulates that listed companies should clearly specify the specific arrangements and decision-making procedures for distributing cash dividends in the articles of association, and protect the shareholders' right to asset returns in accordance with the law.

"The new securities law also involves the cash dividend system of listed companies. Encouraging listed companies to pay dividends to benefit shareholders and at the same time enhance the social value of listed companies and achieve a win-win situation." Liu Jipeng said.

Liu Junhai believes that the new securities law divides investors into two categories, one is ordinary investors and the other is professional investors. Professional investors and securities companies play more of the contract and adjustment functions of equal games, while for non-professional ordinary investors, the new securities law is tilted towards them.

Hu Jichen believes that the investor suitability protection system established by the new securities law is a very bright system. The “Administrative Measures on the Appropriateness of Investors in Securities and Futures” previously introduced is a departmental regulation, and its main content has been written into the new securities law, thereby establishing a more comprehensive investor suitability protection system.

The Securities Law provides that in the event of a dispute between an investor and an issuer, a securities company, etc., both parties may apply to an investor protection agency for mediation. In the event of a securities business dispute between an ordinary investor and a securities company, and the ordinary investor requests a mediation, the securities company shall not refuse.

Recently, the Supreme People's Court and the Securities and Futures Commission have jointly promoted the mediation platform of the People's Court and the online settlement platform for securities and futures disputes on the China Investor Network to implement data exchange, interconnection, and establishment in accordance with the "Opinions on Comprehensively Promoting the Construction of a Diversified Resolution Mechanism for Securities and Futures Disputes" Coordinate a coordinated, efficient and convenient online dispute resolution mechanism for securities and futures disputes.

Information disclosure is also of great significance for investor protection. The new securities law also uses special chapters to strengthen information disclosure obligations.

It is understood that the three companies surveyed have previously received the inquiry letter from the exchange, and the reasons are hot.

Ye Lin, a professor at the School of Law of Renmin University of China, believes that investors should also emphasize the "risk-taking" consciousness. Investors should invest rationally and objectively. Strengthening investor protection and investor education are inseparable.

"For example, in the context of the epidemic, some listed companies may seek development through the 'hot spot' approach, and the stock market may have a certain degree of shock. This requires investors to look at and analyze objectively and rationally." Ye Lin said.

"Ordinary shareholders need to learn to invest rationally, scientifically, safely, and in accordance with the law, and not to be superstitious about rumors in the capital market." Liu Junhai said.

Legalization of registration system

Steady progress in small steps

At a press conference held by the State Council ’s joint prevention and control mechanism, the Vice Chairman of the China Securities Regulatory Commission Li Chao said that the GEM Reform will focus on the main line of the registration system, and will also focus on other aspects, including issuance, listing, information disclosure, and trading. In terms of a series of basic systems such as delisting and delisting, reform arrangements were made. At present, related work is progressing in an orderly manner. At the same time, we will follow the twelve key tasks of the announced capital market reforms, including advancing the reform of the registration system, improving the quality of listed companies, improving and strengthening the service quality of intermediary agencies, protecting investor rights and interests, and creating a more favorable environment for medium and long-term capital entry. We will continue to step up efforts to build a standardized, transparent, open, dynamic, and resilient capital market.

Liu Xinhua, deputy chairman of the Financial and Economic Committee of the National People's Congress, was the former vice chairman of the China Securities Regulatory Commission. He pointed out during the review of the securities law group that "the legalization of the registration system is the top priority of this amendment to the securities law. The establishment of this system The capital market can be described as a pandemic. "

It is understood that in 2018, the Shanghai Stock Exchange established a science and technology board and a trial registration system. In 2020, the newly revised securities law provided for the step-by-step implementation of the registration system for stock issuance.

In recent years, the size of China's bond market has been increasing. According to the relevant person in charge of the People's Bank of China and the Securities Regulatory Commission, in January 2020, China's bond market custody balance reached 100.4 trillion yuan, and the market size ranked second in the world.

On March 1, the National Development and Reform Commission's "Notice on Issues Related to the Implementation of the Registration System for the Issuance of Corporate Bonds" states that the issuance of corporate bonds is subject to the registration system. In accordance with the relevant requirements of the Securities Law and the Notice, the issuance of corporate bonds has changed from an approval system to a registration system. The National Development and Reform Commission is the statutory registration agency for corporate bonds. Issuance of corporate bonds should be registered with the National Development and Reform Commission in accordance with the law.

On the same day, the "Notice on Issues Related to the Implementation of the Registration System for the Public Issuance of Corporate Bonds" issued by the Securities Regulatory Commission pointed out that since March 1, the registration system for the public issuance of corporate bonds has been implemented. The public issuance of corporate bonds shall meet the issuance conditions and information disclosure requirements as stipulated in the revised securities law and the Notice.

Regarding the interbank bond market, according to the relevant persons in charge of the People's Bank of China and the Securities Regulatory Commission, according to the spirit of the "Notice", the issuance, trading, registration, custody, and settlement of financial bonds and debt financing instruments of non-financial enterprises in the interbank bond market. , Shall be administered by the People ’s Bank of China and its designated institutions in accordance with the existing relevant regulations formulated by the People ’s Bank of China and other laws.

Liu Jipeng believes that the new securities law requires the step-by-step implementation of the registration system for stock issuance. Based on the experience of the pilot registration system, we can study how to better promote it. Therefore, there is still a process to implement the registration system.

Last year, the CSRC issued the "Implementation Opinions on Establishing a Science and Technology Innovation Board and Pilot Registration System on the Shanghai Stock Exchange." Responsible persons of the China Securities Regulatory Commission (CSRC) responded to reporters' questions on the establishment of the Science and Technology Innovation Board and the pilot registration system. They stated that the Securities and Exchange Commission is mainly responsible for three aspects of responsibilities: First, it is responsible for the issuance and registration of the Science and Technology Board stocks; The third is to implement the whole process supervision before and after the event.

"Because of the impact of the epidemic, the capital market will also fluctuate, and the implementation of the registration system will be more cautious. In the long run, the stock exchange has more autonomy in listing, and the Securities Regulatory Commission is mainly responsible for supervision. The trend will not change. "Liu Jipeng said.

Liu Junhai believes that the reform of the registration system needs to be active, orderly, and stable. It is similar to “small steps and fast moving”. The experience of the previous reform of the registration system of the science and technology board can be implemented on the GEM first, and then on the SME board , And finally implemented on the motherboard. Because the motherboard is large, it needs to be secure.

Increase the cost of violations

Fully implement legal responsibility

Aiming at problems such as the low cost of violations of laws and regulations that existed in the capital market in the past, a new highlight of the new securities law is to substantially increase the cost of violations of laws and regulations.

Hu Jizheng believes that for fraudulent issuance of securities that have not yet been issued, the maximum penalty is a fine of 600,000 yuan, which is increased to a fine of 20 million yuan. For securities that have already been issued, the maximum fine of 5% of the raised funds may be imposed, which is doubled to the raised funds. Increasing penalties will make the probability of illegal acts less and less.

"Taking effective and effective legal measures can truly protect the legitimate rights and interests of investors, especially small and medium investors." Liu Jipeng said.

Liu Junhai believes that administrative penalties have been significantly increased, and both listed companies and listed company leaders, including executives, actual controllers, and participating shareholders, will be punished. Correspondingly, criminal liability can also be promoted simultaneously. Civil liability has been further improved, and a presumption of fault has been adopted to allow relevant subjects to self-certify innocence. At the same time, investor protection agencies can come forward and let investors defend their rights at zero cost.

"Credit liability is a major legal liability that is being continuously improved. According to the relevant provisions of the new securities law, on the one hand, the CSRC has included the creditworthiness of all parties in the capital market's integrity file, on the other hand, it has improved the capital market's banning system and Dishonest sanctions system. "Liu Junhai said.

Ye Lin believes that in the specific implementation of the securities law, the Securities Regulatory Commission and the Supreme People's Court should play an important role. When specific issues are involved, other relevant departments, such as the Ministry of Public Security, the Supreme People's Procuratorate, and local governments, can be based on actual conditions. Work.

It is understood that on June 21, 2019, the Supreme People's Court announced "Several Opinions on Providing Judicial Guarantee for the Establishment of Science and Technology Innovation Board and Pilot Registration System Reform." On June 28, 2019, the Supreme People's Court and the Supreme People's Procuratorate jointly issued the Interpretation of Several Issues on the Application of Laws in Criminal Cases Handling the Use of Undisclosed Information Transactions and the Interpretation of Several Issues on the Application of Laws in Criminal Cases in the Manipulation of Securities and Futures Markets ".

It is also understood that the amendment to the Criminal Law (VII) has added a clause that severely punishes "rat behavior" in securities and futures transactions. Regarding the standards for the filing (prosecution) of crimes involving the use of undisclosed information transactions, the Supplementary Provisions on Prosecution Standards for Economic Crimes and the Provisions on Prosecution Standards for Criminal Cases under the Jurisdiction of Public Security Organs (2) issued by the Supreme People's Procuratorate and the Ministry of Public Security ".

"It is necessary to raise the illegal cost of capital market from the four levels of civil liability, administrative liability, criminal liability, and credit liability, reduce illegal gains, ensure that illegal costs are higher than illegal gains, and investor rights protection costs are lower than rights protection benefits." Liu Junhai said.